BackIndia will lose $4.68 trillion in 2012-30 due to NCDs: Norbert Hültenschmidt
Norbert Hltenschmidt spoke about opportunities for Indian pharmaceutical companies in domestic and international markets
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India could lose $4.68 trillion of economic output due between 2012 and 2030 due to non-communicable diseases, but this is an opportunity for companies to invest in preventive health. In an interview in early November. Norbert Hültenschmidt, director and head, healthcare practice, Europe, Middle East and Asia (EMEA) at consulting firm Bain and Co., spoke about opportunities for Indian pharmaceutical companies in domestic and international markets, why the pipeline for patented drugs is drying up globally and which areas Indian pharmaceutical companies are targeting for drug development.
Non-communicable diseases (NCDs) are becoming a significant public health issue for India. What kind of an economic impact do you think they will have?
The report launched by World Economic Forum with Harvard states that India will lose $4.68 trillion of economic output over 18 years between 2012 and 2030 due to NCDs.
The healthcare cost of all of this is the small portion. The biggest issue is that people will not be able to work and some will be pushed into poverty. The report highlights something which is interesting—India only spends 1% of GDP (gross domestic product) on healthcare. There is easily an impact of 5-10% of GDP as potential GDP loss arising from NCDs. India needs to invest to developing its healthcare system and access to care in many people and create a culture to invest in keeping people healthy.
With the growing disease burden in India and the world, what kind of opportunity is there for the pharmaceutical industry?
You need to look at two important factors – where is the market and where is the unmet need.
There is a huge ageing population in the world which is creating a lot of demand. We are also seeing in India a tsunami of non-communicable diseases (NCD) which are cancer, cardio-vascular diseases (CVD) and diabetes. This tsunami is really rolling in. In the US, already 49% of population is either diabetic or pre-diabetic. If you look at India, in 2012, 60% deaths were due to NCDs, mainly CVD, followed by diabetes. In India, infectious diseases are also out there and new NCDs are coming which tells us that there is a huge growth of infectious as well as non-communicable diseases. Indian pharmaceutical companies need to address these markets.
The R&D pipeline of most global pharmaceuticals is drying up, which is a worrying development. Why is this happening and what is the overall scenario of drug development?
From a global perspective, many pipelines are drying up because it’s hard to find new cures... and the bar is constantly rising. So, pharma companies need to do better studies, get more data and so on. The other concern is that some of the drugs in the market today wouldn’t have met the enhanced requirements of the US FDA (Food and Drug Administration) because they were measured at certain metrics in the past. As the requirements go up, the likelihood of success of newer drugs is going down.
There is a huge investment required to bring out a new really innovative drug to the market globally. Our research shows that this is definitely north of one billion dollars that a company needs to invest in for a successful launch of an innovative drug.
This is a bar Indian companies also need to look at. Yes, they are investing into finding new innovative drugs but this is hard. We have just done new research on chances of success to bring out new products in the market. We found out that leaders within one category are three times more likely to bring a drug in the market in that category than newcomers in that category.
Hence, we see that more Indian companies are partnering with global pharmaceutical players to make new drugs.
The investment and risk is so huge that you need to find creative ways to mitigate your risk and understanding disease mechanism better than others. This is also where the whole topic of category leadership comes in as secret source of why companies are doing this better.
We see a lot of risk-sharing happening with pharma companies especially for big investments. Clinical trials are most expensive when it goes to phase III clinical trials; it’s relatively inexpensive with phase II. This is where companies start to collaborate and we will see more of it in the future. There will be different kinds of partnership for diseases which have big and attractive markets.
For those diseases where there is a lot of public interest but not attractiveness from market side – we see public private partnership. We see this in the US with NIH (National Institutes of Health) with several companies pooling their research and allowing pharma companies to take this research and develop the drug once certain disease mechanisms have been better understood. We will also see more of this.
Which diseases are global pharma companies focusing on for drug development? What is the share of Indian pharma companies in the overall pool of research projects globally?
There are more than 5,000 pharma projects in pipeline publicly known globally; the majority of these investments are happening in cancer space. This is a pretty attractive area but it also means that there are so many projects under development that there is a further sub-segmentation of those markets -- this makes it less attractive for companies to actually be able to recover huge investment; they are doing because target population is getting smaller.
With help of bio-markers and other metrics, there is a linking of diagnostics and pharma products in order to define the right patient where the product is getting better.
Indian companies have started investing in drug development but their portion of global pipeline of new drug is very small. It is below 5%.
What other areas are pharma companies researching?
There is a lot of investment going into mental disorder and central nervous diseases which includes depression and other diseases like Alzheimer’s. It is interesting to note that pharma companies over the last five to eight years have invested north of $10 billion and it still hasn’t led to any good treatment yet. It shows the magnitude of investment that is required for this break-through.
A multitude of companies have invested in it and many have said that they will not go after this anymore because they don’t see that there is enough basic understanding of the disease mechanism in order to be able to develop drugs. This has gone back to academia to understand the disease biology and also to pharma companies to do some of the work to develop this drug.
You have advised many pharmaceutical companies in India? What is their main concern and what opportunities are they looking at?
Companies face different issues subject to whether they are looking at the generic space or innovative space. On the generic side, it’s a question of how to get access to global markets with the right products. They need to understand regulations of the individual markets and we have seen many generic companies fail to get good access to the market because they were not able to understand the local requirement.
If you look at innovative companies, the key discussions we have had is how to sub-segment and target enough innovation areas in order to have good chances of success and do enough risk mitigation. It’s easier to go after certain niches and try to win them than go after big indications and compete against big gorillas globally, who usually have better understanding of disease biology and better financial muscle to cope with portfolio approach and not single project approach.
What kinds of niches are Indian companies looking at?
Companies are looking at sub-segments of diseases like cancer or some form of cardio vascular disease. So, within a therapeutic area within a sub-sub segment which may not give them a blockbuster north of a billion dollars but can still yield peak sales of couple of hundred million dollars.
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