Biocon-Pfizer Breakup: Why Diabetes Alliances Don't Work for Indian pharma?

In a very surprising move, Pfizer and Biocon announced today that they have called off their 17-month old commercialization alliance for generic insulin. “The companies have agreed that due to the individual priorities for their respective biosimilars businesses, it is in their best interest to move forward independently,” said the press release. This was followed by many tweets from Biocon CMD Kiran Mazumdar-Shaw saying the parting has been “amicable”, clinical development of biosimilars is on track, Glargine global Phase I nearing completion, etc.

It’s still a million dollar question what went sour in the relationship – between the world’s biggest drug maker and India’s largest biotech firm.

Biocon says the priorities changed on both sides and in the absence of any plausible reason, sources are raising the issue of “quality” and “missing systems and processes” at Biocon’s end and of “confused” strategy at Pfizer’s.

Analysts are busy calculating the costs on both sides. For one, Biocon will certainly not get all of $350 million of the deal amount, let alone the several hundreds of millions it could have made in royalty. It will have to search afresh for new regional partnership in marketing its insulin biosimilars; it is already scouting for a new partner for its oral insulin (that was not part of the Pfizer deal) that failed to meet the final endpoints in its Phase III trial last year.

For Pfizer, which has said clearly that it is not abandoning diabetes portfolio and will continue to be active in their “own research and business development efforts for diabetes, which represents a huge unmet medical need”, getting a solid foothold in India remains as unresolved as it was 17 months ago.

Hopefully, we’ll eventually know what didn’t work in this partnership but for now I can’t help but think why diabetes partnerships for Indian pharma run into trouble?

The first kid off the block was Dr Reddy’s Laboratories which out-licensed two diabetes molecules to Novo Nordisk and Novartis in 1998 and 2001 respectively. That class of molecules – insulin sensitizers – was initially promising but later the big pharma dropped it and that brought an end to DRL’s innovation in diabetes drugs. In 2008, Glenmark faced a similar situation when Eli Lilly suspended work on a diabetes drug that was out-licensed by Glenmark.

Smarting from these setbacks, and also the raised bar that the US FDA has placed on approval for metabolic drugs (diabetes and cardio vascular disorders), both Glenmark and Dr Reddy’s have exited this therapeutic area. Though it’s another issue altogether that as diabetes and cardiac disorder patient populations grow, esp in India, even the biggest drug companies are shying away from developing new drugs for these diseases. The new rules slapped by the FDA just don’t make the proposition attractive.

So do such broken deals!

4 comments to “Biocon-Pfizer Breakup: Why Diabetes Alliances Don't Work for Indian pharma?”

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  1. Disclaimer: I cannot speak about the specifics of the Pfizer-Biocon, DRL-Novo Nordisk, DRL-Novartis and Eli-Lilly-Glenmark partnerships. But from the little I know, I can only venture to speculate about the following:
    Although the same set-up exists in Indian pharma as abroad in terms of quality assurance-quality control (QA-QC), six-sigma practices etc, the stringency with which systems are monitored and rules enforced is quite different between the Western world and India. Sure, things happen in other countries as well but the degree and the impunity with which the culprits get away is quite different.
    A QC employee who rejects too many batches by being too picky or too black and white in their thinking will find themselves out of a job quite soon. Quality control is a tricky affair—both loyalty to one’s professional code and to one’s bank account are to be balanced.
    In spite of the number of years that multinational companies (MNCs) have spent in India, living in five-star hotels and flying around in business class and holding meetings in posh conference rooms fitted with the latest technology will not prepare them for the stark reality that lies just behind the closed doors.
    US-FDA can come and inspect facilities and certify them to be suitable for manufacture of materials and formulations that will be exported to the US, but maintaining them that way day after day instead of only doing a dog and pony show on the days that these visits take place, requires a different level of dedication to quality and a different kind of fear for the law than what exists in most Indian companies.
    One wonders why MNCs cannot see things for what they are –after all, they are not stupid. But I suppose people see what they want to see and when these MNC employees want to push the huge Indian market and the potential business gains down their bosses’ throats, they don’t see much beyond the profits. When the going gets tougher and people realize that they will be left holding something rather unpleasant that they never dreamed they would face, alliances are called off.
    I remember this funny anecdote by a colleague who was head of the quality control department of an Indian company when an (Indian) FDA official came to inspect his facilities and check out his documentation. Orders from the higher-ups were to take the official to the company’s plant that was some 2 hours away from where this fellow sat and to which place, my colleague was asked to send the junior-most female subordinate to keep the official occupied.
    Random documents that were not of the official’s interest were dumped on her while she was plied with beverages and snacks and told that the others were on their way through a lot of traffic. Changing dates and fabricating QC reports so that it looked like batches had been tested and had passed when they hadn’t was customary for these people as it is for many people.
    Where new drug discovery is concerned, things are a lot stickier. The whole human body is a complicated, intertwined mess that makes choosing suitable targets to treat diseases much harder, that is, without triggering adverse effects that hit other systems in the body. Sometimes, the traditional set-up of in vitro testing before in vivo testing can only reveal so many problems in the hits (the molecules that are chosen to proceed through the different stages of drug discovery).
    There may well be some unpleasant surprises when the molecules are tested in animals and for their pharmacokinetic (how they will be absorbed, metabolized [processed] and excreted from the body) and for their toxicity profiles. And the longer it takes to catch these unpleasant surprises, the more is the expenditure in studying those molecules. To then admit that they are not as good as one would have hoped is highly likely to irk the people investing money into and expecting gains from the process.
    As a former moronic colleague said glibly in a meeting, “India does not have as many resources as the developed world has. We cannot afford to admit that we have spent money and time chasing useless things.” The true moron that he was, he had no answer to why India should not be more careful in checking whether the things she chases are worth the few resources she has (versus the developed world) rather than carelessly chase useless things for the sake of chasing them.
    For one thing, the US-FDA is found to be a pain in the neck by even companies in the Western world. Its demands had not made it pharma’s best friend (nor should it be) and its approval of any drugs or fast-tracking of any testing makes headlines in the pharma world. Naturally, a chalta-hai attitude would hardly find the US-FDA more friendly.
    Diabetes and cardiovascular disease are scourges of modern life. Besides genetics, every careless bite, every superfluous morsel of a transfat or sip of a sugary drink as we loll on the couch in front of the TV will raise our risk of becoming diabetic and of also clogging our arteries with plaque. Nature finds a way to set the dominoes falling. Finding drugs that neatly hit one target and not cause adverse effects on another, is sometimes a fool’s errand in itself. To be careless while doing it is an even bigger one.
    Don’t always look to the guys in the white coats for help, listen to your grandma (or someone else’s sensible grandma). Don’t eat more than you will need, don’t spend more than you earn, get regular exercise, eat your fruits and vegetables, don’t eat too many fried things and learn not to worry about what you cannot control.

  2. Pfizer is cutting its losses here. Insulin is of one of the oldest biotech drugs and profit margins on its generic version is already low and will get lower as patents expire and more competitors come.

  3. That’s because it’s not a marriage of equal partners!

  4. sunit mehrotra says: -#1

    i wonder if any divorce is ever amicable

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