We can agree on two things. Biocon is a superstar. And so is SII.
Biocon is a poster child of biotech innovation in India. Decades of unwavering passion, commitment to a science that India has no skill in, and enduring financial patience, has brought it in the league of a big few, like Amgen. While it is nowhere near inventing new drugs, it is possibly halfway there. What’s important is that its science has received validation from regulatory agencies that matter. Its ability to manufacture new forms of insulin at global standards and scale is remarkable. This is one of the world’s oldest drugs but has remained a monopoly of two or three big companies for nearly a century. Biocon is busting that and how – with nearly three billion does already dispensed globally.
Serum Institute of India (SII) is already the world’s largest manufacturer of vaccines and by some reports, accounts for nearly two-thirds of the world’s vaccine use. A private company, it kept a low profile, maintaining a tight focus on child immunisation the world over – working closely with GAVI, UNICEF and the health ministries of the world. Until Covid stuck, who outside the industry would have heard of SII? It perhaps is a household name today, or nearly getting there. What remains vastly unacknowledged is the serious global impact that one organisation can have on the health of the world. That SII has remained fiercely independent is perhaps the biggest contributor to affordability and accessibility of essential vaccines in the southern hemisphere.
That two global superstars are coming together is a milestone event in the evolution of Indian biotech. What’s interesting about this alliance?
Let’s not invade each other’s spaces
SII has been working to get into biosimilars, novel antibodies and proteins on its own. It has not seen much progress despite having technical collaborations in these areas. Biocon is light years ahead, as we know. By taking a stake in the latter, SII gets a meaningful share of the value of a pipeline it aspired for but is late to the party. Similarly, for Biocon, vaccines would have been the logical expansion opportunity, given its scientific ability. It now gets access to a commercial portfolio and can bring immediate revenues.
A joint future pipeline
Biotechnology based sciences have many new frontiers that are opening to therapeutics and prophylactics – mRNA, CAR-T, fusion antibodies, novel conjugations, stem cells etc. – to name a few. There is merit in pooling together resources to explore this. Much of the raw materials used in biologically derived products are import intensive – media, bags, reagents. There is also merit in collaborating to indigenize this – as considerable global scale is available in both companies to back this. This “Atmanirbhar” theme is timely.
Devil is in the details
- Will Biocon be successful in commercialising the 100 million doses per annum it has access to? Most of the developing world depends on GAVI, UNICEF and national level health bodies to make these available and SII already services these channels successfully. It will also service the Covid vaccine alliance once exports are allowed to open up. It leaves the private trade channels available for Biocon to participate in – where opportunity exists mostly in the US and Europe. The more modern polyvalent and pneumococcal vaccine should be considerable scope here, however lengthy regulatory hurdles will not be insignificant even for the joint might of these two companies.
- No details of the proposed joint pipeline are available. One assumes that it may be a conceptual understanding presently. Who will invest how much, how will synergies be leveraged, which synergies will be leveraged – are currently unknown? Arguably the most exciting part of the collaboration remains a mystery
Managing perceptions and egos
Optically, without details of future pipeline and investments, it does appear that the alliance is a short-term fix to “revenue gaps” for Biocon. At the price of some “loss of control”. The companies should disclose more granular plans in the near term to prevent this perception from cementing. It’s also unclear why Biocon hasn’t taken a commensurate reciprocal stake in SII, which would have eased even remote “conflicts of interest” in future. Could that be a possible next step?
Both companies are professionally managed, founder driven organisations. They are run by flamboyant founders, who not only enjoy being in the limelight but are also known to speak their minds. Will they be able to strike the right relationship and governance that deals with issues objectively and proactively? The track record of Indian companies collaborating (other than outright M&A) is woefully inadequate to form a view.
The success of this alliance may depend as much on Founder Chemistry as it does on the science of Biology.
(Note: Chandru Chawla is Executive VP, Cipla and writes on management, leadership, environment conservation and human rights. The views expressed above are personal)