How many of today’s start ups will remain relevant a few years down the line? What are the realities of surviving in the pharma industry today? What are the business models in vogue today which have evolved in response to these challenges? Over the next year, we will profile promising companies and their leadership teams to answer some of these questions. We hope that at least some of these will be part of the next crop of winners in India’s life sciences universe. In this issue, we spotlight two companies with very different growth strategies.
Dr Rama Modali, a molecular biologist from National Institute of Health (NIH) and National Cancer Institute, founded BioServe in 1989 in Washington. It set up India operations thanks to venture funding from Ventureast and was reportedly the first company to provide DNA synthesis, DNA sequencing and related services in the country. Over 12 years of operations, BioServe India, headquartered in Hyderabad’s Genome Valley, evolved from being a molecular kit manufacturer into a state-of-the-art genomics services provider, to top Indian pharma and biotechnology companies as well as research labs and hospitals. Further proof of its worth came this August, when it was acquired by US-based Cancer Genetics. Now as Cancer Genetics India, the company is slated to evolve further along this path, offering cutting edge biomarker analysis and oncology diagnostics services. In a country where more than one million new cancer cases are diagnosed each year, there are many more companies offering similar services, so will Cancer Genetics India be able to leverage its legacy? The management is betting on labour arbitrage and market demand and hoping that the use of genomics in therapy will change the way medicine is being practised in this country. There are signs that this is already happening, but will the cost of such cutting-edge services, in a predominantly out-of-pocket market, prove to be a stumbling block? The company does have a solid reputation on the research side as well, so we’ll have to wait and see.
And at the other end of the spectrum, we profile Akumentis Healthcare, just four years old but already anointed as the ‘fastest growing Indian pharma company’, rising steadily up AIOCD’s Top 50 ranks. Thanks to an aggressive sales strategy in carefully selected niche therapeutic areas, and relying completely on contract manufacturing, the company exemplifies a new breed of pharma entrepreneurs who prefer an asset-lite approach to the sector. But will this strategy suffice as it comes up against more established brands, some of them enjoying ‘heritage brands’ status? As it moves up the rankings, it is also a matter of scale: at the top of the AIOCD rankings is Abbott (including Abbott Healthcare and Novo Nordisk) which has a MAT of Rs 5029 crores. At the 38th position, Akumentis with a MAT of Rs 401 crores seems aeons away but as the adage goes, Rome was not built in a day.
A more serious issue is marketing ethics. With a more aggressive customer, the much maligned nexus between pharma companies and doctors is getting repeatedly exposed, on prime time TV as well as in other media. Will companies like Akumentis and its peers stay on the narrow path or devise more creative means to climb up the sales rankings? And lastly, its reliance on contract manufacturing exposes it to risks from the quality perspective. Quality issues have plagued the biggest names in the Indian pharma, the most prominent being Ranbaxy Laboratories. In early November, the US FDA revoked tentative approvals given to Ranbaxy for exclusive marketing of generic Valcyte and Nexium as the manufacturing facilities mentioned in the company’s applications were later found to be non-compliant to US FDA norms.
Do write in and tell us which companies deserve to be in the next edition of ‘Rising stars’.