Q: What are your views on the Government’s recent PLI scheme?
The government has realized that they have to do something about its API dependency. While some of these schemes are fantastic but I have a little bit of a different view. If you look at China, why is its cost so competitive? The first thing that we got to understand is that the land is pretty much free for them. Second, the cost of power is less. Third, the finance or the term loans that they get are not of five and seven years, they’re probably 10 to 15 years term loans. Also when they set up a factory, the common utilities are provided by the park. Whereas, if somebody in India sets up a factory they have to do everything by themselves.
If you look at the economies of scale, they manufacture an intermediate or key starting material looking at several hundreds of tonnes per month. So if you add all these things together, there is an economic incentive of almost 25% right there itself. So that’s why we are not able to compete. The production linked incentive scheme is great, but it still does not address these advantages that China has. It is a good starting point for India but we got to do a lot more.
There need to be more innovative ways to fund risk-based research in India. The government has some great schemes, but it’s very hard to understand how we can leverage those funds to do cutting edge research, to develop new molecules that come out of India. I think that’s an area where there’s a huge potential and there’s a lot of talent. India should also contribute to the innovation space.
Q: How has the Covid pandemic impacted Laxai Life Sciences business?
We have been growing year-on-year substantially and Covid has sort of accelerated some of the opportunities. We are seeing a lot of our customers wanting to derisk from China. More customers are coming to us which has increased the pipeline of opportunities from the contract research and CDMO (contract development and manufacturing organization) space.
Another area where we have seen growth is the post-Covid treatment space. Most post-Covid treatments include a combination of Cetirizine and Montelukast. We have stabilised those two products in our API portfolio and we are seeing a steady increase in its demand.
India is very good for the finished APIs, but we still source the key starting materials and intermediates from China. In the generic space, they capture 70% of the manufacturing business. All these will convert in the next six to eight months and that’s an area which we are seeing a lot of inquiries come our way.
Every company is making a conscious decision to derisk 10-15% and that itself is a huge opportunity for companies like us, and India as a country.
Q: What are the latest developments in the Covid curative compound developed by Laxai?
Pertaining to Covid, we have developed a compound called Umifenovir which we applied for a clinical trial in partnership with CSIR. Umifenovir used along with Colchicine boosts the immune system. If this clinical trial becomes successful, I think we can do a lot of business with that.
We’ve also developed certain intermediates that go into Covid APIs. We have the technologies for Hydroxychloroquine (HCQ) which is not in demand, but we’ve developed it, and we now started working on Favipiravir and its intermediates. Apart from that, combination of Cetirizine and Montelukast is also picking up for post-treatment of Covid, to give relief to the lung and breathing.
Q: What is the new molecule that the company is working on towards Covid treatment?
We have developed a molecule called Nafamostat with properties of both antiviral and anticoagulant, and the side effects seem to be very less based on the data that we’ve studied. We have applied for phase-3 but the government is saying we don’t have this molecule in India, so we have do a phase-2. Currently, we are evaluating whether we should, as it is a very good molecule.
Q: What is Laxai’s growth plan in the coming years?
So, we have a very clear roadmap. We are aspiring to be one of the top 10 small molecule CDMO companies in the world. The reason why we bet on this is if you look at the USFDA applications for clinical trials, 70% of the molecules are small molecules, out of which 60% are in oncology. Our roadmap is to become one of the leaders in the CDMO space, and as a subsection of that we want to be focused on oncology CDMO.
One of the immediate plans that we are working on is to set up a cytotoxic oncology manufacturing facility for intermediaries and APIs for innovators. So that’s one of the things we’re doing. Second, we want to invest significantly in green chemistry technology, and continuous flow manufacturing, to be able to be cost-competitive as well as reduce the carbon footprint. Third, we are looking at acquiring small CDMO companies in Europe and United States, primarily for acquiring scientific talent, technology and customers, where they don’t have manufacturing and bring large scale manufacturing back to India. So we have a very clear plan on how we’re going to achieve our vision in the next six years.