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Life Sciences /Biotechnology Attracting Risk capital and Stimulating Alliances and Joint Ventures

Vishal Gandhi Asst. Vice President

Life Sciences &Technology,YES BANK LTD

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The AgendaThe Journey

India – The Vision

India – The Opportunity

Life Sciences Clusters/Biotech Parks

About YES BANK Life Sciences credentials

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The Journey

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Statistics • 5,500 companies worldwide• 500 are publicly owned• $60bn USD plus revenue base

• Hundreds of products on the market

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What does LS Encompass?

• Therapeutics – novel and generic• Diagnostics• Devices• R & D Tools and Reagents• Instruments• Health Care Delivery – hospitals, clinics• Services:

CRO; Chemistry; Labs; Pharmacy

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The Changing Global Life Science Industry• Key Issues

• Need to reduce “time to market”

• Need to sustain profitability

• Disease and healthcare management

• Leading to

• Changing industry structure

• Outsourcing and Partnerships

• Research Alliances

• Mergers & Acquisitions

• Emerging service areas

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USA’s USP

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The Fuel: Capital

Government

Spending

($27 bn pa)

CAPITAL

Venture

Capital /

Private Equity Scientific

Expertise

CONCEPT TO MARKET

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Entrepreneurial Environment

Faith in Science

Motivating Small companies &individuals

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Recent licensing transactions between Biotechnology and pharmaceutical companies

• Neurocrine/Pfizer( Indipion, an insomnia agent): Pfizer gains exclusive worldwide development and marketing rights in exchange for upfront, milestone and royalty payments

• Millennium/Ortho Biotech (Velcade, a first-in-class chemotherapeutic agent): Millennium retains all US commercialization rights whereas Ortho will keep rights out side the US. Millennium will receive royalties from Ortho on sales outside the US and received an upfront payment of USD 15 million. Milestone payments for clinical development, regulatory development out side the US and sales milestones are included

• Avanir Pharmaceuticals/Peregrine Pharmaceuticals (An anticancer antibody): In exchange of license fee, milestone and royalty payements for Avanir’s antibody

Contd.

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Indian Response• Increased focus on R&D

• Increased focus on CRAM services (including biologics)

• Marketing alliances

• Brand acquisition

• Adoption of product patent regime

• Life Science focused VC funds

• Development of Life Science Clusters with shared wet lab infrastructure

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India - The Vision

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Statistics

• Domestic market– $1.46 billion in 2005-2006– Estimated at $5 billion by 2010

• India expected to contribute 8% of the world's biotechnology market by 2010.

Over 200 biotech companiesTotal bioscience investment of nearly $150 million USD Significa

nt promise of Growth

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India –The Opportunity

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Research & Development

India is positioned to grow into a major R&D center for biotechnology companies on the basis of

Low Cost

Skilled Workforce

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Advantage India

• Growing demand for biotechnology products

• Rich biodiversity

• Strong R&D base

• Wealth of well educated human capital.

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Base

Powerful and inexpensive information base

India advantage from a clinical trials standpoint

Access to large number of patientsSophisticated networkShort patient recruitment times

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Patent Protection being strengthened

Regulations established to approve

Genetically modified cropsRecombinant therapeuticsGuidelines for Stem Research

Effective 1st Jan, 2005TRIPS agreement expected to increase foreign investment and improve the environment for R&D and forging new global alliances

Achievements

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Venture Capital & Government

• SBIRI (DBT)• APIDC-TDB• PRDF (DST)• NMITLI (CSIR)

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Life Sciences cluster /Biotech Parks

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Characteristics of Life Sciences Cluster• A Cluster can be defined as a

geographically proximate group of companies and associated institutions in a particular field linked by commonalities and complementarities– Where, value of the system as a whole is

greater than the sum of its parts – Are usually seeded and evolve organically– It is observed worldwide that innovation

driven companies thrive better in clusters

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Elements of Life Science Cluster

R&D Institutions with strong industry

linkages

Availability offinance

Support Services Companies – vendors,

suppliers, law firms, VCs

Life Science Parks/Incubators to nurture

SMEs

Innovative SMEs, Startups

Anchor companies

Life ScienceCluster

Good commoninfrastructure

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Leading Life Science Clusters• According to Minnesota Biomedical and Bioscience

Network report on leading life science clusters as of 2004-05 there are– 12 Life Science Clusters in EU (Germany, France,

Switzerland, Belgium, Sweden, Finland)– 11 in USA– 14 in Asia-Pacific (including

Hyderabad,Bangalore and Uttranchal from India)– 4 in UK and Ireland– 3 in Australia– 3 in Canada– 2 in South America– 1 in Africa– 1 in Middle East

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Genome Valley Cluster, Hyderabad• 600 sq. km in three blocks around Hyderabad designated

as Genome Valley for life sciences growth

• Life Sciences R&D institutions• CCMB, IICT, CDFD, NIN, ICRISAT, Univ of Hyderabad etc.

• Biopharma Companies • Shantha Biotechnics, Indian Immunologicals, Bharat

Biotech, Biological Evans, Krebs Biochedmicals, Ocimum Biosolutions, Dr. Reddy’s Laboratories etc.

• Contract Research Organisations• Vimta labs, Suven Life Sciences, GVK Biosciences,

Magene Life Sciences etc.• Hospitals, clinicians involved in R&D and clinical research• Dedicated biotech fund - APIDC Venture Capital• Life Science Parks/ Incubators

• ICICI Knowledge Park, SP Biotech Park, ICRISAT Agri-park and Incubator, Incubator at Univ. of Hyd.

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Offerings of Life Science Clusters

• Generally infrastructure driven shared facility offering innovation driven SMEs and startups the right location and fulfilling some of the other listed needs – Shared infrastructure & admin support lowering

overheads – Low capital investment – ready to use infrastructure– Network creation and international knowledge flow– Competitive environment– Facilitating Technology Transfer, fundraising, marketing– Mentoring for incubatees– Knowledge building - introducing/ strengthening codes

and conventions through shared learning• Can be government driven, private initiative, public-private

partnership or university led– Government’s role in removing entry barriers crucial

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What VC’s Look For

• Technology backed by defendable IP

• Business model• Valuation/Exits: 5-10x return• Cost of development and time lines• Competition

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VC Value Proposition

• Financing: long-term equity • Business Partner: share risk and

reward• Networks: Access to expertise and

alliances• Mentoring• Exit

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India biotech investment opportunities driven by its competitive advantages1. Drug Discovery:

Deep knowledge base of traditional medicine to aid in drug discovery.Large Bio diversity of plant / marine / animal to aid in drug discovery / production & nutraceuticals.

2. Clinical trials:Large drug naïve populations for rapid and low cost clinical trials.

3. Services focusing on the huge domestic market:– Huge domestic markets with specific needs that can provide scale

advantages to companies addressing these needs: availability of drugs, diagnostic services, healthcare delivery, health insurance, etc.

4. Contract research/ manufacture: – chemistry skills, that can lead to strength in process design, contract

manufacturing, laboratory drug discovery related services.5. Orphan drug discovery & development: Low cost skilled labor with

easy availability provides the ability to build contract manufacturing and services businesses; build drug discovery businesses focused on orphan drugs, etc.

6. Bioinfomatics services: strong IT skills to aid in developing IP in a number of the services areas that Indian companies are involved in.

7. Stem cell / GM crops: Enabling policies that help development in Stem cell/ banking research, GM crops, etc.

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Tech Transfer

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Technology Transfer Licenses

• Potential Licensees/Licensors– Small company that lacks the facilities to

do basic research of its own and wishes to buy the products of others’ research

– Larger research based-based company which wishes to expand its product line or investigate new areas of research

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Commercial & FinancialCommercial & FinancialConsiderations of aConsiderations of a

Biotech/PharmaBiotech/PharmaLicense AgreementLicense Agreement

®®

____________________________

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®®

____________________________

Commercial Clauses Commercial Clauses • Commercial Due Diligence Commercial Due Diligence ClausesClauses

- Clauses Relating to Development- Clauses Relating to Development- Clauses Relating to - Clauses Relating to

Working/MarketingWorking/Marketing Product-By-ProductProduct-By-ProductMarket-By-MarketMarket-By-Market

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®®

____________________________

Financial Clauses Financial Clauses

• MilestonesMilestones

• Annual Annual Payments/Maintenance FeesPayments/Maintenance Fees

• Upfront Upfront PaymentsPayments

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Life Sciences & TechnologyLife Sciences & Technology

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Corporates : Private Equity and M&A

United Phosphorus Ltd.United Phosphorus Ltd.

Advisory for Acquisition of agrichem business in India

20052005

Ranbaxy Laboratories Ltd.

Ranbaxy Laboratories Ltd.

Exclusive advisor to Ranbaxy for divestment of 100% holding in Ranbaxy Fine Chemicals Limited

20052005

Medreich LimitedMedreich Limited

Advisory for private equity fund raising of US$ 25 million

20052005

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Corporates: Business Advisory

Large Global Generic Company

Large Global Generic Company

Advisory for product portfolio analysis and

suggested growth strategies for the domestic market

20052005

Large Global Pharmaceutical

Company

Large Global Pharmaceutical

Company

Advising a large MNC Company for setting up its R&D facility in

India

20052005

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Corporates: Key Relationships

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Membership of various national & international level bodies OPPI

IDMA

ABLE

BCIL

TiE

Providing advisory and fund based services to agriculture, life

sciences & biotechnology companies and government bodies

Provide advisory services for Infrastructure related projects such

as life science and IT parks etc. jointly with YES’ Infrastructure

team

Assist customers in their M&A transactions by coupling our

sectoral / industry knowledge with the experience of YES’ M&A

team

Sectoral Focus & Strength

FICCI

CII

PHDCCI

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M&A League Tables

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Case Study - Pune BT Park

Background

o MIDC wanted to set-up the first ever Biotech park at Pune

o An offshoot from new expressway between Mumbai and Pune.

o Supporting bio-pharmaceuticals, diagnostics, vaccines companies

o MIDC invited private developers for joint development, promotion

and marketing of the proposed park

Consultants’ Role

o Carried out the overall conceptualization of the park

o Created Information Memorandum to invite private participation

and created the selection criteria for private partner

o Provide hand-holding till the finalization and structuring of the deal

with the selected private partner

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Pune BT Park

The Proposed Concept

Specialised biotech facilities

(BioResource Centre)

Common Utilities

Specialised office space for

customised labs

Business Facilitation Centre

Common Amenities Block

Developed land area for

GMP facilities

Biotech Park Infrastructure

RESIDENTIAL COMPLEX

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Pune BT Park

Current Status

o TCG (88% Equity) is developing the park in conjunction with

MIDC

o Three of YES BANK’s clients have already taken space at the

park

o YES BANK recently got a client from US for leasing facilities at

Pune BT park

o TCG has approached YES BANK for advisory services towards

building the requisite infrastructure and inviting new tenants

Revenue models

o Sale of Plots and Office Space (Long Term Lease)

o Rentals from BioResource Centre, Build-to-suite premises

o A charge on the IPR generated from the park

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Government Assignments -examples

Advising GOM for developing Mumbai into a Biotech Hub

Member of the Screening Committee in SBIRI. SBIRI is a scheme launched by DBT that supports the high-risk pre-proof-of-concept research and late stage development in small and medium companies

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Thank you