‘We have to create an ecosystem where companies are encouraged to constantly pursue next generation products’

According to a white paper by Sathguru Management Consultants in association with CII on vaccines, India is at the cusp of a new era in vaccines as there is a need for self-financing of immunisation programme in the near future. Pushpa Vijayraghavan, Director, Sathguru Management Consultants, in an interaction with Viveka Roychowdhury, says that there is significant scope to make the pathway for vaccines more efficient

Why have traditional big Indian pharma players not entered the vaccines segment? Do you see some late entrants and if so, what are the triggers for this interest?

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Pushpa Vijayraghavan

India has historically nurtured greater strength in chemistry as compared to biotechnology. All biotechnology ventures have been dwarfed by larger pharmaceutical companies, not just in India but even in the global landscape. It is more so in India given the chemistry dominance.

The vaccine industry has been largely composed of Indian biotech companies (such as Serum Institute of India, Bharat Biotech, Shantha Biotech) and a very few pharma companies with a common interest in biotechnology (Panacea and Biological E) and multinationals with global presence in vaccines (MSD, Sanofi, Pfizer et al).

The industry grew to approximately $1 billion in 2015 with a robust CAGR of 25 per cent between 2011 and 2015. As the industry grew in size, it has attracted attention of larger Indian pharma companies and continues to do so. For instance, Lupin has been marketing certain MSD vaccines for the Indian market and Wockhardt has been importing and marketing the varicella vaccine. The more recently announced marketing collaboration between Cipla and Serum Institute brings together notable segment leaders from the Indian vaccines and pharma ends. Amid this landscape of pharma companies that have engaged in marketing efforts and collaborations, Zydus Cadila stands out as one of the pharma companies which has invested more deeply in the segment with an extensive focus on product development and pipeline, manufacturing and markets. Zydus Cadila also enjoys an R&D edge, given the backbone of platform technologies and research strength gained through the acquisition of Etna Biotech (an Italian company), Crucell’s vaccine R&D arm. Aurobindo Pharma has also entered the segment through a strategic investment in a pioneering vaccine venture, Tergene Biotech. Given the significant growth potential, we perceive that such interest from cash rich market pharma companies will only expand.

The Sathguru paper says, ”Focus on strong technology foundation has been the key enabler for success of the Indian vaccine industry and we would like to highlight the criticality of ensuring this strength is intensified in an appropriately rewarding ecosystem.’ What kind of incentives would you recommend?

To ensure sustained competitiveness, we have to create an ecosystem where companies are encouraged to constantly pursue next generation products and enjoy technology-led global market leadership. This calls for attention to several elements:

  • Larger quantum of non-dilutive funding for R&D and product development so that certain amount of technology de-risking can be accomplished (common in EU and US where extra mural grants amounts are more substantial).
  • R&D tax breaks and fiscal incentives that are globally benchmarkable
  • Rewarding private markets without the threat of price control. Cross-subsidisation is important in vaccines where public health supplies are at extremely affordable pricing. All vaccines covered under UIP are provided free of cost to all citizens and this negates the need to swing the sword of price control as a threat on vaccine companies
  • Efficient public procurement system so that there is greater market maturity in national procurement systems and reward for innovation is easier to realise for Indian companies.

What are the regulatory changes required to eliminate technology gaps and accelerate path to market for vaccines produced by Indian companies?

There is significant scope to make the pathway for vaccines more efficient. Facilitating an accelerated commercialisation pathway is critical for companies to realise value on their investments as well as for the government to be able to procure important life-saving vaccines from Indian companies.

As of now, all vaccines are classified as new drugs even if they are follow-on products to currently approved vaccines. There are multiple agencies involved in the regulatory process and the overall timeline for product approval is very stretched. For instance, through the CII position paper, we were able to highlight the inputs from the responding companies that on an average, waiting period for joint site inspections has been about four to six months and a similar range of waiting period for Form 29 issue has also been indicated.

‘Indian UIP has been supported by GAVI since 2002. India begins its transition towards self-financing its vaccine programme from 2017 and GAVI has recently announced funding support of $500 million for the period 2017-2020 after which India will completely graduate out from GAVI support. In order to actualise the set immunisation goals in the near term, in the base case scenario, the government spend on immunisation needs to be increased three fold.’

How will the Indian government fund the UIP post 2020?

Once India graduates from GAVI support, the entire immunisation programme will be funded by national funding. In this context, it is encouraging to note that the recently approved National Health Policy 2017 reflects the intent to raise healthcare funding to 2.5 per cent of GDP.

What have been the outcomes so far of Mission Indradhanush?

As per the ITSU immunisation dashboard, the nation’s full immunisation coverage stood at 87 per cent as at December 2016. The effort is ongoing but substantially higher attention is required in areas beyond routine immunisation – strengthening health systems, continuous cold chain infrastructure etc.

If Made in India vaccines would be an affordable option, how come scale-up capital and funding support of substantial quantum for vaccine developing companies is still lacking? Where will this shortfall come from?

The shortfall is currently met by industry as well as philanthropic funding from global sources as well as global procurement agencies. The challenges is hardest on companies developing complex and high investment pipeline products and especially younger ventures. The capital intensive and rather long product development cycle implies that no ventures will be able to cross the valley of death unless the funding gap is bridged.

What is your opinion on the vaccines that are included and should be included in the UIP? How should this choice be made?

Beyond pneumococcal conjugate vaccine (PCV) and inactivated polio vaccine (IPV), the Government has already announced that HPV will also be included in UIP. It is important we ensure HPV inclusion is done in a timely manner and IPV is expanded to three doses on UIP (vs the one dose currently announced). Beyond these, it is important we create a robust and responsive surveillance system to identify emerging infectious disease threats and proactive protect against them to reduce impact of epidemics. Dengue could merit consideration if there are more effective vaccines developed. Additionally, campaign vaccination for cholera warrants consideration. Lastly, as stipulated in the NHT 2017, it is important we have strong programmes to protect against zoonotic diseases, an emerging and looming threat.

How are vaccine makers impacted by the pricing regime as they are included in the NLEM?

The inclusion of vaccines in NLEM is unwarranted and is a strong deterrent for industry investments. The core objective of the NPPP of ‘ensuing availability of required medicines at reasonable prices’ doesn’t apply to vaccines given a specific programme for universal vaccination, the UIP. Under the UIP, all citizens have free access to vaccines included in the programme. Hence, the concern of access doesn’t arise in the case of vaccines and private markets largely cover discretionary vaccines (six-in-one, varicella, meningitis etc) are haven’t been considered by the Government as high public health priorities. All Indian companies supply vaccines for the UIP at very nominal prices based on government tendering process. The private market provides cross-subsidisation opportunity and financial sustainability to the industry. Creating the looming threat of price control is unnecessary and only serves as a negative message to the industry that freedom of pricing in private markets could also be curtailed. In a high-capex industry such threats serve as severe investment deterrents.

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