Syngene to enter drug discovery

Syngene, the contract research subsidiary of Biocon, India's leading biotechnology company, is going into a critical new area.

It is making its first foray into drug discovery which will convert it from being a totally service oriented operation to one that seeks to acquire a bit of intellectual property too.

Emphasising that this is only a first step and Syngene will retain its basic contract research orientation, Dr Goutam Das, chief operating officer, said, "we will initially spend less than 5 per cent of our revenue on this new activity. We will also not go into it on our own but in partnership with foreign drug discovery firms."

Initially it will have to be partners from markets with strong IPR regimes as Biocon wants to raise comfort levels about its own IPR commitments.

While seeking out partners, Syngene will try to balance two opposites. It will stick to the areas it knows best and at the same time not undertake any programme that may make existing clients worried about competition from their service provider.

In looking for partners who provide the perfect fit, Syngene will concentrate on anti-diabetic and cardio vascular areas as well as anti-infectives in which there is considerable interest.

There are two reasons why this new activity is being taken up. One, the product patent regime will come into play in India from next year (2005), making it worthwhile to own intellectual property, and two, in biotechnology, as opposed to say software, every operation is expected to have at least some products in its portfolio and not be entirely service oriented.

Though getting into the products business is a long drawn out affair, eventually, in a couple of years or so, Dr Das expects the company to file for patents.

The change in Syngene and Biocon (although the latter is already into product development in a small way) reflects the mood change in the group as a result of the hugely successful public issue.

Because of the public confidence reposed in it, the group wants to become a player of some significance. Products give you a different kind of clout.

The group also wants the boys, who have developed considerable expertise in their respective fields, to have something more to do.

The choice of a co-development partner is actively on and is being restricted to non-majors among discovery firms as global drug majors do not go in for co-development. They either do things from scratch themselves or buy out a product at a particular stage of development.

Syngene, which posted a 40 per cent rise in topline last year and contributed significantly to the improved margins of the group, expects present trends to continue and maintain the growth momentum in the current year.

It also expects to have more clients even while seeing existing clients' business grow. A fallout from the high profile acquired through the public issue, this development will derisk the business by reducing dependence on individual clients.