"Innovation is the key in this business. And in India, we are innovative in imitating others. That's the talent we have got," admits KV Balasubramaniam, managing director, Indian Immunologicals. Running one of the top 10 animal health companies in the world, he strongly believes that there's a huge talent pool of researchers and genetic engineers who can do a lot better for the community. And once explored, India would surely become more prominent and there would be a huge demand in the field of biotechnology, he confirms. Good manufacturing practices have to be strictly adhered to during production and products should conform to the standards laid. Citing few other key points, he spoke to Sunitha Natti of CyberMedia News about IIL's expansion and future plans.

Indian Immunologicals is the largest manufacturer of FMD vaccines. How did you manage to become one?
IIL has emerged as the largest manufacturer of Foot and Mouth Disease (FMD) vaccine in the world on account of a strong domestic base (we have a market share of 80 percent of the large Indian FMDV market) and because of our emphasis on exports. This has been helped, in good measure, by our ability to give quality vaccines at a very affordable price, apart from constant upgradation of technology. IIL is also the largest supplier of the FMD vaccine to Food and Agriculture Organization (FAO).

A leader in the animal health care products, how have things changed for IIL?
When we started in 1983, National Dairy Development Board (NDDB) felt the need to serve the farmers ambit and launched the products at a very low cost. We were able to bring down the cost of the vaccines to as low as Rs 3.50.

The company remained a one-product company till it set up its plant in Hyderabad in 1989-90. We realized that we needed to work on other vaccines. In 1994-95, we expanded on the vaccines portfolio. Apart from that, we also saw the need to tune to the changing markets as in this knowledge-based industry, we have to value people for the contribution that they make. Today, we are more performance-driven and innovative, besides being result-oriented. We believe in constant research and coming out with new products.

What has been your experience in India and globally? Has the world begun to recognize IIL as a great vaccines manufacturer? What is next on your agenda?
The world has slowly begun to recognize the Indian vaccine manufacturers as the ones who have the ability to fill the gap left by multinational companies who no longer find the mass market of pediatric vaccines profitable to operate. In IIL's case, it is certainly being recognized as a competent veterinary vaccine manufacturer. However, one must understand that the veterinary vaccine market is quite limited, unlike the human vaccine market, accounting for only $2 billion out of the $10 billion vaccine market. IIL has been recognized as a research-driven technologically competent manufacturer with the ability to respond to large requirements in a short duration.

Our plan is to move into the human vaccines market. We would like to bring better value to the market with our proven ability of manufacturing technologically superior vaccines at affordable prices. We already operate the "Abhay Clinics" on franchisee basis and we will build on this successful business model.

What is the standing of the Indian animal health care companies in the global scenario?

As mentioned earlier, the human and veterinary vaccines market is around $10 billion. This comprises of $2 billion in animal health, growing at 4 percent per annum and $8 billion in human health growing at 9 percent per annum. The Indian market is very diminutive. The developed countries account for 85 percent of the total pharma industry and the Indian market is about $150 million, with the veterinary segment accounting for $20 million.

There's no comparison in terms of market share but when assessed in volumes we have reasonable numbers. But prices in the developed countries are much higher and that's what makes the difference.

In the vaccine industry, there are four companies that are dominating the global market. They operate in high-innovation driven, high-price markets. But we operate in a totally different paradigm. We are not innovators but imitators. However, we are now getting good on the innovation side too. We develop vaccines, which are already in the market and at affordable prices. Thus, although the volumes are high, because of low prices the value of the market gets limited.

Can India become the vaccines hub of the world? Are there any bottlenecks? What are the issues and concerns and how should India position itself?

India can become a major vaccine producer of the world provided it is able to effectively tap the growing human vaccines market, especially for the pediatric segment, such as Hepatitis B, Hib and influenza and focus on the now emerging Asian markets.

In my view, the bottlenecks are only in terms of regulatory barriers in different markets and not so much in our scientific capabilities. Apart from this, it is also important that we learn to market our vaccines as technologically equivalent, if not better, to those produced by the western companies and establish ourselves as reliable suppliers of quality vaccines. Therefore, the issue is how the Indian industry positions itself on technology and how companies are able to gear up their marketing abilities in the international market.

Can India become a preferred outsourcing destination for animal healthcare companies abroad?

When we say outsourcing, it could mean manufacture or research. In both cases, it's the affirmative. Costs are comparatively low. It's about one-third lower in manufacturing and one-tenth lesser in research. We are transforming into a global player and the ethical aspects are being addressed and regulations are falling in place. So this is something that's good and one should make the most of it.

What are your current capacities for vaccines and what are your key achievements?

We presently have a capacity of 60 million quadrivalent doses of FMD vaccine, 30 million doses for other veterinary vaccines and 3 million doses of human rabies vaccine. We are creating manufacturing facilities for Hepatitis B, Hepatitis A, DPT, measles etc. with world-class capacities.

Our most significant achievement has been in creating a highly talented and committed research group which has been able to develop several veterinary vaccines, most of them being the first in the country and the only few in the world. This has been backed by a strong marketing force, which has helped build large market shares for these products, mainly through a value proposition of affordable immunity, and backed by sound service support. We are also in the forefront of research and development of DNA and monoclonal antibodies for therapeutic uses. We are a niche player in vaccines, focused on this business and a successful organization, which balances the social commitment of NDDB and the demands of a profitable pharmaceutical player.

What are your plans for the future?
We are building new facilities for manufacturing products mainly for measles, DPT, Hepatitis etc. By March 2005, we would be launching Hepatitis-B vaccine commercially. This will be followed by the other vaccines.

Any plans to look beyond the existing market base?
Last year we could not do well, particularly in the area of exports, as we did not have a demand. But this year, we are very optimistic. Our thrust is in South-East Asia. The big markets for veterinary vaccines are Asia, South America and Africa. With good partnerships, there's a lot of scope for the export of veterinary vaccines in South America and Africa.

How is the company geared up for the impending product-patent regimen and increased overseas competition?
We have both advantages and disadvantages of the current patent regime. It has helped develop a competitive industry. However, if we have to compete globally, we have to respect international laws. The advantage in India is we have a very low-cost market. The vaccine prices in India are much more lower than any of the Western countries. In the next few years, you'll see a lot more Indian companies exporting vaccines.

India would soon become a global hub for the vaccine development, as it can understand the technology very well. We are much better than the other developing countries including China. We are already on the roadmap to be the global hub. The reasons for this could be the huge domestic market, developed-pharma industry that can provide materials at a low cost, products which can be developed and produced at reasonable prices and a good pool of scientific talent.

What's hindering the animal health care industry in India?
Primarily the sector is small. About 85 percent of the population in India does not have access to good quality healthcare. Compounding this is the meager public expenditure being spent on this. You can well imagine the plight of the animals.

In an effort to fill in this gap, we have launched a programme by developing vaccine centers under the operation "Pratirodh" programme. It provides vaccination services for farmers at affordable prices on a systematic basis. We would be expanding this programme in the next three to four years.

For the current fiscal year what will be your R&D investments and turnover?
Our annual turnover for the year 2003 stood at Rs 67 crore and we are targeting Rs 100 crore this year. And the investments in R&D would amount to five percent of the sales turnover figure.