Sun
Pharma looks beyond generics at experimental drugs
Sun Pharmaceutical
Industries Ltd., India's largest domestic drug maker by market capitalisation,
plans to invest more than $280 million in the experimental psoriasis drug that
it in-licensed from US-based Merck Sharp& Dohme (MSD) last month and hopes
to commercialise globally by 2018, said industry consultants with direct
knowledge of the matter.
This is part of Sun's
attempt to invest in a basket of promising innovative products in select
therapies to grow beyond generics and add new revenue streams, they said. Sun
is the first Indian drug firm to adopt this strategy of inlicensing
experimental drugs at a late trial stage for commercialisation. In-licensing
involves drug makers tying up with each other to cooperate on various aspects
of development and marketing.
This sum cited above
includes over $200 million that it may spend in Phase III clinical trials and
the $80 million that it has committed upfront to in-license the drug but
excludes what it may owe to MSD as royalties on achieving milestones related to
regulatory approvals and sales.
"This is part of
Sun's broader strategy to move beyond generics post 2018 and the company is
hunting for more such lucrative branded experimental drug opportunities in
select therapies such as CNS (central nervous system), cardiovascular,
diabetes, allergy, oncology, ophthalmology and gynecology besides the derma
segment," said one of the consultants cited above. He added that this is
one way Sun is trying to address a key investor concern on how the company can
boost the already high market capitalization that it commands today. A Sun
spokesperson refused to comment on the matter.
Industry experts said that
Sun is scripting a shift in strategy for Indian generic companies, which have
typically out-licensed drug candidates at an early development stage.
"Acquiring an R&D
asset for clinical development is a bold move. Hitherto, all Indian companies
would look to license out their R&D pipeline. These companies were
comfortable becoming a licensor at an early stage of development," said
Sanjiv Kaul, managing director, Chrys Capital, a private equity firm. Sun
Pharma is reversing that process by becoming a licensee, he added.
Late-stage clinical trials
require deep pockets and are fraught with risks of failure, among the main
reasons why Indian firms have steered cleared of this path until now.
"Sun today finds
itself at an inflection point where it has to change gears to accelerate into
the next orbit. It is moving up the pharma value curve and in the process has
paved the way for other cash-rich large pharma companies in India to follow,"
Kaul said. Sun's promoter Dilip Shanghvi has placed unorthodox bets in the past
and is doing that once again, said other industry veterans.
"Shanghvi had thought
out of box by focusing on chronic drugs in the Indian market when all his
Indian peers including Ranbaxy (which Sun is in the process of acquiring) were
concentrating on anti-infectives. That strategy paid off. Today, in another
smart move, he is betting on novel drug candidates involving chemical synthesis
at a time when all other Indian players are going gungho about
biosimilars," said Ramesh Adige, an industry expert and a former executive
director with Ranbaxy. DS Brar of Ranbaxy and the late Anji Reddy of Dr Reddy's
were very keen to do in the late nineties what Shanghvi has ultimately done,
Kaul said.
"This boldness comes
with success and a cash-rich balance sheet. I hope it is not an isolated case.
One needs to have three-four shots at the goalpost for one goal to
happen," he added in response to ET's query on Sun looking out for other
similar opportunities.
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