How Western Companies Can Capitalize on the Opportunities in India

December 23, 2011
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Dramatic changes in regulatory and market structure in India, the world’s largest democracy, has created unusual opportunities for biotechnology and medical technology companies.

Dramatic changes in regulatory and market structure in India, the world’s largest democracy, has created unusual opportunities for biotechnology and medical technology companies. OneMedForum’s India Session will examine how Western companies can capitalize on the opportunities in this market.  A New York based investment banking firm, Aurora Capital will anchor the panel. President and founder of Aurora Capital LLC, Jeff Margolis founded Aurora in October 1994. Below, he is interviewed by OneMedRadio on the opportunities India has to offer. He points out that India is emerging as a significant player in the life science sector. The 2005 patent amendments have brought India into the modern world in terms of intellectual property.

Click below for interview audio followed by a full transcript. To attend the India Session, register here.

Brett Johnson:    This is Brett Johnson with OneMed Radio in New York. Today, we are with Jeff Margolis, who is the president and founder of Aurora Capital, a New York-based investment banking boutique, which concentrates on the biotech and med tech sectors. We’re talking about the India session that Jeff is anchoring at the OneMedForum in January, January 9th through 12th in San Francisco, California. Thanks for joining us today, Jeff.

Jeff Margolis:    Thanks for having me, Brett.

BJ:     So I know Jeff at Aurora you’ve been concentrating a lot of energy on opportunities in India and I’m told there’s a lot of evolution and changes that are happening within the market. Can you tell us a little bit about why India and what’s happening over there now?

JM:      Sure, Brett. We view India as a great place for US and European life science companies to focus their attention to consider collaborations. India has historically been known to provide wonderful services to the worldwide pharmaceutical and biotechnology industries, services such as data management, CRO or contract research organization type services. But India is emerging as a much broader and deeper player in the life science world than just that.

BJ: And what’s happening there? I mean what’s been going on that’s made that become a reality?

JM:     India is emerging as much more of a global player in deeper and broader aspects of the life science space. We believe that this has been triggered to some extent by the 2005 patent amendments that have now been around for a few years and have brought India into the modern world in terms of intellectual property. At the same time, we think that this has caused India to look globally to develop new skill sets and consider a much more global view of not only the services they provide, but the risks that they’re willing to take in this industry.

BJ: So when you say the patent amendments, did they just become more strict in the enforcement of intellectual property rights?

JM:  What has really happened is for the very first time, India now recognizes patents certainly on biologics, but also what’s called Swiss method patents. And by the way, this is a topic that we intend to address in depth in this panel discussion at the OneMedForum.

BJ:   Okay. So the basic idea though is that they’re paying more attention to those rights of the people with intellectual property and getting more investment in the sector?

JM:  We believe that what it’s done is it’s given Indian pharmaceutical companies an incentive to develop expertise in biology. They’ve always been very strong in chemistry. They’ve always been the generic manufacturers of active pharmaceutical ingredients for the generic world, but what this does is this now allows a western world company to feel more comfortable with its IP protection in India under these new rules and also creates the potential for proprietary rights within India for the Indian pharmaceutical companies.

BJ:   Interesting. Interesting. So if I’m a US biotech company for example like how would I approach this? I mean what’s your advice on how you consider the opportunity and what is the opportunity really?

JM:    I think there are several things to think about when one is looking toward India. One could always look toward India for the traditional services. This is a very highly technically educated society that’s accustomed to doing business in the Western world where English language has been spoken for many, many years and who are comfortable dealing with the western culture, and they provide services in a manner in which a western company would feel comfortable. So one could always look for traditional CRO or manufacturing or data management services and get those services at a very cost effective manner as the cost structure in India is significantly lower than in the United States and in Europe.

But one can now look further. One can now begin to think about Indian pharmaceutical companies being strategic investors or strategic partners in innovative products. This is something new. This is something beyond what India has traditionally been known for and so this is something that I think US and western European companies would find value in exploring.

BJ:    So what are the big challenges of that? Is it finding the right partner or is it just doing business over there? I mean what are the hurdles of pursuing this opportunity?

JM:  I think there are two hurdles, one is the concept of Indian pharmaceutical companies going at risk in some of these projects is relatively new. And so finding the right units within the Indian pharmaceutical companies and even finding the right pharmaceutical companies to partner with would be a challenge initially, but many of these Indian pharmaceutical companies are in fact looking to do just that. So that is the first challenge.

The second challenge is understanding entity structure, foreign investment and a variety of things that surround the mechanics of getting this done. And I think for that, to overcome that, one just seeks professional help.

BJ:   I got you. And so Aurora Capital is starting to develop some focus on that? Can you talk a little bit about what your group does and how you help companies?

JM:       Yes. We’ve built a small India group within our investment banking division here at Aurora Capital. It’s currently comprised of three professionals who are language and culturally connected to India. They operate from the United States and our primary goal is to assist US pharmaceutical companies in seeking, negotiating, and executing on strategic transactions with the Indian pharmaceutical and life science sector in general. So that would include what one would traditionally think of as joint ventures, licensing agreements, and similar type of strategic transactions and it goes far beyond just finding a service partner to provide a set of services at a less expensive price than one would buy in the western world.

BJ:    Can you talk a little bit about the session at the OneMedForum that you’re organizing in terms of the topics that you’re going to cover and some of the people that might be involved?

JM:     Sure. We currently have agreements from two internationally renowned very large Indian pharmaceutical companies, one from the business development perspective, the other from the innovation perspective to sit on the panel and speak to their goals in looking outside of India. We have a patent attorney who has agreed to sit on the panel who is familiar with the revisions to the patent law in India that commenced in 2005. And we have the CEO of a small publicly traded American biotechnology company who has successfully partnered in the service area with the CRO in India and is currently executing on clinical studies there so that we can speak to the personal experience of somebody who has done it.

BJ:   Interesting. So what’s sort of your guess on the takeaway? I mean what can people walk away with you think after they sit in the session that you’re doing?

JM:   I believe that for the CEOs and directors of business development in the audience, they will be able to walk away with a notion as to or an understanding as to why they should consider engaging with an Indian life science company and what they may be able to get out of it. I think they may also get out of this a notion of how they should do this, not just why they should do it but how they should do it as well.

BJ:     Well certainly, it’s a big market and it sounds like it’s a tremendous opportunity and it sounds like a very exciting session you put together. So thanks so much for joining us today, Jeff.

JM:     Thank you, Brett. I appreciate it and look forward to seeing you in January in San Francisco.

BJ:    Terrific. That was Jeff Margolis, president and founder of Aurora Capital, a New York-based investment banking boutique focusing in the biotech and med tech sectors talking about the session in January at the OneMed Forum that concentrates on opportunities in India. This is Brett Johnson with OneMedRadio in New York signing off.