Profiles in Biotechnology, Standards, Machinery, Innovation, Global Know-how, Strategies, and Expansion

Sep 01, 2007

Focusing on Much-Needed Vaccines

Profile: Shantha Biotechnics

In a nation of more than 1 billion people, the importance of vaccines goes beyond healthcare—it is a matter of national security. Armed with this belief and a philanthropic vision that most Indians could be protected against hepatitis, DT–Polio, and other afflictions, Dr. Varaprasad Reddy entered the nascent Indian biotechnology sector in 1992 and has since managed to threaten the monopoly of large laboratories. That year, the Hepatitis B vaccine cost $33 per shot, and yet some families were subsisting on less than $1 a day. Meanwhile, India was importing only 180,000 doses per year.


(PHOTO COURTESY OF DR. REDDY'S)
"I wanted to do something about this, but I received harsh responses from companies when I mentioned producing here," says Reddy, managing director of Shantha Biotechnics Ltd. (Hyderabad). "We therefore decided to do it ourselves, and with the help of a financial partner from Oman, we revamped a full lab. I also wrote to 70 Indian scientists that were working abroad and asked them to join the project. Three of them came, and we started our team from there."

Thus began a movement in India that can be credited for the birth and rise of most of what is today India's biotechnology sector. "In October 1995, we could open our first facility, by which time we had cloned, fermented, and purified the antigen and were ready for scale-up. The country went from 180,000 doses in 1992 to today's 90 million doses, out of which 50 to 55 million doses are produced by Shantha." The move also triggered an influx of new entrants, which unexpectedly eroded prices and put the relatively young sector in difficulties. From $1 a dose, prices fell rapidly to the price of 4 rupees, slightly less than a single US cent.


Dr. Varaprasad Reddy
Companies like Reddy's had to move to new markets to survive: Following successful prequalification by the World Health Organization, the first granted to an Indian company in 2002, Shantha struck a deal with UNICEF, the United Nations Children's Fund, and today supplies 52% of the UN agency's hepatitis vaccine for global use.

Global demand diversified and combined vaccines such as DT–polio, and newer products such as erythropoietin (EPO) or interferon were rapidly added to the company's products list.

Despite being a global company and a seasoned biotechnology player, Shantha has a turnover that ranges from one tenth to one hundredth of most direct western competitors. "Equivalent hepatitis products to ours are sold for $70 in the US, $40 in Europe, and we are selling our vaccine at 23 cents. The same thing happens for our EPO." In these conditions, the results posted aren't that impressive, but Reddy is confident that they will triple within a few years.

Shantha captured the attention of French vaccine powerhouse BioMerieux, and by the end of 2006, the Lyon-based company acquired a 60% majority stake in Shantha. With this incorporation in BioMerieux's global network, Shantha is expected to become a major research and development center for the French company and a global hub for vaccine development.

"Indian companies will look forward to find western sponsors for contract development and contract manufacturing," said Reddy. "We cannot have our own intellecutal property, because of lack of resources, but our innovation in India will be useful for western companies."