Biocon, Syngene set up 1st nutrition R&D centre

Drug firm Abbott today opened its first nutrition research and development center in the country in collaboration with Biocon's subsidiary Syngene.

Highlighting the features of the deal to CNBC-TV18 Kiran Mazumdar, chairman and managing director, Biocon said, Syngene will be providing research services and this is an outright contract research partnership. The research centre will be largely developing over the counter (OTC) products. It would develop products very specifically focused on India needs, but those products will  have huge opportunities in other parts of the world as well, she added. Also Read: Espirito Santo questions Biocon's accounting practices Below is the edited transcript of Mazumdar's interview with CNBC-TV18. Also watch the accompanying video. Q: Can you give us the highlights of this joint research centre. What exactly is Syngene bringing to the table? A: Syngene is a contract research company. We are bringing to the table our scientific talent pool, our research management abilities and we have created a customized research centre for Abbott Nutrition. That’s the deal, it is basically a research centre where Syngene provides research services and it’s an outright contract research partnership. Q: How would you expect business to increase for Biocon itself and for Syngene because of this deal? A: Syngene is going to benefit because it is moving ahead in terms of integrated services. A few years ago we had a very similar customized research services, long term model with Bristol-Myers Squibb. Abbott is the second such large long-term research arrangement that we have got into. How Syngene will further benefit is the fact that we also have other aspects of the facilities and services which Abbott will tap into like preclinical, clinical, formulations development at a pilot plant and many other analytical services and labs that we have on this particular site which Abbott will be able to tap into. So it’s a very interesting arrangement where not only Syngene hopes to expand this present relationship. As far as Biocon is concerned it will be a very different relationship if and when it happens but right now we are focused on what Syngene is going to be able to deliver for them. Q: Should we understand that that research centre will largely be producing OTC (Over-the-counter) products? A: Well it will be developing largely OTC products. They are basically focusing on the India market to begin with where many of these products do have global opportunities. To begin, it was basically been talked about as for India and in India, but now they are talking about in India for the world. So what they expect to do is to really develop products very specifically focused on India needs, but it has huge opportunities to take it in other parts of the world as well. Q: You are investing in your insulin biosimilars on your own after the Pfizer breakup. Do you see the collaboration with Abbott extending to other areas as well outside of what you have done with Syngene? A: Once you start partnering with a company in one part of your organization you do hope that you will have other opportunities. Right now there is nothing on the anvil, but as the relationship grows we do hope that there will be opportunities for both organizations to explore. Q: In the concall you perhaps indicated that there could be a listing of Syngene in the next one year or so, is that on track. In the near term can we expect something on that front as well? A: I would hesitate to talk about the near term because you know how the markets are and you know how the Indian economy is. We will have to wait and watch but suffice to say that we are certainly very committed to taking Syngene to the market. We are looking still at that one year to 1.5 year time frame, but our advisors are basically telling us in terms of the timing. Q: Will there be any equity interest that Abbott will show, if and when you do an IPO and hive off the stake in Syngene? What is the equity interest at all that is promised or likely from Abbott? A: There is no such intent and there is no such discussion. So, I would not be able to comment on such a situation. Q: It will be very much of interest to Biocon investors to know what will be say the revenue or profit implications of this center. By when do you think it will start showing on the P&L at all? A: Its already started reflecting in the P&L last quarter because we transited from a small group of scientist that we were supporting in our existing labs to now the dedicated center. So, you will see it getting reflected this fiscal onwards. Q: Any product that you can say that is likely to come off that research center and be launched in India in FY13 itself? A: I don’t think we are privy to that information. You will have to ask Abbott for that information. We are just providing the services. Q: Last quarter your numbers actually surprised positively. But there are some concerns that Statin sales could start declining from here on and that could actually pressure your financials. Do you think that is likely or do you think the concern is not really valid at this point? A: The concern is not valid for two reasons, one is we are not seeing that decline and secondly with the rupee being where it is, obviously we benefit from that weak rupee in terms of our exports. Q: How soon if at all can we expect a likely partnership on the insulin biosimilars front because that perhaps is something that market has been watching very closely? Do you think it could be possible in the next 2-3 quarters? A: I explained earlier that we have many existing partners that predated Pfizer and we had restricted them to certain parts of our insulin’s portfolio. Now that Pfizer has exited this space we are now forging much larger partnerships with all these partners. So, we are already beginning to gain traction in terms of how we look at emerging markets. The main thing to watch is how we get into partnering our insulin portfolio in US and Europe and that should happen in the not too distinct future.