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By Jeremy Grushcow

An article in the Hindu Business Line says the Indian Drug Manufacturers’ Association is lobbying heavily to keep data protection and other innovator-friendly IP provisions out of the free trade agreement being negotiated between India and the EU. But, with Glenmark and Jubilant on the rise, and with even Biocon carrying the R&D water in its deal with Pfizer, demands for IP protection from domestic constituents are bound to be increasingly loud.

Keep an eye on the progress of the free trade talks, continuing with the India-EU summit this week. Apparently, the main gaps are: the percentage of tradable goods that are tariff-free; a sustainable development clause; and the IP issues noted above. We’ll see how hard India pushes to keep IP out of the picture.

Re-posted from the Cross-Border Biotech Blog

Jeremy Grushcow is a Foreign Legal Consultant practising corporate law at Ogilvy Renault LLP. He has a Ph.D. in Molecular Genetics and Cell Biology. His practice focuses on life science and technology companies.

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By Hari Venkatacharya

I’m actually posting this blog while enroute to Toronto from a one- week trip to India. In seven days I was in Mumbai, Pune and finally Bangalore. The Indian companies I have met with continue to be very confident, and feel that 2010 will be a breakout year.

The most striking and memorable meeting on this trip has been a meeting I had in Bangalore with a friend of mine who about a year ago started a Trust that invests in rural-based start-ups. The venture, NextWealth, has now been operational for about six months, and already the implementation of the vision has been staggering.

The premise of the venture is that in India today there are hundreds of accredited, private engineering colleges that are situated in Tier 3 towns and villages. A large proportion of these are actually in the four southern states- Tamil Nadu, Andhra Pradesh, Kerala and Karnataka. All of these have enrolments of hundreds of students, but the prospects for a job after graduation are slim, unless the student moves to a neighbouring city. This of course poses multiple challenges;

  • The burden on a city’s infrastructure increases significantly.
  • Tier 3 towns and villages are hollowed out, where the brightest go to the city.
  • The family structure is changing, since traditionally in India as parents grow older, children take care of them.

NextWealth, founded by Dr. Sridhar Mitta, addresses many of these concerns by providing a good salary for graduates that remain in the towns and villages, and actually do work that has both a manual and automation component for Indian and foreign companies headquartered in adjacent cities.

Everyone in the value chain is a beneficiary:

  • The graduate has a job close to home, and is able to help support the family, while utilizing his/her acquired skill sets.
  • The towns and villages benefit since now there are healthier families, contributing to their growth.
  • The city-based companies have a cost-effective, captive labour pool, since salaries in villages are about 30% of what is paid for an equivalent staff member in a city. Attrition is also comparatively much lower in rural areas than cities.
  • The end customer benefits by having service providers that are highly motivated to deliver their solutions on time, and are also very willing to customize their services for fees that cannot be matched in a city environment.

This is the next wave of entrepreneurship in India, where successful entrepreneurs in the for profit sector are now targeting the reform of job creation and the overall well-being of towns and villages, while also making a healthy profit and creating significant value for all stakeholders.

Hari is a seasoned entrepreneur with over a dozen years of experience in building and exiting businesses in Canada, US and India.

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By Hari Venkatacharya

After having returned from my fourth trip to India in the last year three weeks ago, I’ve been thinking hard about where I believe Canadian companies need to focus in the next twelve months to create momentum, and buffer themselves against the vagaries of the US economy.

Although the overall sentiment in North America is certainly more upbeat than it has been in 12 months, there is no doubt that most people, including myself, are very sceptical about whether the US, and so also the Canadian, economy is now on a growth path, or simply making up some of the lost ground from the carnage of last year.

Although we saw some good growth in the job market in Canada in November, this was more than compensated for by more losses in December 2009. In addition, the new US budget is not only including significant deficit spending, but is also hinting at tax increases.  In Canada, our finance minister has indicated that at least five years of budget cuts will be needed to again balance the books. Where does this leave the entrepreneur?

I believe that there is still the potential for huge growth for companies that target a specific niche market, and look at both organic and inorganic growth in emerging countries. I do not believe that the North American markets will grow anywhere near the 9-10% GDP growth that is being predicted for India and China, for this year. We may be lucky to simply not have our economies shrink!

Here are some predictions for 2010:

  • SME companies in Canada will start to de-couple from an exclusive US-focused growth strategy and will engage with companies in emerging markets.
  • The traditional VC model will cease to exist. More investments will come from strategic partners, government agencies, and angel investors.
  • The Canadian economy will shrink an additional 2%
  • We will have a new government in Ottawa.
  • Canada will allow significantly more foreign investment from Asian companies, specifically focused on the clean technology sector, like the recent Samsung deal in Ontario.
  • Canadian government-backed innovation programs will more aggressively pursue US and foreign VCs to leverage their investments.
  • Canadian early stage investments will go down by 20%, with more funding allocated to M&A and consolidation plays.
  • The oil sands will be forced to focus future development on a more environmentally friendly model, mostly due to international as opposed to national, pressures.

Fundamentally, Canadian companies at any stage need to re-focus their attention to non-US markets, or they will be left behind in the huge growth opportunities that exist globally. The urgency has never been greater to diversify our base of business, and to take advantage of true global networks and connectivity.

Hari is a seasoned entrepreneur with over a dozen years of experience in building and exiting businesses in Canada, US and India.

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Re-posted from the Cross-Border Biotech Blog

jeremy grushcowBy Jeremy Grushcow

The Cross-Border Biotech Blog has been following the increasing innovative activity taking place in India’s and China’s biopharma industries, and Glenmark Pharmaceuticals is a great example of this trend.

Forbes profiled Glenmark this week (H/T FierceBiotech), noting that it started in 1978 as a generics firm but now has seven clinical-stage compounds and has partnerships with Forest Labs in the U.S. and Teijin Pharma in Japan.

GlenmarkThere are two really interesting points raised in the article:

  1. Glenmark is using its revenues from generics to fund its innovative R&D programs. Biotech business models have long incorporated quick revenue as a funding source for long-term R&D; but the typical focus for the short term is on services revenue (because it typically leverages the platform they’re building anyway).  For long-term survival, though, nothing beats tearing a page out of Big Pharma’s playbook.  In Canada, Bioniche’s tenacity is fueled in no small part by animal health revenues, mimicking the Big Pharma animal health divisions.  Glenmark, similarly, has ridden into R&D on the back of the other Big Pharma cash cow — generics
  2. Glenmark saw a strong IP regime as an opportunity. I’ve been hypothesizing that more innovative activity will drive more support for IP protection in India and China; but Glenmark is an example of the opposite causal relationship:

“During his time in the U.S., Saldanha could see that India was likely to join the World Trade Organization and that meant come 2005 it would have to respect patent laws: ‘Generics generate cash, but we needed innovation to take us into the future.’”

My bottom line: Glenmark is a great example of how to look to the future and build for it.  Canada has an opportunity now, on a national scale, to deploy its revenue both within the biopharma industry (from our generics companies) and outside it (from our natural resources) to build for the future Saldanha saw.  We’d better seize that opportunity while we can.

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Re-posted from the Cross-Border Biotech Blog

jeremy grushcowBy Jeremy Gruschow

A very interesting article in Nature Biotechnology from a group at the McLaughlin-Rotman Centre for Global Health provides some empirical support for a trend we’ve been following of increased innovative activity in developing countries.

According to the article, over 25% of Canadian biotechs collaborate with developing countries.  Of these, however, the vast majority of companies do so alongside collaborations with other developed country partners — only 4% collaborate exclusively with developing countries.  Also, gaining access to developing countries’ markets is the most frequent (66%) reason cited for collaboration.

Still, some of the data reflects the growing importance of developing country collaboration (China and India in particular):

  • Canadian firms’ collaborations with India (17) and China (22) nearly equal the number of collaborations with Japan (18) and Germany (23); and
  • Accessing knowledge from developing countries’ partners (24%) is approaching providing knowledge to developing countries’ partners (37%) as a reason for collaboration.

How do these collaborations look overall?

GrushcowThe figure from the paper on the left shows the geography of, and rationale for, the collaborations. Part “a” shows marketing and distribution collaborations, and part “b” shows those involving an R&D component.

What is the effect of all this activity?

Well, it’s hard to quantify, but the authors review revenue data from public company respondents and find that:

“average total revenues of firms that have North–South collaborations are nearly four times higher than firms that do not have such partnerships.”

My bottom line: causal or not, that’s a correlation that should cause all biotech companies to take note.

Jeremy Grushcow  is a Foreign Legal Consultant practising corporate law at Ogilvy Renault LLP. He has a Ph.D. in Molecular Genetics and Cell Biology. His practice focuses on life science and technology companies.

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