Hyderabad/New Delhi: Vaccine maker Bharat Biotech International Ltd started working on a pair of vaccine candidates to protect humans against the Zika virus in December 2014, months before it became a global health scare.

Within seven months, the Hyderabad-based biotech company was ready with prototypes and filed for global patents, a remarkable feat for an Indian vaccine maker in terms of time taken for a new innovation.

Last week, Bharat Biotech made headlines with a public announcement that it was the first in the world to file for patents for Zika vaccine candidates.

It started work on the candidates while developing vaccines for chikungunya and dengue, which are spread by the same species of mosquito as Zika.

“Our interest in Zika virus, an obscure virus when we started the project a year ago, was that the clinical features at an early stage of infection are indistinguishable from that of dengue and chikungunya," the company said in its announcement.

No vaccine has yet been developed for Zika, which has been suspected as the cause of birth defects in thousands of babies in Brazil and is spreading rapidly in the Americas; last week, World Health Organization (WHO) officials expressed concern that it could hit Africa and Asia as well. A pregnant woman in Spain became the first in Europe to be diagnosed with the virus.

WHO said the Zika crisis in Brazil was a public health emergency of global concern.

To be sure, it could be years before Bharat Biotech, or any other vaccine maker for that matter, is ready with a vaccine against the virus.

The vaccine candidates have to be tested on animals and humans to prove their safety and efficacy before they can hit the markets.

“Considering that women of childbearing age and pregnant women are the prime target for the Zika virus vaccine, we consider safety as the overriding factor in the development of a new vaccine for this virus," Sumathy K., director of research and development at Bharat Biotech. “The vaccine methods developed early on, before the devastating consequences of the epidemic in Brazil came to light, provided us a push to accelerate vaccine development."

According to analysts in the biotech space, in the normal course, it would take 5-7 years and at least 150-200 crore to conduct pre-clincal and clinical studies in India.

That’s a challenging proposition for a small biotech company with revenue of 267 crore and profit of 18.5 crore in the year ended March 2014, according to documents available with Registrar of Companies (RoC). The company had debt of around 193 crore as of March 2014.

The latest figures are not available; the company declined to comment on its financials citing the fact that it’s not publicly listed.

The challenge of bringing the vaccine candidates to market doesn’t perturb Krishna Ella, 60, the founder-chairman of Bharat Biotech, who made a splash also in April when he said his team had developed a vaccine candidate for the Ebola virus.

“If I am businessman, I would not have done research," said Ella, according to whom Bharat Biotech has so far 50 global patents.

“But we are scientists, we are crazy and we drive with a certain passion, visualizing and hypothesizing."

A yeast molecular biologist by training, Ella, who hails from a farming family in Vellore district of Tamil Nadu, worked as an assistant professor with the Medical University of South Carolina before returning home and founding Bharat Biotech in 1996, together with his wife Suchitra Ella.

Like many other Hyderabad-based pharma and biotech companies, the initial focus of Bharat Biotech was on making copycat vaccines, taking advantage of India’s liberal patent regime, which at that time didn’t allow product patents.

Bharat Biotech came into the limelight when it launched Revac-B, a recombinant Hepatitis-B vaccine, in October 1998. Priced at $1, almost 25 cents less than its closest competitor produced by Shantha Biotechnics. A price war ensued, hurting margins of both companies.

Hepatitis-B vaccine helps prevent the spread of Hepatitis-B, a common risk factor in liver cancer.

In 2005, India introduced product patents, forcing companies like Bharat Biotech to evolve from being a me-too generic vaccine maker to a research and development (R&D)-driven company.

Overcoming the challenges of funding and R&D risks, Ella doggedly pursued vaccine development, and managed to pump in about $150 million (around 1,000 crore) into research; he raised the money through internal accruals, loans, grants and equity sales.

The outcome of those efforts resulted in three new vaccines in three years—for childhood diarrhoea, typhoid and Japanese encephalitis.

Bharat Biotech mitigates the risk of failure associated with R&D through research grants and supply commitments from funding agencies, governments and partnerships.

The company’s R&D pipeline includes nine new vaccines, which it plans to commercialize in the next 3-4 years. They include vaccines for chikungunya, malaria and tetanus, and an inactivated polio vaccine. An inactivated vaccine is created by killing a pathogen in a way that its ability to replicate is destroyed, but the immune system can still recognize it.

Ella declined to comment on the funding requirements of his vaccine projects.

“Our strategy is to develop vaccines for neglected diseases; people who suffer from these diseases are the poor who live in the emerging world, as it’s not such a big concern for big pharma that largely focuses on diseases more prevalent in the developed world," he said.

Bharat Biotech’s revenue comes mainly from exports to emerging markets and governments and multilateral agencies like Unicef, WHO and Gavi, the vaccine alliance, and other agencies involved in mass immunization programmes.

Business news channel ET Now reported on Thursday, citing people whom it didn’t name, that private equity investors Carlyle Group LP and TPG Capital LP are conducting due diligence to acquire around a 30% stake in Bharat Biotech collectively held by ICICI Venture Funds Management Co., Subhkam Ventures and the International Finance Corp. in a deal that potentially values the company at between 1,200 and 1,500 crore.

Promoters Ella and his wife together hold around 45% stake in Bharat Biotech, according to the company’s filing to the RoC.

“The strength of Bharat Biotech is their execution capability in translating research into large volume delivery," said Pushpa Vijayaraghavan, vice-president of consulting firm Sathguru Inc.

Indian vaccine companies, which largely survive on public health vaccination contracts, face the challenge of pricing pressure, so they have to innovate in terms of their product pipeline to have a first- and second-mover advantage, Vijayaraghvan said.

Indian vaccine companies are good in certain therapeutic areas that are specific to Indian conditions; Bharat Biotech, for instance, was doing research on chikungunya four years ahead of a breakout of the disease, said Hitesh Sharma, national leader of the life sciences practice at consulting firm EY.

Bharat Biotech has sceptics as well.

“Ella’s Zika vaccine makes a good story, but it ends there," a top executive at a vaccine maker said on condition of anonymity.

“Investors value the company based on the number of WHO pre-qualified products; here is where the company is way behind the competition," the executive said.

A WHO pre-qualification is a critical eligibility criteria to take part in global supply tenders. Bharat Biotech’s oral polio vaccine of three variants is pre-qualified by WHO.

Bharat Biotech’s pride at becoming the first company to file for global patents and registering a brand name for the Zika vaccines is a bit of a concern, said Leena Menghaney, who heads Medecins Sans Frontieres’s Access campaign in South Asia.

“For public health pandemics like Zika, collaborative open source research, not monopolistic approaches based on patents, are needed," she said.

Reuters contributed to this story.

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