“’Current financing climate unable to support large vision models”’

How has the business model of the company changed since inception?

Villoo Morawala Patel

Avesthagen began with a model based on R&D and innovation and focussed at the convergence of food, pharma and population genetics leading to predictive, preventive, personalised healthcare and food security. We were ahead of our time and would have still continued to break path as a disruptive model if the markets had not let us down in 2008. The current financing climate is unable to support large vision models and now that we are product ready we have decided to just move the products out into three companies, dedicated to pharma, nutrition and agriculture. Avesthagen will continue to move forward as an R&D focussed on preventive and personalised healthcare, The Avestagenome Project and Environment Adjusted Crops. So it is not really a demerger so much as a spin-off opportunity.

Will all the entities be incorporated outside India?

With regards to our spin offs, there is no hard and fast rule. At the moment we will have to wait and watch for the best situation for our company. We will go where we get the best quality and quantity of funds, operate where we get the best human resource and sell where we get the best price.

While over 50 IPOs have raised about $ 7.5 billion in the US in 2013 why have Indian investment firms not been able to match up?

50 IPOs across all kinds of sectors in the world’s biggest economy – India is nowhere. In fact we have a lot of hard work to do before we even think of a comparison. For example, India did not even get a mention by Jamie Dimon in the recently held JP Morgan Healthcare Conference. We do not encourage innovation in India, we do not support companies that are riding through a tough time. In the US, there is a respect for entrepreneurship and risk taking and even for failure. Not so in India. It is by just determination (that) we hang on. Yes, some of us are die-hard entrepreneurs and we don’t give up even in adversity because we are committed to the nation and to its people.

The company raised money through PE and VC funding, was planning to have an IPO in 2008, the recent demerger move is also to raise capital. Do you think that Indian biotech, particularly start ups, are struggling to raise funds in India? What reasons do you see for this?

Yes it is to raise capital. This industry cannot be built in a Rs 5-15 crores. To be really globally competitive we need larger financing rounds of 20-30 million Euros to have any significant impact. The Indian banks and PE and VC is nowhere near that. The Indian IPO market is perceived by the bankers to be non-receptive to the mid stage biotech IPOs. I have more faith in the Indian public so if we could find a brave banker willing to take a mid – stage biotech with good products to the market, we are ready to list.

APAG has eight biosimilars in the pipeline worth $40 million. Apart from Avdesp (Darbapoetin) and Avent (Enbrel), what are some of the other classes of biosimilars? How have the guidelines released last year in India helped companies?

Avesthagen has eight biosimilar cell lines that address a $ 40 billion opportunity post patents, that will be moving into a new company. Besides Avdesp and Avent, the other molecules address monoclonal antibodies targeting cancers. Yes the guidelines are clear and favourable provided we get funded for the clinical trials. Most guidelines are arriving at a sweet spot and that is good analytics to prove biosimilarity and ability to scale up. We do not have any products in the market however we are seeing early licensing deals for distribution rights. There will be a few challenges on the way ahead and this will need to be overcome. 

Avesthagen has stressed on a strong focus on innovative R&D. You have been unequivocal about MNCs misusing India’s patent system, what then are your views on the Indian Patent Act and decisions which have come under sharp attack by the US?

Yes we have a strong focus on R&D and innovation. With regards to the patent system I have nothing to say pro or against MNCs or Indian companies. In this extremely cut throat game of pharma, I have seen Indian companies do much worse than the MNCs so its about the pot calling the kettle black. To some extent I have lost faith in our system where there is jungle raj and people make claims and counter claims. And there is no decision making and sitting on a fence all the time. Its boring and detrimental. I am not interested and I just want to be allowed to do good work.

With Environment Minister M Veerappa Moily considering approval for GM crops, how do you see the move for the bioagri sector?

We have to get good science based products to the market. So I am all for the release of “environment adjusted crops” to the market as we have so much to do with our marginal land. Care and control of course needs to be put in place. But let’s get a good system in place with the NGOs also respected for their opinions and suggestions.

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