M&As dawn Indian biotech industry in July

Consolidation of the biotech industry is on the cards.

Novozymes acquires Biocon's enzyme business

First, one of India's leading biotech companies, Biocon Ltd has sold its enzymes activity to Novozymes, which has signed a definitive agreement under which it will acquire the enzyme activities of Biocon for a total consideration of $115 million (approximately Rs 470 crore). The purchase price has been agreed to $102 million, of which $97 million will be paid up front, and $5 million when certain business targets have been met. In addition, $13 million is related to committed service fees and lease payments to be paid over a period of upto ten years.

"The acquisition of Biocon's enzyme activities provides an important step for Novozymes in strengthening our position in the Indian market, which we believe has an attractive growth potential. The activities of Biocon have a good strategic fit to our existing enzyme business," said Steen Riisgaard, CEO, Novozymes.

"We are pleased with the sale of our enzyme business to Novozymes. Novozymes has the strength and focus to continue expanding the business, providing high quality enzymes for the Indian market," said Kiran Mazumdar-Shaw, Biocon's CMD. Biocon can now continue its strategic focus within the biopharmaceutical business.

The transaction is a purchase of the enzyme activities of Biocon, including the transfer of related tangible and intangible assets, liabilities and employees. Biocon's enzyme activities will be acquired by Novozymes South Asia, a fully owned subsidiary of Novozymes, where as the activities as such will be integrated into Novozymes' global enzyme organization. The continued production and formulation will happen at the Biocon site under lease and service agreements with Novozymes. Novozymes' existing establishment of R&D facilities in Bangalore will not be affected. While Biocon's enzyme's business in 2006-07 stood at Rs 95 crore, Novozyme's business in India was estimated at Rs 100 crore.

RFCL acquires Wipro BioMed

In another development, RFCL has announced that it has signed a definitive agreement to acquire Wipro BioMed, a leading provider of biomedical solutions. Wipro Ltd has reached an understanding with RFCL to transfer its biomed business which includes employees, assets, liabilities, operations, customers and partnerships.

The acquisition of Wipro BioMed is a part of RFCL's multi-pronged inorganic growth strategy to emerge as a globally respected company in the field of life sciences solutions.

The business operations of Wipro BioMed will be integrated with RFCL's diagnostics division - Diagnova. Wipro BioMed has 20 alliance partners in diagnostics, life sciences and medical systems businesses either as an OEM or as a distributor. "Looking at the promising growth opportunities which Wipro BioMed offers, we found this acquisition to be a great strategic fit for RFCL. This acquisition will enable RFCL to enter into the high growing segments of in-vivo diagnostics, fully automated clinical chemistry and hematology, and research solutions. Together with BioMed, RFCL will be able to achieve critical mass and emerge as key player in the $375 million market which is growing at a rate of 15 percent per annum," said Sushil Mehta, managing director of RFCL.

Avesthagen acquires Renaissance Herbs

Avesthagen has also announced its acquisition of 100 percent of the US dietary supplement company, Renaissance Herbs Inc. (RHI). The transaction is expected to be completed by the end of July. RHI is a fully-integrated supplier of proprietary nutritional products that are marketed on a global basis through multiple sales channels. The company sources its raw materials in India and South East Asia for processing in its facilities outside of Bangalore. The acquisition supports Avesthagen's bio-nutritional business strategy through vertical integration and access to key markets. Dr Villoo Morawala Patell, founder and managing director of Avesthagen, said, "We believe that this acquisition is highly synergistic for both companies."

The trend in the industry is clearly to consolidate core businesses and grow. One is likely to see further more deals during the year.

Biocon to develop biosimilar G-CSF for Abraxis

After selling its enzyme business to Novozymes, Biocon is strengthening its presence in the oncology segment. The company has signed an agreement with US-based Abraxis BioScience, wherein Abraxis will license the right to develop a biosimilar version of granulocyte-colony stimulating factor (G-CSF) in North America and the European Union.

Under the terms of the agreement, Biocon will receive an upfront licensing fee and following approval in the licensed territories, royalties from Abraxis BioScience. Detailed financial terms of the agreement were not disclosed.

"Abraxis Bioscience is an ideal partner for Biocon as we increase our focus on oncology. We are confident that both partners will realize success in attaining market leadership for G-CSF in their respective markets," said Kiran Mazumdar Shaw, CMD, Biocon Ltd. "The present licensing arrangements will certainly pave the way to other opportunities in the foreseeable future."

G-CSF is an haematopoietic growth factor that works by encouraging the bone marrow to produce more white blood cells. Therapeutic G-CSF is primarily used for the treatment of neutropenia, the lowering of the white blood cells that fight infections. Biocon has received regulatory approval from the Indian DCGI for the treatment of neutropenia in cancer patients and intends to launch the product in India through its oncotherapeutics division. "We are very excited to enter into this collaboration with Biocon. We believe that this partnership allows us to participate in the emerging biosimilars market and build a new platform for growth," said Patrick Soon-Shiong, chairman and CEO of Abraxis BioScience.

The biological activity of Biocon's G-CSF used in clinical trials was evaluated by NIBSC (National Institute of Biological Standards and Control), UK, which provides independent testing of biological medicines. The NIBSC found that the potency of Biocon's drug met the necessary requirements of a biosimilar G-CSF.

Biocon Q1 net at Rs 53 cr

Biocon has reported a net profit of Rs 52.8 crore for the first quarter ended June 2007 as compared to Rs 38.9 crore in the corresponding period last fiscal. Sales during the recently concluded quarter (on a consolidated basis) stood at Rs 270.8 crore compared to Rs 211.5 crore in Q1FY07. All business segments delivered robust growth. Biopharma performed particularly strongly. Margins in services were restrained by currency appreciation. Its branded products for nephrology, oncology and cardio diabetes performed strongly.

The company has licensed G-CSF to a global biopharmaceutical company for North America and the European Union. It also entered into exclusive agreement with Invitrogen to market insulin to the global cell culture market.

Biocon's discovery led research programs in particular Oral Insulin (IN105) and Anti-CD6 monoclonal antibody (T1h) continued to make good progress. IN105 completed Phase IC Human Clinical "Proof of Concept" trials. T1h will commence Phase II human clinical trials during Q2 FY08. In another development, Biocon received regulatory approval from DCGI for bio-similar Streptokinase and GCSF. Further, Biocon's subsidiary Clinigene moved its operations to a new, state-of-the-art, dedicated facility and Syngene commenced construction of the dedicated facility for Bristol Myers Squibb.

NASSCOM to fund biotech companies

NASSCOM, the trade body of the IT software and services industry, has mooted an India Innovation Fund to provide angel stage funding to start-ups to drive innovation in emerging technologies in the areas of IT and biotechnology. The fund will have a corpus of Rs 100 crore, which could be increased to Rs 150-200 crore in the next two years. The fund will be set up through a public-private partnership, where the government role will be limited. The investment decisions will be taken up by professional fund managers. The fund will allow private investors to acquire stakes in the professionally-managed PPP fund, Nasscom said.

Biovel to produce HGH

Biovel Life Sciences, an integrated biotechnology firm, has inked a licensing agreement with US-based Dowpharma to produce Human Growth Hormone (HGH) using Pfenex Expression Technology, for the first time globally.

Announcing the completion of the first phase of its 10-acre facility at Hoskote near Bangalore, Biovel chairman and managing director, P Sudhakera Naidu said HGH accounted for a $3 billion regulated market and the firm was optimistic about its huge potential in India.

Using the Pfenex Expression technology, Biovel is looking at developing a cost-effective process for commercial-scale production of HGH, he said. Dowpharma has already developed a high-yield production strain and bench scale process for production of HGH. Dowpharma will prepare and transfer to Biovel a Research Cell Bank and bench scale process, Naidu said.

This technology is based on specially modified strains of Pseudomonas fluorenscens bacteria and consistently outperforms other microbial systems.

maxEEma to invest Rs 250 crore

Ahmedabad-based biotechnology firm maxEEma Biotech has chalked out plans to scale up its production capacity of organic pesticides as well as its ayurvedic pharmaceutical division. It plans to invest nearly Rs 250 crore. It will be investing Rs 50 crore for scaling up its production capacity of organic pesticides and Rs 200 crore on augmenting its R&D centre and setting up a separate entity for ayurvedic CRO.

The company will be augmenting its R&D centre for ayurvedic formulations and will set up a CRO for the clinical trials for ayurvedic molecules. The ayurvedic CRO will be a separate entity and conduct clinical trials of its in-house ayurvedic formulation as well it will be open to other ayurvedic companies for clinical trials. maxEEma had developed an ayurvedic formulation for disease of oral submucous fibrosis (lockjaw - a pre-cancer stage) and snoring disorder.

Currently, the company is working on diabetes, cholesterol and arthritis which are under R&D stage. The company is not into manufacturing of ayurvedic medicine and would like to limit itself only to the R&D and F&D (formulation and development) stage.

It is also increasing its organic pesticide division's production capacity. Presently, its capacity is 5 lakh liters per annum for liquid and 5 lakh tons for granules. Post-expansion, the production capacity will be scaled up to 250 lakh liters annually for liquid and 250 lakh tons for granules.

Zenotech bets big on NBEs

Zenotech Laboratories Ltd (ZLL), the specialty generic injectables company, is betting big on new biological entities (NBEs), especially in cancer treatment, to propel its growth in the near future.

The Hyderabad-based company, which recently tied up with Ranbaxy Laboratories for its first biosimilar product, G-CSF (Filgrastim), has also won the country's first CRAM (contract research and manufacturing) project in biotech from the New York University for a wound healing product.

According to Dr Jayaram Chigurupati, CEO of ZLL, the contract involves developing cost-effective process and toxicity studies for the patented recombinant protein (an NBE). The final product ready for clinical trials would be given back to the New York University.

The one-year contract would lead to the development of the E. coli (bacteria) based wound healing product. Once, the clinical trials are through and the product ready for commercial launch, ZLL would also have the worldwide manufacturing rights.

ZLL has set a target of filing a total of 40 ANDAs by 2009, including with Ranbaxy. The alliance with Ranbaxy has helped in terms of documenting, filing and development of ANDAs for regulatory markets. The company has invested over Rs 100 crore in creating R&D and manufacturing facilities, compliant to USFDA standards on a 50-acre plot near the Biotech Park on the outskirts of Hyderabad.

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