Missing the Boat from the Other Direction

About a year ago, I commented on a editorial written by Christoph Westphal, a well-regarded biotech entrepreneur, executive, and investor, in which he blew a clarion (one of several) for our local academic/biotech/pharma industrial complex to develop products for customers who are “able to pay for innovation (what are the medical needs in China or Brazil?).”  My counterpoint (one of several) was that there are attractive markets for affordable treatments for diseases that afflict millions throughout the world, not just in countries with high-growth economies, and yes, developing affordable drugs in a cost-effective way is challenging scientifically and operationally, but this country’s potent combination of government, academia, and industry is up to it, and frankly, needs to be competitive in a world marketplace (“Missing the Boat”).  A recent report by the Center for Global Health R&D Policy Assessment, a part of the Results for Development Institute (R4D), a grant- and contract-funded global health consulting company in Washington, DC, addresses the global health innovation problem from the other (not-for-profit) direction and unfortunately, misses (my) boat, too.

The report, “India’s Role in Global Health R&D” (R4D report), is the most recent of the Center’s reports on public and private investment in global health product development (for my comments on previous reports, see “Yet Another” and “Credit Worthy”) and is the first to focus on a single country.  While authors based the report on interviews more than 50 representatives of Indian companies, research institutes, government agencies, foundations, and other groups, they acknowledge it is a “an overview of opportunities and constraints for global health R&D in India” rather than an analysis and that their recommendations are preliminary, i.e., another contract is needed to finish the job.  Unfortunately, the authors focus on the opportunities for participation by government (India’s and those of the high-income countries) and donors (foundations and international agencies), and by intent ignore the opportunities for companies, including developing affordable, but not “innovative,” products, like generic drugs and biosimilars, and products for the noninfectious, chronic diseases, like cancer and diabetes that are also a health problem in the mid- and low-income countries (see my posts “Biosimilar Fever” and  “Generics Play”).

As far as it goes, the report is worth reading and gathers together useful information, but I’ll skip to its recommendations.  For me the less interesting are:  more funding by “international partners” (governments and foundations) through Indian governmental programs of academic research and companies, including start-ups (which could be the topic of a report by itself); and more technology transfer between developed world “technology hubs,” like the NIH, to Indian firms (but his doesn’t work well for US firms).  Of more interest and value are the recommendations aimed at the Indian government:

  • Adopt and publicize clear criteria for new product procurement and tie R&D support of universities and companies to the procurement of needed products;
  • Conduct  disease burden and cost-effectiveness studies to inform decisions on new technology procurement;
  • Work with other countries to aggregate demand for important products;
  • Harmonize the product approval process with international standards, provide more guidance, and have a “fast track” regulatory pathway for technologies with significant potential public health impact; and
  • Assist Indian firms in navigating international regulatory and procurement processes.

I think these recommendations are good guidance for any country seeking to improve its public health and support its indigenous life sciences sector and will improve global health, but the rub, as usual, is money, organization, and political will.

Regarding the for-profit sector, the authors express concern (as have other academic writers, see “Healthy, Wealthy, and Wise Reprise”) that Indian companies will not be interested in low-margin products for under-served markets as they become more profit-motivated, either by becoming public companies or through partnerships and acquisitions by and with multinational firms.  I’m less concerned, imagining that successful companies find new business models as needed, and think that if the authors looked hard enough they may have found similar opinions among their interviewees.  The R4D report’s authors describe some of the strengths of the Indian vaccine/drug/diagnostics industry have for developing global health products, but I summarize them as:

  • Access to a large pool of educated, trainable scientists and engineers;
  • Relatively lower R and D and clinical trial costs (labor, land, equipment, capital);
  • Access to a growing contract R and D and clinical trial sector;
  • Ability to conduct trials in populations of interest and need;
  • Visibility and influence with the government to push to improve public health spending, procurement, insurance, and product regulation/approval;
  • Expertise low-cost manufacturing and in process improvements to lower cost;
  • Distribution and supply relationships to the mid- and lower tiers of the international market; and
  • Revenues from existing products.

These strengths make the Indian companies logical partners for the MNCs that see the need to developing affordable products for the public-sector buyers of the developing world, the increasingly insured middle class of the emerging market countries, and the cost-constrained “first world” countries.  Also Indian companies may be licensees of candidates for new products from the increasingly cash-strapped US biotech industry (if their investors can be more patient and take a lower ROI).  So my recommendations for India’s role in global health R and D is to:

  • Reject the “only way to high profits is high margins” model;
  • Exploit your knowledge and strengths in developing low-cost products;
  • Increase your business development activities to sell your products to the MNCs and their generics franchises and the independent generics companies; and
  • Shop in US biotech industry for product opportunities.

Perhaps in the next report, R4D will look more closely at the successful global health products of Indian companies (childhood vaccines, fixed-dose combinations of HIV/AIDS medicines, and HIV rapid diagnostic tests) and the products under development (like Ranbaxy’s malaria drug, see “A Long Strange Trip”) and make recommendations on how companies can build their global health business.