The Advinus Decade: Inside the Tata Group’s expensive drug discovery flameout

“I’ve not really spoken about Advinus since I left,” said Barbhaiya over the phone from the US, reluctant to speak on this matter. “You know what happened to Ranbaxy [referring to the major data fudging fraud in his previous pharma company for which it was fined $500 million]. If I turn the clock back and if I were to choose between joining Ranbaxy again and joining hands with the TATAs, I’d choose Ranbaxy any day over the TATAs, just on ethical grounds.”

To be emotionally unengaged in such matters is hard. Even Ratan N Tata, chairman emeritus who was personally involved in setting up Advinus in 2005, is learnt to have shown “fair amount of patience” until he was left with little. The group had rallied around the idea, pooled in resources from Rallis India, ‘cleverly’ worked out a new company structure in Advinus and hoped its cutting-edge tech and processes would invigorate a few group companies, especially Tata Chemicals. But they cut their losses after 12 years. The ripple effects of which are felt in the drug discovery community in India, which is small and struggling and prone to second-guessing itself at such closures. They resemble what the Bay Area in the US was in the ‘70s and ‘80s when it was all hard work and no money.

For the TATAs, what came out of it was perhaps learning. “Some of it was also vague. It’s like saying what did the Indian team learn by losing the [cricket] World Cup in the years that it lost,” says Satish Pradhan, who was associated with Advinus right from the start and served on its board until he retired from the group in 2015.

The two-headed hydra

When the Eurofins deal concludes by September, what would be sold is the contract research business in Bengaluru which has been in progressive decline in the last three years, in spite of being a high margin business with all international accreditations in place. It ended FY16 with Rs 163 crore in revenue, Rs 17.3 crore in losses. Did the chinks lie in how it was set up?

Advinus started with two distinct units—a contract research organization (CRO), which did toxicity and other studies for pharmaceutical and agri businesses; and a drug discovery unit in Pune to do basic research for new molecules. The former was to keep the kitchen fire burning so the latter could undertake risky research. To avoid creating a schizophrenic entity, the two units were kept in two locations, so that services, with their serious contractual obligations, did not influence intellectual property (IP) creation.

“Even before the Pune centre was set up, we had alliances with Merck, Johnson & Johnson, and Novartis,” says Barbhaiya. It was not the usual full time equivalent (FTE) arrangement that most CROs have with their customers. For instance, the $45-million deal with Japan’s Takeda around 2011 was earning 3-4 times the usual FTE and supported exploratory research with a lot of freedom, he adds.

In spite of his credentials, a former senior executive from Bristol-Myers Squibb in the US, and having struck some collaborative drug discovery deals with big pharma, Barbhaiya could not swing it. “Rashmi’s orientation to toxicity services was very different; he was a pharma guy while in toxicity services there is a lot of non-pharma work which nobody paid attention to,” says a consultant who’s worked with the TATA group for several years and doesn’t want to be identified. Barbhaiya was also more interested in high-risk, high-reward business of drug discovery. A lack of focus on the CRO side changed the character of Advinus. At one point, it had close to 450 people in the discovery unit. Around 2010, it was running nearly 10 discovery programmes at an annual cost of $1.2 million per programme.

Amount of risk

“We are not talking small money. And they had some proprietary pipeline too. Rashmi wanted to do high-risk business but the TATAs did not understand it properly,” says the consultant. For instance, around 2011, Advinus had an anti-diabetes molecule where it had found a new mode of action and the initial data showed promise. “Advinus needed $20 million to move into further studies but it was short of money.”

Even while doing services, says Barbhaiya, Advinus was the first Indian company to develop “comprehensive capability to do all preclinical work for a molecule to make it IND-ready” and in record time of six to seven months. Companies have to file Investigational New Drug (IND) application, which involves furnishing lot of data, with the regulator before they can begin the clinical study. “The usual time is 15-18 months. So, to save one year in preclinical work in the [20-year] life of a patented molecule is a huge thing,” notes Barbhaiya. He says at least two molecules discovered at Advinus reached clinical studies, including one with Novartis.


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