Industrial - Life sciences

Discovery Search Partners built its business through life sciences, but in recent years we have developed a strong foothold in industrial products.  Our initial foray into industrial products was a natural transition as we partnered with companies that supply products to our life sciences partners.  So our early partners included specialty chemicals, test and measurement and laboratory instrumentation providers.

Our success at placing key executives in industrial companies coupled with the growth of some industrial markets has enabled us to broaden our industrial footprint.  Water treatment, semi-conductors, industrial automation and nanotechnology are other growing markets where Discovery Search Partners has enjoyed great success.

Key market dynamics - Pharma

Geographic balance will continue to shift toward pharmerging countries, which are expected to grow at a 14-17% rate through 2014, while major developed markets will grow at 3-6%.  The US will remain the single largest market in the world with revenue just short of $400 million by 2014 while China will grow to become the world’s 3rd largest market for pharmaceuticals during this period.
Therapy area growth will continue to be driven by innovation and areas of unmet need.  In the areas of oncology, diabetes, multiple sclerosis and HIV, annual growth is expected to exceed 10% as new drugs are brought to market, patient access is expanded and funding is redirected from other areas where lower cost generics will be available.

Broad cuts in spending will be applied by public payers to publicreduce growth in drug budgets.  Publicly funded health systems are under increased pressure to reduce growth in drug budgets following the global economic downturn.  Governments seeking to restore fiscal balance will likely apply restrictions or reductions in reimbursements to reduce drug spending.

Peak years of patent expiries will shift major therapies to generic dominance. Products with over $140 billion in revenue will face generic competition in the next five years with therapy areas like cholesterol regulators, antipsychotics and anti-ulcerants being affected the most.
Closer scrutiny of new products will keep product launches in the range of 30-35 products annually but these products will be subjected to more rigorous and complex assessments by payers before being accepted into clinical practice and reimbursed.

In moving beyond 2014 and leading up to 2020, IMS expects to see a continuing shift toward biopharmaceuticals, specialty-driven products and changes in the mix of disease areas of interest.
Discovery Search Partners has an outstanding performance record in pharmaceuticals, biopharmaceuticals and specialty pharmaceuticals.  We have proven expertise across all functional areas, with possibly the deepest experience in R&D where innovation is the critical ingredient driving company success.  Additionally, we have broad therapy experience and can cite numerous placements of note in virtually all therapy areas of interest. 

The US concern

The US concern
With markets in the developed world becoming saturated, multinational drug companies are increasingly looking to emerging economies with large populations for sales expansion and growth.

Powerful pharma lobbies are alleging that India is running riot over intellectual property rights. They feel that a poor IP framework can impede the development of new medicines over the long term by creating an environment that all together stop the pharmaceutical industry from investing in innovation.

They feel that Section 3(d) of the Indian Patent Act undermines innovation. It disallows much of the incremental innovation done on existing treatments from being patented in India. At the same time they point out that it is incremental innovation that has delivered outstanding benefits to patients the world over—whether in the treatment of HIV/AIDS or drugs developed for malaria and other tropical diseases.

The Indian viewpoint
With calls in the US for designating India a priority foreign country (PFC), the worst downgrading of status by the US trade representative for inability to protect IPRs, the Indian government is accusing US authorities of intimidating the Union health ministry over the issue of compulsory licences.

A PFC tag can allow the US to impose unilateral sanctions against India for domestic laws which deny benefits to the US under any trade agreement. According to some officials there seems to be a two-fold agenda behind the "cacophony" emanating from the US.

While pressure is being created on India's health ministry to not consider drugs for compulsory licences , there is also a deliberate attempt to use India to scare away other developing countries like Indonesia and Brazil from introducing legislation to prevent ever-greening of drug patents, like section 3 (d) of Indian Patents Act (IPA),according to a report

Micro Labs & Bal Pharma strengthen operations

Large pharma companies who are keen on emerging markets to support top line growth cannot ignore investments in locations like Baddi in Himachal Pradesh and Uttaranchal along with Sikkim in the north. The two companies from Karnataka, Micro Labs and Bal Pharma which jumped into the bandwagon for strategic investments in the region between 2005 and 2007 still view Baddi and Uttaranchal ,destinations for domestic as well as emerging markets supplies.

On the whole, small and medium size units have a strong presence in Baddi and Uttaranchal primarily to carry on contract manufacturing assignments.

However Kaushik Desai, immediate past chairman, Industrial Pharmacy Division, Indian Pharmaceutical Association (IPA) consider North India particularly Baddi and Uttaranchal now unviable locations for continued investments from a long-term view point.

The region is facing tremendous challenges in terms of accessing and retaining skilled workforce. The regulatory landscape needs to be strengthened considerably. Further, the lack of additional tax benefits make it even more unattractive for companies to consider expansions. This has led pharma companies not to concentrate on these locations or even mull any additional expansions.

A section of pharma companies in the region stated that issues such as production plants in remote locations, unwillingness of skilled work force to relocate , constant challenge of hilly terrains in terms of transportation and logistics hamper efficiency in terms of time and money.

Moreover the regular findings of not-of-standard quality drugs manufactured has also sullied the reputation of this region. The stark reality is that the highest number of substandard drugs detected by the state drugs control departments across the country is from this region,.

Contract manufacturing - India

With contract manufacturing business losing sheen, greener pastures like Sikkim emerging as better options for many, increased regulatory scrutiny putting pressure on biggies and financial crises engulfing the established firms, the North Indian pharmaceutical industry is facing rough weather.

The so-called excise free zones of Himachal Pradesh and Uttarakhand, the two major hubs of North India, have become less attractive for the pharmaceutical units, portending woes for the entire industry in the region. Now the only remaining hub is the Jammu region.

`In 1970 and 80s, Delhi and outskirts were leading hubs for the pharmaceutical industry, mostly led by small scale and medium players. Then slowly biggies emerged and captured the ground while some existing units diversified. It is learnt that 30-40 per cent of the units in the excise-free zones are ready to sell their business,” according to industry leader Nipun Jain.

The major pharmaceutical units in the region are Ranbaxy, Panacea Biotec, Venus Remedies, Ind-Swift, Ind-Swift Laboratories, Surya Pharma, Dabur Pharma, Jubilant Organosys, Nectar Lifesciences, IOL Chemicals and Pharma. Over the years, unlike Gujarat of Maharashtra, the region has not witnessed the rise of any new player to reckon with, other than Mankind Pharma.

Experimental Drug shows - Resistant leukemias

Research in mice and human cell lines has identified an experimental compound dubbed TTT-3002 as potentially one of the most potent drugs available to block genetic mutations in cancer cells blamed for some forms of treatment-resistant leukemia. Results of the research by Johns Hopkins Kimmel Cancer Center investigators, described March 6 in the journal Blood, show that two doses a day of TTT-3002 eliminated leukemia cells in a group of mice within 10 days. The treatment performed as well as or better than similar drugs in head-to-head comparisons.

More than 35 percent of acute myeloid leukemia (AML) patients harbor a mutation in the gene FMS-like tyrosine kinase-3 (FLT3). Normal FLT3 genes produce an enzyme that signals bone marrow stem cells to divide and replenish. But when FLT3 is mutated in some AML patients, the enzyme stays on permanently, causing rapid growth of leukemia cells and making the condition likely to relapse after treatment.

Many investigators are developing and testing drugs designed to block the FLT3 enzyme's proliferation, several of which are now in clinical trials. So far, their effectiveness has been limited, according to Donald Small, M.D., Ph.D., the Kyle Haydock Professor of Oncology and director of pediatric oncology at Johns Hopkins. Small led a team of researchers who originally cloned the FLT3 gene and linked it to leukemia a decade ago.

RANBAXY BURDEN

Sun Pharma’s seemingly bold acquisition of Ranbaxy was hailed by several analysts and some of the corporate heads as they think Mr. Dilip Shanghvi’s strategy of acquiring poorly performing companies and turning them around may work this time also. Between 1997 and 2012 Sun Pharma made 13 acquisitions starting with the purchase of Caraco Pharmaceuticals. That was the year in which it also bought stakes in two Indian pharma firms namely Tamilnadu Dadha Pharmaceuticals Ltd and MJ Pharmaceuticals Ltd. But in the case of Ranbaxy take over, Sun is facing a different type of hurdle. A belligerent US FDA taking a tough stand on Ranbaxy’s exports from most of its Indian plants to the US market.

 Ranbaxy has been confronting serious issues with regard to exports to the US, its most important market, since 2009. All its Indian facilities exporting drugs to the US have been barred from doing so by the US drug regulator for failing to comply with manufacturing standards. Last year, Ranbaxy also pleaded guilty to felony charges related to drug safety in the US and paid $500 million in civil and criminal fines under a settlement with the department of justice. And its balance sheet has been disappointing for some time. Ranbaxy's consolidated net sales for the year ended December 2013 declined to Rs. 10,604 crore from Rs. 12,253 crore in the previous year and EBDITA to Rs. 1,066 crore from Rs. 2,211 crore. EBDITA

The company's net loss amounted to Rs. 1,012 crore in 2013 as against a net profit of Rs. 923 crore in 2012. The company skipped dividend and its share price declined steadily during this period. Another area of concern for the Sun management will be the handling of huge sales force of the two companies. Sun and Ranbaxy have a combined field staff of about 9,000. Once the merger is completed, many of the sales personnel will end up covering the same doctors, especially in the speciality areas. For Sun Pharma’s plan to turn around Ranbaxy with the operating synergy will have to trim the field force and integrate its supply chain.


Layoffs in the sales force can only help to save on salaries and overheads by way of lower cost of travel, prescription promotion and administration costs. To address all these adverse and sensitive issues may not be that easy for the company management for some years.