The Edge, 18
Feb 2008
Net Value, Aurigene
comes to Malaysia
By Toh Mei Ling
Developing a new economic sector has never been an
easy task seeing that there are no clear
step-by-step methods that ensure the success of the
endeavour. In the past, Malaysia has always looked
to attracting foreign direct investment as a part of
its developmental strategy. Three years after its
inception, Malaysian Biotechnology Corp (BiotechCorp)
has formed its first strategic alliance with Indian
drug research company Aurigene Discovery
Technologies Ltd. A wholly owned subsidiary of
India's third largest pharmaceutical company, Dr
Reddy's Laboratories, Aurigene will be setting up
three functional labs here in Technology Park
Malaysia. The company was recently awarded BioNexus
status.
"To us, this is something that is very significant
in the developmental initiatives that we are doing.
India, back in 2006, recorded the second highest
growth in number of patents worldwide. It is clear
that India is emerging as a superpower in science
and technology innovation. This is why we are
collaborating with companies in India. We are also
very selective — people have asked me where are the
Dell equivalents in biotech and to be honest, to
bring these companies in, Malaysia would have to pay
through its ears. Is it really worth it?" asks Datuk
Iskandar Mizal Mahmood, CEO of BiotechCorp.
He adds that BiotechCorp takes a different strategic
view when looking for partners, focusing more on
value creation and building of the ecosystem rather
than purely job creation. Giving the example of
Aurigene, Iskandar explains that the key objective
is to improve drug discovery capabilities in
Malaysia. Incorporated in 2002, Aurigene started as
a drug discovery company that is focused on
collaborations with large pharmaceutical firms.
Initially, it had two facilities — Bangalore and
Boston — but the latter has been shut down following
the improvement of intellectual property laws in
India.
"Aurigene was not set up for the purpose of cost
arbitrage. Right from the beginning, we have a well-
drawn-out focus whereby we are in the business of
generating IP as the end product. We do very high
quality work and that is why our business model is
different from that of the outsourcing model. We do
not need to double people in order to double
revenue. We have three focus areas — oncology,
metabolic disorders and inflammation. From a science
focus, we do largely structure-based drug design,"
says C S N Murthy, Aurigene's CEO.
In the past two to three years, Aurigene has started
collaborations with big pharmaceutical names like
Johnson & Johnson's, Rio Science in Denmark and
AmGen in the US. The company doubled its revenue in
2007, he adds, and is expected to continue its
impressive growth this year. Last year alone,
Aurigene filed 14 patents. Operating out of India
has significantly lowered the cost of failure in
R&D, while the value of the discovery remains the
same: "In India, we can fail for one third or a
quarter of the cost if it was done elsewhere,"
Murthy says.
One of the reasons why Aurigene opted to locate in
Malaysia was because of the reliability of the
logistics industry here, and the ease of which it
could import materials. Aside from this, BiotechCorp
has been encouraging interaction between the company
and local universities: "We have met a few students
from Universiti Malaya and with the right
opportunity, we can turn these people into assets.
Our operations are not very people intensive — it is
about a few good people," he explains.
Although the setting up of its US$2 million (about
RM6.5 million) facility is currently in its pilot
phase, Murthy says Aurigene is clear on what it
wants to do with the facility. Taking a careful
stance, he adds that the company would like to
really experience how different it is operating out
of Malaysia and get familiar with the workings of
the country first before really moving forward more
rapidly. The plan is to start with between 15 and 20
people, but there are plans to scale up to about 50
in the next two years. The Malaysian facility will
be focusing on R&D for drug metabolism and
pharmacokinetics as well as cell biology.
Although BiotechCorp has equal focus on all areas of
biotechnology, the healthcare spectrum seem to
dominate the local scene. Of this, Iskandar says:
"Of the 42 BioNexus companies, 19 are actually in
the area of healthcare. The approved investments
that are coming in from these companies are quite
good as well and we do also have a good pipeline in
terms of the companies that we are evaluating and
those we are assisting to nurture in healthcare
biotechnology. In India, biotechnology is a huge
industry that is recording growth rates of 20% to
30% for the next five to seven years. Its healthcare
biotechnology sector alone is valued at over US$2
billion."
No doubt, BiotechCorp will be hoping to see similar
growth in Malaysia. |
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