Major progress in IPR policy, should roll out yr-end:Biocon

The National Intellectual Property Rights (IPR) policy has made significant progress and should be rolled out by the end of the year, says Kiran Mazumdar Shaw, CMD, Biocon.

"I think yes, they are going about it in a very rational way. It has made significant progress. I think it is in the very advanced stages of being rolled out and I think they have looked at India's concerns, they have looked at making it a fairly reasonable and rational IPR regime for India," she told CNBC-TV18. She says there is a need to protect interest and disallow monopolies like big pharma or big companies/ corporates that want to invest and take advantage of the Indian market.

A draft patents policy was formulated earlier this year. It will be moved to the Cabinet after integrating all the inputs from all the departments, commerce and industry minister Nirmala Sitharaman said on Monday.Below is the edited transcript of Kiran Mazumdar Shaw's interview with Kritika Saxena on CNBC-TV18.Q: Last about one odd year there has been a lot of changes - there has been Make in India, Skill India, Digital India, Clean India, do you feel that the government has done enough or so far is it just talk and not as much implementation?A: Obviously these are very important initiatives that the government is taking and I think this messaging is very important to get these things off the ground. So, there is a kind of sense that there is a focus on manufacturing, on skill development, on cleaning up the environment, on various important issues that I think the country does need to act on. I think it is important for the government to walk the talk. I really believe that whilst they have set the agenda it is still not in motion I think that is what we need to focus on.It does take time to basically make sure that you are coming out with comprehensive policies that can actually make you deliver on these objectives. So, I think let us give the government a little time because I know some things are happening. For instance, I do know that in the Swachh Bharat Abhiyan initiative the government has made substantial progress though we are not seeing much on the ground. I know that the Prime Minister himself has been very disappointed in terms of the school toilet projects but that is because it is not for want of people doing it but it is basically because we haven’t figured out and worked out what it takes to build all these toilets. I know that our own company has taken on the responsibility of constructing these toilets in neighbouring 25 schools - government schools, rural schools. However, the fact is the bureaucracy involved in actually constructing these toilets is unimaginable. I think the government has to fix the systems. We have a systemic problem in terms of how projects are implemented. We always suffered because the bureaucracy and the processes and the regulatory kind of mechanisms that we have to conform to are just so tedious and so difficult and sometimes unsurmountable that people give up.I will give you an example. Today, the government has mandated 2 percent CSR spend for corporate. Believe it or not there is a standstill in CSR spends because suddenly FCRA has become a huge issue for all corporates. The government has to think this out and resolve these kind of obstacles and in most cases senseless obstacles if they really want us to do things. A large part of the reasons why many of the toilets have not been constructed is because of FCRA. I am on the board of Infosys, we have a huge problem because we have committed ourselves to building a lot of toilets but FCRA has stopped all this.Q: So, what is being done in terms of the discussions with the government to remove these roadblocks because if you need a clearance , if you have 50 percent foreign shareholding and you need that clearance of course there will be a delay. What is being done on the ground right now, has the government given you some kind of an assurance that they will look into these issues?A: That is not the kind of assurance we need. We need action. The government is always saying we will look into this matter and we will solve the problem and we will make sure that these issues are resolved but that is not what we want to hear. We want to get a quick resolution to these matters. I think the government has to act in haste, that is what I am saying - you look at any regulatory system, any of the issues today that are preventing us from focusing on development and progress. Wherever there are regulatory hurdles, you have to remove them. We keep talking about regulatory simplification, ease of doing business, these are simple things that the government can easily act on. So, I think they are fighting entrenched bureaucracy and they have to know how to do that.There has been a significant delay in terms of the school toilet project, what is the status in terms of implementation right now, has that come to a standstill or is there some kind of action right now from individual corporates?A: The kind of challenges that India has, we cannot do things in small measures, it has to make big impact, so you have to make sure that these projects are implemented in a big way, in a scalable way. There is no point making a few toilets here and a few toilets there right? You have got to make impact and for that you need to scale.Q: Let me ask you then about the make in India policy. Of course the government is trying to simplify manufacturing norms but do you feel that for the pharma sector specifically, for pharma companies to be able to set up plants over here, are the make in India policies by the government or the ease or that they have brought in by the government, is that conducive to the pharma sector?Will we see more pharma companies now be able to set up plants over here?A: In all fairness let me tell you that the news is pretty good for the pharma sector because actually the government has done a lot to help this sector. For instance Special Economic Zone (SEZ) norms have been hugely simplified, today you can do a lot of self attestation for SEZs which was really quite a cumbersome aspect to deal with when you were an SEZ. The second thing is I am actually working with the regulatory systems in the country and they are very receptive to regulatory reforms because regulatory reforms were what was keeping us back and I must say that at least in the pharma sector there is a lot of proactiveness, there is a lot of receptiveness to bring about change and that is a big positive for me. I am still not at all happy with the price control regulations and that is one regulatory body that needs urgent reforms because they don’t get it. They don’t understand that the present market dynamics and market mechanisms are actually bringing down costs of drugs very effectively and I don’t think there needs to be further control because otherwise you will kill the industry.Q: Speaking about that, what is the update from the government so far? They have given some kind of an indication that they will act on the National Pharmaceutical Pricing Authority (NPPA) norms and the guidelines, has there been some kind of a clarity coming in from there or has there been any guidelines that have been simplified yet?A: No, I am afraid that is one area where I am very disappointed, in fact I have also met with the minister who has appraised of the matter, he quite understands what our position is and he actually does indicate at least to me and to many of us that he is willing to do something about it. Now when you talk to the regulator themselves, they need to understand that this is not something about obstructing business but it is about enabling business. All regulators in this country must understand that, that is the first maxim that the government should focus on. How do you get regulators to know that they have to enable the economy, enable development, enable business and they cannot be seen as obstructing and becoming barriers of growth. That is where our challenge is and many of these regulatory bodies are very petty in their approach to how they regulate various sectors. Q: Let me also ask you in that case about the IPR Bill which Nirmala Sitharaman has kind of indicated that that will be taken up by the cabinet. How significant would that be or has there been some kind of communication by the government to corporates that this could be simplified or taken up by the government soon? A: I have been involved to a limited extent with the IPR policy from the evolution to the formulation of the new IPR policy. I have interacted with the members of the IPR policy team. I feel that yes, they are going about it in a very rational way. Q: So it has kick-started? A: It has, it has made significant progress and is in a very advanced stage of being rolled out. They have looked at India’s concerns and making it a fairly reasonable and rational IPR regime for India. We also have to make sure that we protect our own interests and we don’t allow market monopolies from big pharma or big companies or big corporate who want to invest and take advantage of the Indian market. So, it is a little bit of a give and take because there has been a serious concern especially in the pharma sector where a large number of compulsory licensing applications suddenly became very visible and this became a huge cause of concern for the innovators and I agree with that because you cannot be frivolous about compulsory licensing, so that aspect needs to be taken care of.Q: So roughly by when do you expect the IPR policy to actually come about, see the light of day because from conversation to actual implementation it takes.A: No, but they have made significant progress and remember the committee was set up not too long ago, so if you look at that, it has been fairly rapid and if you ask me, hopefully by the end of the year you should see it being rolled out.Q: Goods and Services Tax (GST), big concern of course. Everyone is talking about how that has been an issue for every single corporate. It hasn't simplified the basic taxation norm. GST not coming about is a big negative. Yes, it seems to be taking the light of day now. From the talks that the government has had so far how significant would it be for Biocon, for corporates to simplify your tax structure and simplify your balance sheet?A: It is extremely important. GST is one area that will make a big difference to investment and growth and this is extremely important because right now it is a nightmare to deal with all the interstate and multiple taxation that we have on everyone of our products. So, from that point of view GST will certainly make a huge difference.Q: You are confident though that they will reach the deadline?A: I think so.Q: Have you had some conversation with the government?A: I haven't, but I am optimistic that they will make it happen because there is no logic in obstructing that. I really don't believe that the opposition gains anything by obstructing GST because after all it was mooted by the opposition in the last government and I really believe it is in everyone's interest to support that GST bill and they should stop creating more complexity around it, like they are suddenly talking about taxing GST or something to that effect and it is unwarranted.Q: Let me ask you in that case about the sector as a whole. Last one year there has been a lot of action in terms of consolidation but in the last two-three odd months or two odd quarters the talk has been that the consolidation was a one off and that there was just a couple of companies that were merging, there were some important acquisitions that took place. Is the pharma sector gearing up for a consolidation little ways down the road or is it still early days right now? Are companies still nascent in terms of their overall growth trajectory and visibility?A: If you actually look at the Indian pharma sector there are large number of pretty big sized pharma companies and then you have a sprinkling of midsized and then large number of very small pharma companies across the country. What is happening is it is very clear that with the tightening up of regulatory norms and we need to enforce a compliance culture. With the enforcement of compliance culture not only within the country but from external agencies it is becoming very clear that quality and compliance are very expensive and therefore you are likely to see consolidation also increasing and you will see Q: Over the next one or two years?A: I am sure you will see more mergers and acquisitions taking place.Q: Will Biocon be one of the participants?A: We are certainly looking at a number of acquisitions basically because we do need to basically build capacity in certain of our business areas and from that point of view we will make some judicious acquisitions to expand some of these Q: Is this within this fiscal or would it be over a period of time?A: Hopefully within this fiscal.Q: What are the areas that you are looking at to be able to expand your portfolio and complete the gaps?A: It is largely in the area of manufacturing. So, we will be looking at those.Q: So you look at manufacturing plants specifically?A: Largely, because we are basically going into many areas and where some of it has gaps where we don't even have many large scale manufacturing capacities. Some of it where we have exhausted some of where our capacities that we need to expand and extend it. We are also investing in expanding Brownfield and Greenfield kind of expansion projects. We have just set up huge facility in Malaysia that is now sort of being operationalised. So, Biocon is very fixed on making sure that we have global scale in manufacturing to support our business.We want to make a huge impact on global healthcare through biopharmaceuticals and biopharmaceuticals in terms of manufacturing is very expensive proposition and we also need to build scale if you want to make global impact. So, that is the kind of journey we are on and I really want to make sure that maybe one in five diabetic at least uses some product made by Biocon and maybe one in ten cancer patient might use an important biologic coming from Biocon. That is the kind of ambition or goal that I have because I feel that is what we should be looking at. We already know that Biocon's Statins do command a huge part of the global market. We have a significant part of the global market as Active Pharmaceutical Ingredients (APIs) go. So, we have made global impact in many of the other areas. Now it is time for our biologics to do the same.Q: One of the most transformational things that the market is waiting for is the oral insulin business. Is that on track, is there are timeline that you have, when it will be able to hit the market?A: Yes, we have done a very important set of studies recently which have yielded very encouraging results and now we are on to a very important part of the next phase which is really to conduct pivotal proof of concept study which will really tell you how important and how effective the drug is. Of course we lost a lot of time I would say, we lost almost two years of development timelines because of the ban on clinical trials but we have now tried to make up for it by doing many of these trials overseas and that is unfortunate.Q: That is the thing that you have raised significantly with the government. That is the one thing that you have particularly raised with the government. Clinical trials being banned in India, huge negative for the country yes, there has been some kind of clarity coming in, government has said that they are going to look into it at least. Has there been some update with respect to the guidelines, could that be opened up a bit?A: A draft guidelines has come out but industry still is not very happy with some of the guidelines that they have proposed. For instance it is absurd to suggest that each investigator can only conduct three trials. We don't even have enough investigators and why put a limit on the number of trials an investigator can conduct. There are things like the percent of government hospitals that should be involved in clinical trials. On one hand you are saying that basically saying clinical trials are something that has to be watched very carefully and then the government itself says you must make sure that most of it is veered into government hospitals.So, there is a lot of confusion around who is trying to come up with these guidelines, what is the objective. We should stop worrying about putting people into straight jackets when they are doing these clinical trials but they need to free up the whole trial regiment and basically make sure that the punitive measures taken on companies and investigators who do wrong are strong.But it is not right to make it such a risk free business that anything going wrong becomes hugely punitive. So, that is the biggest concern that we have that the way they are treating clinical trials is that if anything goes wrong in a clinical trial you have to pay a huge price. That is ridiculous because clinical trials are meant to provide new medications for diseases. If you have a cancer patient who has no recourse to any medication and you are putting them on a trial and if the cancer patient dies I really don't think that is a cause for huge punitive action against the company or the investigator.Q: So, all in all you would say that as of now how things stand today. Ease of doing business hasn't being simplified by the government just yet?A: In our sector some of that ease of doing business is unfolding and I hope it just becomes easier to do business.Q: How long would you give the government? One year?A: I am going to give the government one year because trying to judge the government in the first year is a bit difficult because it was not fair. The government needed that one year to come out with all the kind of efforts and policies and thinking around ease of doing business but if they can't deliver on that in the next one year then there is a cause for concern.Q: Is Biocon on track to reach the USD 1 billion by 2018 or would you be able to cross that target?A: We are certainly confident.