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November 25, 2006

Indian pharma cos. strike more drug discovery deals with MNCs

Businessworld has a cover story on the new drug discovery partnerships being created between Indian life sciences firms and MNCs.
Last week, Nicholas Piramal signed an agreement with the UK drug discovery firm Morvus Technology. Nicholas Piramal will use the technology of Morvus to develop drugs in areas such as cancer, diabetes and arthritis. We could shrug it off as a routine development, but for two reasons. One, it is the third R&D collaboration agreement that Nicholas Piramal has signed with an overseas company in the last year and a half. Two, it is the sixth R&D collaboration between an Indian and a foreign company within the last three months. Several more are being negotiated and will be signed within a few months, say sources. Have the Indian pharma and biotech companies found a new strategy for drug discovery and development?

...Last year, Nicholas Piramal made a strategic investment in the Canadian firm Biosyntech, a company that makes gels for regenerative medicine. This year, Dr. Reddy’s formed two partnerships with UK-based firms: with Argenta for developing Asthma drugs, and Clin Tech for commercialising its anticancer molecule. Last month, Syngene, the services subsidiary of Biocon, signed a deal with the Swedish firm Innate Pharmaceuticals to collaborate on drug development. Then came the Nicholas Piramal and Connexios deals.

As we wrote this, more partnerships were being discussed and a few would be announced soon. Nicholas Piramal is discussing another partnership. Two services companies, Advinus and Jubilant Biosys, are also set to sign collaboration agreements soon. All these partnerships involve one novel thing: adding to the work of someone else with no clear idea of the returns. The money being spent is small in some cases and large in others, but for the Indian company the conceptual leap involved in a real collaboration has been big every time. It is now clear to many Indian companies that doing drug discovery research alone is probably not going to give good results, unless one is very lucky.

Arun Natarajan is the Founder of Venture Intelligence, which tracks private equity and venture capital in India and Indian-founded companies worldwide. View sample issues of Venture Intelligence India newsletters and reports.