One hobby horse that I ride is the idea that, as the developing world develops, it will also be developing the multiple inputs needed to support a biotechnology industry, one that will invent and make affordable and profitable products for both domestic use and export (e.g., my posting of April 8, 2010). This topic was well-studied by Peter Singer, Sarah Frew, and colleagues at the McLaughlin-Rotman Centre for Global Health, University of Toronto (MRC Global) for the BRIC countries and South Africa, e.g.:
-Frew et al. 2007 (India) (Pubmed Citation);
-Frew et al. 2008 (China) (Pubmed Citation);
-Rezaie et al. 2008 (Brazil) (Pubmed Citation); and
-Al-Bader et al. 2009 (South Africa) (Pubmed Citation).
A compilation of these studies was published by Frew et al. in 2008 (Pubmed Citation) in which seventy-eight “homegrown,” small to medium biotech companies (excluding generics manufacturers and subsidiaries of the MNCs) were survey. The authors found that a quarter of the 500 products these companies sold or developed were aimed non-major money-making diseases (HIV, malaria, TB, and the neglected tropical diseases), about half in the neglected disease category. The products were mostly diagnostics but also included vaccines and therapeutics, and about half were in development and about half were on the market (sales data were not given). One of their conclusions, over-simplified by me, is that these companies are demonstrating success at “affordable innovation” and will be best helped by access to pro bono management consulting through a Global Health Accelerator. I think such a program may add complexity and friction and am more in favor of market-driven, B-to-B acceleration (see my posting of March 4, 2010).
A related hobby horse is how governments are/may be accelerating the development of indigenous affordable biotech innovation, especially in ways different from those in the major market countries (e.g., underwriting basic research, subsidizing small-scale commercialization, offering tax incentives, and running an effective regulatory and IP infrastructure). Not having the inclination, ability, or time to do a full-scale review, I looked at one government-based institution that is doing some pretty creative stuff, the Oswaldo Cruz Foundation of Brazil, also know as Fiocruz. Fiocruz has a glorious history that began with its founding in 1900 as a pubic health institute to produce vaccines against the bubonic plague, small pox, and yellow fever (Fiocruz history) and is now a key part of the country’s ministry for health. It currently has 7500 employees and describes its activities as including “research and development; highly-regarded hospital and ambulatory care services; production of vaccines, drugs, reagents, and diagnostic kits; education and training of human resources; information and communication in the area of health, science and technology; quality control of products and services, and the implementation of social programs.” In short, it is a combination of the NIH, CDC, and a mid-sized pharmaceutical company.
Fiocruz got into the drug-making business in 2004 when, in an initiative they call unprecedented, the government purchased a GlaxoSmithKline (GSK) pharmaceutical plant for $6 million, and it was incorporated into Farmanguinhos, Fiocruz’s pharmaceutical division. Farmanguinhos now makes and sells a range of drugs (anti-inflammatory, anti-infective, anti-psychotic, analgesic and antiulcer drugs, therapeutics against AIDS (9 of the 17 used), malaria, schistosomiasis, tuberculosis, leprosy, filariasis, onchocerciasis, anemia, diabetes, hypertension and cardiovascular and central nervous system diseases). Its production represents 36 percent of the Ministry of Health’s purchases and has estimated annual sales $100 M as of 2004 (Fiocruz drugs and, if you read Portuguese, Farmanguinhos).
As a vaccine developer and manufacturer, Fiocruz’s Bio-Manguinhos division produces 47% of the vaccines used in Brazil’s National Immunization Program and is certified by WHO to supply the yellow fever vaccine to the United Nations procurement agencies and to export to other countries (Bio-Manguinhos). It also has a creative model for accelerating Brazil’s affordable innovation: it trades Brazilian market entry and guaranteed sales to a multinational company (MNC) for technology and rights to manufacture the MNC product for its own and other markets. The exemplar deals are those with GSK. According to the GSK website on technology transfer and joint ventures (GSK TT and JV), since 1985 the company has had Fiocruz manufacture the GSK vaccines for polio, Haemophilus influenzae type b (Hib), measles, mumps, and rubella, for use in Brazil and, in 2007, got a government contract for up to 50 million doses of Rotarix (a vaccine against rotavirus, cause of gastrointestinal illness and death in children) which required the transfer of the vaccine manufacturing technology to Fiocruz and a license to make the product starting in 2012 (although this maybe for the domestic market only).
More recently, in September 2009, it was announced that GSK will sell $2.2 billion of its new pneumococcal vaccine, Synflorix, to Brazil at an affordable price, about $15 and decreasing to $7/dose compared to about the $50/dose major market price, for about 8 years, guaranteeing a revenue stream. GSK is also transferring manufacturing and a license for Brazil to make its own vaccine and apparently other similar vaccines (Financial Times article, Financial Times article; Nature Biotech article). Another kicker is that GSK and Fiocruz will work together on a dengue fever vaccine, apparently putting $50 million each into the effort (FeirceBiotech article).
Bio-Manguinhos also makes reagents for laboratory diagnostics tests and the kits themselves, producing 2.5 million per year (2004 data) for diseases such as leptospirosis, leishmaniasis, viral diarrhea, Chagas Disease, leprosy and dengue fever, and HIV (Fiocruz diagnostics). For the first-generation HIV tests, Fiocruz used the buy, technology transfer, and manufacture model with the test originator, Chembio Diagnostics Inc. of Medford, NY (Fiocruz partnerships). Fiocruz and Chembio extended the deal to the next-generation platform (http://www.chembio.com/globalhealthproducts.html) which was recently approved for sale in Brazil and resulted in a $400K license fee (Chembio press release). According to Chembio’s first 2010 10-Q, approvals are pending for similar tests for Leptospirosis and Canine Leishmaniasis with similar compensation. Finally, Bio-Manguinhos also makes interferon and erythropoietin (Fiocruz biologicals).
Where is Fiocruz going as a pharma company? According to the Financial Times, its president, Paulo Gadelha, has said “his institute was already pledging to provide technology transfer to make low-cost drugs and vaccines for African countries” (Financial Times article, Financial Times article). Not entirely clear. But as for innovative licensing deals for affordable innovation, Fiocruz is cruising.