What are some of the process Research and Development initiatives that Dishman Carbogen has executed in recent times?

Mark Griffiths: We have a key skillset in the manufacturer of highly potent and highly active products, which started off as a nascent capability back in 2002 in one of our Swiss sites. It has grown to represent half of our activities commercially. We predominantly focused on drugs for oncology for the treatment of cancer, with a subset of technologies called antibodydrug conjugates or ADCs. These complex molecules are very potent and have a high toxicological index that requires special handling capabilities. They are a combination of an antibody, a potent drug, and a synthetic material to link them together.

Antibody-Drug conjugates are a real technology driver and are growing on HPLC chromatography for commercial products, but also utilizing things like SMB simulated moving bed chromatography. The cost of doing chromatography versus the speed it provides you in getting some market has been driving the fact that chromatography has become a commercial skillset rather than a development skillset.

That product business after quite a few years of little investment in R&D, we’re now putting a large emphasis on research and development to introduce new products to that portfolio. Those products address both nutraceutical and pharmaceutical needs. There are other areas where vitamin D and its analogs or spin-offs have real activity, in cancer and in the treatment of certain diseases. We are doing research in Holland and in India to develop new products. We are essentially a service business and also have certain elements of product business. We are covering both bases by continuing to innovate in our product business, but also continuing to innovate in our services and the capabilities that we have to address a customer’s needs.

So we bought a small facility in France about 10 years ago which really enabled us to learn and understand the market very well. We took it from a loss-making facility to a profit-making facility. Now we are investing significantly in a commercial manufacturing setup for the formulation of the oncology products and very difficult to do compounds under sterile conditions in France. A project that’s already underway is about a 40 or 50 thousand Euro investment, and that will enable us to address the customers’ needs and capturing more of the value chain. Micro reactors are also gaining more traction and we have developed expertise in microreactors. We are going through the validation of our first-ever process substantially developed on microreactors, which can potentially have a knock-on effect on our product business going forward.

There are a lot of international players who have made and moved into the Indian market what’s the kind of competition that you see?

Mark Griffiths: Carbogen Amcis was acquired by Dishman in 2006 and the strategy behind that acquisition was that Mr. Janmejay R. Vyas, the founder and Chairman of a company recognized that companies are not going to come to India or China direct to create their IP in the first case and he realized that he needed a high tech front end in India. Hence, he looked around the world for an organization that could provide that high-tech front end and gets him access to the biotech market. The principle behind it was that we have large capacity and capabilities in India and capturing customer relationships much earlier down the value chain tends to have the effect of locking in customers Carbogen Amcis did not have a large scale capacity and therefore was losing opportunities for projects that were going to be bigger than the capacity that we had in Switzerland.

The acquisition was from the Indian side to access more customers globally. So the principle behind the business is that we have a high-tech front end that has the ability to feed the larger scale capabilities that we have in Asia. The synergy allows us to develop the processes for customers and then take them commercially at a very large scale without changing different organizations. We do that in-house between the teams that exist in Europe and India and it’s a pretty well-trodden path now. The value proposition is that you can develop your compound in a safe country. From an IP perspective, you can lock in your IP and your patent. Then when you start to get into the commercial field and competitive you have the ability to maintain that level of expertise, but also to provide those drugs at a better value. So it’s offering that continuum of service from a milligram to one of the biggest 80 tons a year. In terms of being a full-service API manufacturer, there are probably only 5-10 companies in the world that have all of it together under one roof, under one ownership. That is the value proposition.

Talking about the services and capabilities of your organization, in terms of quality how do you see this market going in India?

Mark Griffiths: If we look at a global market and break down the demographic of the market, Oncology or cancer as a disease is both the largest single and medical need which is also the most diverse disease. All non -small cell lung cancer is the same as it is whether you are an Asian or European or North American. We aim at a suitable demographic market which financially benefits the business. We target our efforts for customers and also what customers are doing in terms of investment in areas of research. For example, China and Russia are the biggest countries that buy cigarettes. China has high cases of non -small cell lung cancer. It is a cost-conscious market, and from an R &D perspective, the development of brand-new technologies is still in its infancy.

The ability to sell expensive products at a high price is tough but that can change as the middle classes gain more traction in China.

Japan is a strong Oncology market with its vast smoking population. It is a high-value market as a hypochondriac nation. North America is another strong market. Big insurance companies, high average level of wealth compared to other countries in the world similar to Europe. The emergence of the middle classes, the strength, and the innovation in business generated by the middle classes in India are going to continue to drive growth in that area too. That’s one of the reasons why we have a highly potent footprint in our Ahmedabad pharmaceutical facility. We see that that market will continue to emerge as it relies on insurance policies and government-funded programs to introduce new drugs. The increasing middle-class sector brings more wealth comes into the country which enables them to buy medicines.

About personalized medicine, how cost-effective is it especially in a country like India?

Mark Griffiths: Personalized medicines for us means that you’ve taken a base molecule and formulate it into a series of different types and personalize the way that that drug acts for a particular patient or a subset of patients. So dermatologically applied drugs for skin cancer rather than taking a tablet might have more impact on the disease without the side effects

We can offer this in a domino logical sense, which is easier to apply.

There are two things, one is affordable for the patient itself and the other one is being affordable for the doctors and the clinics. Every patient admitted for a dose of chemotherapy is a cost to the hospital, especially a publicly funded hospital. So the personalization of some medicines actually helps to lower the cost of those medicines by restricting the need to having to go into a clinic to have the treatment.

In countries like the UK, where we have a huge publicly funded health service the ability to remove one and a half million people from hospitals is a big deal that saves a lot of money for the health service and makes that drug affordable to that public health service. So it works from both ways. The more the drugs are personalized, the more in countries like America and Japan will have the effect of lowering the price for other countries that don’t necessarily have that same fiscal profile. So there’s an interesting dynamic around it, and it depends on how you personalized.

Take for example human genome sequencing which is a breakthrough technology for the field of medicine & healthcare. This approach enables the medical fraternity to develop personalized medicines based on individual DNA print of a person and prevent an ailment disease from occurring than curing. In my view, over the next 20-30 years, personalized medicine will lead to paradigm shift in the healthcare & wellbeing on this planet.

For example, the biggest problem with COVID for India right now is that the health service, the public health service cannot cope. If you were able to remove 30% of the people from the hospital by having a treatment that doesn’t cure COVID but prevents it from taking place, you decrease the chances of going to the hospital, which will be highly beneficial for the healthcare services sector in India

Tell us about the manufacturing footprint & investments of your organization in India.

Harshil Dalal: Dishman had started investing way back in 1998 in the Bavla facility, which is the largest manufacturing site that we have across the globe. The owner of the company wanted to have a presence in the veteran world so that we could draft companies right at the initial stage of development of the molecule, those companies coming to India only for late-stage development or commercial manufacturing. So, post 2006, when Dishman acquired Carbogen Amcis we actually did a massive CAPEX investment, especially between the periods 2007 to 2011.

When the global recession hit everyone, we were actually caught in a situation where we did the CAPEX, and that was all based upon what our customers had told us in terms of the potential revenue that each of their molecules could yield us. And since our size was pretty small at that time, we had no choice but to actually do a CAPEX or just believing the customers’ words. The recession led many of the molecules which were in the development stage never saw the light of commercialization.

jasubhaimedia.com PHARMA BIO WORLD 30% of the people from the hospital by having a treatment that doesn’t cure COVID but prevents it from taking place, you decrease the chances of going to the hospital, which will be highly beneficial for the healthcare services sector in India.

Secondly, the FDA also came out with a law in 2010, which stated that only if the new molecules is significantly different from the existing one, that the patent life of that molecule could get extended. So, while the investments were made, the change in law led certain molecules in the development phase never progressed because these large Pharma companies were just doing our screening of the existing molecule in terms of the patent life. That was a really tough period for us. And we were at that point heavily dependent on the top 10-15 global Pharma companies which formed almost 95% of our revenue. So we started focusing on these small and mid-sized biotech companies as compared to just a large Pharma company.

Hence, in the last 4- 5 years there haven’t been any massive investments, or even if there have been investments, those have been backed by contracts that we have entered into with the customer. So currently the CAPEX that was announced 6-9 months back, or massive investment that we’re doing between Switzerland and France, are outlaying about 100 million dollars.

We formed a syndicate in Switzerland which is led by credit means and then another six banks who are going to fund us for this purpose. The funding is very cheap as compared to what it would be about 3- 4 years back. This CHF 100 million CAPEX is backed by either commercial orders or commercial contracts in place or anticipated orders and strong anticipation of orders that we are receiving from our customers.

So that’s a massive shift in terms of the way of thinking of the management that is actually helping us to improve our returns ratios, and those will keep on improving as we move forward.

Mark Griffiths: The last investment was by the previous owners of Carbogen of a 100 million dollars investment which is the largest investment to date. We’ve done incremental CAPEX on various things, the addition of technology, etc. From an investment perspective, venture capital money is pouring into Pharmaceuticals at the moment because of the profile of the health industry in general during this pandemic.

So unlike the recession that we saw in 2008, where money was drying up in the pharmaceutical industry, significantly in medium to small biotech mediums are small biotech which at the moment is driving the innovation in the Pharma industry, and those are the customers we target.

In the foreseeable future, how do you see the global operation plan of India progressing globally?

Mark Griffiths: We are strategically placed in the right countries from a geopolitical perspective and operational perspective with ability to address the demand from the emerging markets in Asia. There is a significant change in R&D culture in Asian countries as more and more professionals from China & India after their education in the West are moving back to cities like Beijing Shanghai, Mumbai & Hyderabad are setting up innovation start-ups. We are well positioned globally & technically to take advantage of the changing market dynamics.

Dishman Carbogen Amcis has the ability to provide a continuum of service and manage the value of that service right away from the start of a project where money is not the issue, speed is. The ability to manage the value and drive the value for the customers is critical. So we are working on projects in India that used to be done by developers in Switzerland but now our Indian team executes these. Offshoring this work to India is not only cost effective & profitable but it also frees up the time of our team in headquarters to focus on research to develop new products.