Drug multinationals are treading with caution on the molecules to license from Indian companies, meaning Glenmark’s deal with France’s Sanofi may not be a forerunner to a clutch of similar agreements benefiting local firms.
Indian pharmaceutical companies outlicense a drug under development to foreign players with deep pockets as it is an expensive process. The latter undertakes trials to develop the drug.
The foreign partner usually makes an upfront payment, while the outsourcer receives money in various phases (called milestone payments) as the molecule clears each stage of development.
Besides this, the multinational is entitled to exclusive marketing rights in certain developed territories if the drug makes it to the market. Such deals benefit both the parties with one not having to incur high expenditure and the other getting a molecule at a low cost. However, there is a major risk of the molecule failing clinical trials or not making it to the market.
Glenmark has outlicensed a drug that seeks to treat Crohn’s disease and multiple sclerosis to Sanofi in a deal that will yield the domestic firm $613 million.
More such deals can be in the offing with many domestic firms developing new chemical entities (NCEs).
However, observers and industry leaders are advising caution. “The licensing environment has become very challenging because a lot of big firms have changed their strategic intent. Many are moving to branded generics and different business models. There is a huge amount of downsizing happening in big drug firms. They are bringing down their research capabilities, lots of sites closing down and scientists are getting laid off at many big companies,’’ said Glenn Saldanha, managing director and CEO of Glenmark.
He said a company involved in drug research should not only make significant investments before it could see returns but also needed to be patient.
Speaking to The Telegraph, Surajit Pal, pharma analyst at Elara Capital, said foreign drug firms were extremely cautious in striking licensing deals, particularly at the initial stage as the prospect of the drug hitting the market was not clear.
According to experts, only a handful of molecules out of 1,000 make it to the market.
Pal said even in GBR 500, which was outlicensed to Sanofi by Glenmark, it is too early to count the potential revenues. “With high failure rate in initial phases of clinical trials, we believe that probabilistic scenarios will be useful only when the molecule reaches phase-III trails.’’
A senior official from a domestic firm said companies could either outlicense their drug at an initial stage of clinical trials or as close to the market as possible.
In the first case, there is a risk of the drug failing the trial. In the second case, companies can obtain a better valuation as there is more data available. “We have seen in the past companies outlicensing drugs that were at an initial stage of trial. However, they were not successful in clinical studies,’’ he said.
Source: http://www.telegraphindia.com
Indian pharmaceutical companies outlicense a drug under development to foreign players with deep pockets as it is an expensive process. The latter undertakes trials to develop the drug.
The foreign partner usually makes an upfront payment, while the outsourcer receives money in various phases (called milestone payments) as the molecule clears each stage of development.
Besides this, the multinational is entitled to exclusive marketing rights in certain developed territories if the drug makes it to the market. Such deals benefit both the parties with one not having to incur high expenditure and the other getting a molecule at a low cost. However, there is a major risk of the molecule failing clinical trials or not making it to the market.
Glenmark has outlicensed a drug that seeks to treat Crohn’s disease and multiple sclerosis to Sanofi in a deal that will yield the domestic firm $613 million.
More such deals can be in the offing with many domestic firms developing new chemical entities (NCEs).
However, observers and industry leaders are advising caution. “The licensing environment has become very challenging because a lot of big firms have changed their strategic intent. Many are moving to branded generics and different business models. There is a huge amount of downsizing happening in big drug firms. They are bringing down their research capabilities, lots of sites closing down and scientists are getting laid off at many big companies,’’ said Glenn Saldanha, managing director and CEO of Glenmark.
He said a company involved in drug research should not only make significant investments before it could see returns but also needed to be patient.
Speaking to The Telegraph, Surajit Pal, pharma analyst at Elara Capital, said foreign drug firms were extremely cautious in striking licensing deals, particularly at the initial stage as the prospect of the drug hitting the market was not clear.
According to experts, only a handful of molecules out of 1,000 make it to the market.
Pal said even in GBR 500, which was outlicensed to Sanofi by Glenmark, it is too early to count the potential revenues. “With high failure rate in initial phases of clinical trials, we believe that probabilistic scenarios will be useful only when the molecule reaches phase-III trails.’’
A senior official from a domestic firm said companies could either outlicense their drug at an initial stage of clinical trials or as close to the market as possible.
In the first case, there is a risk of the drug failing the trial. In the second case, companies can obtain a better valuation as there is more data available. “We have seen in the past companies outlicensing drugs that were at an initial stage of trial. However, they were not successful in clinical studies,’’ he said.
Source: http://www.telegraphindia.com
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