ET Q&A - India is So Big, We Can't Ignore It, We Always Keep It on Our Radar
SEVERIN SCHWAN CEO, ROCHE
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Schwan says India's healthcare spend relative to GDP is very low, compared to economies such as China which spends about 5% to 6% of its GDP on healthcare. In India, it is 1% to 2%
Roche, the world's biggest seller of biotech drugs and dignostics, is preparing to launch a raft of nnovative products that work by activating the body's immune system to fight cancer cells. These drugs, popularly termed immunotherapies, demonstrate a paradigm shift in cancer treatment and experts believe it will transform the way cancer will be perceived in the next decade.Most of Roche's $48-billion turnover (in 2014) at present comes from a small portfolio of cancer products led by Avastin, which clocked sales of nearly $6.5 billion. Herceptin, its breast cancer drug, grossed about the same level of sales. At a meeting to showcase its future pipeline earlier this week at Basel, senior Roche executives underlined that its potential offering in mmunotherapy are industry-leading.
Roche Global CEO Severin Schwan said that while India will be on the company's radar, government steps towards healthcare allocation and a protected environment in intellectual property will help attract investments. In a wide-ranging conversation with ET's Vikas Dandekar, Schwan discussed the company's business outlook in India, pricing, access issues and the recent volatility in emerging markets, and much more. Edited excerpts:
The world of Big Pharma seems to be divided on the issue of drug pricing -while some companies believe pricing of medicines should not pose a barrier to access, others emphasize that research for newer drugs needs to be sustained. How does Roche see these changes, given its significant presence in cancer medicines?
I think this is a very valid point. What's all the nnovation for, if it does not reach the patients?
But what I would say is the question of access is not limited to pricing. Pricing is an important element but typically it's a much bigger issue.Very often, the healthcare infrastructure would not be in place -you need labs, you need educated decisions of doctors and patients, then there is need for surgery, infusions, and all these need infrastructure to be able to help with those mportant medicines.
Therefore, if we look at access we try to nclude all the stakeholders and we try to work with NGOs and with political decision makers to make sure that the overall nfrastructure is in place to provide medicines. Pricing is also an important component and that is something where we continue to work. We actually go for a much more differentiated approach in pricing. It's an ongoing paradigm shift. Five years ago, the industry had more or less uniform global prices for patented medicines.Today, we see the industry -and Roche is one of them -doing much more differentiated pricing according to the purchasing power of the respective countries.
How do you plan to make your cancer drugs available in India?
We always keep India on our radar. The country is so big that you cannot ignore it. There is however high political volatility, and political decision making isn't always easy. But trust builds over time. If volatility goes down a bit, if the government invests in healthcare, if IP is protected, I can guarantee every (healthcare) company in the world will come to India. India is all about talent and the country has really highly educated people.Also, Indians understand both the west and the east, so it is almost like a vital link to both sides of the world.
In India, our market position is relatively small and the reason is two-fold. One is we are facing challenges of intellectual property protection.There is a patent law in place but the execution is challenging from our perspective. I hope Indian companies invest in research and development and then there could be more interest from the country to provide an environment that protects intellectual property. The same thing is happening in China. That country wants to build a local life sciences industry and so they protect their IP, which is also attracting others to the country. h is also attracting others to the country.
Next, in India there is limited money for overall health expenses. As a result, the penetration of high level healthcare is also limited. The very rich people from India fly to the UK or US to get treated, and then there is a vast majority that does not have any access to healthcare.
Coming to emerging markets, there's been high volatility recently and some big companies have even seen a slowdown. How does Roche react to this and where do you place India?
I am optimistic of the development of emerging markets. Volatility is there, but the long term trend is clearly a positive and I am convinced that we will see above average growth rates in emerging markets.
For India, the observation that I would share is that apart from discussions on pricing of specific medicines, one fundamental topic is how much India wants to spend on its overall healthcare system. It is not for me to make that judgment but from outside, what I observe is that the healthcare spend relative to GDP is very low compared to economies such as China which spends about 5% to 6% of their GDP on healthcare. In India, it is 1% to 2%. Even if you double the healthcare budget over time in India, it will still be lagging to comparable economies.
How does Roche see the quality of research in India? It did a deal earlier this year with Curadev, a relatively new outfit.
We go where we see innovation and it can happen anywhere. A lot of it happens in the US.Most are still in the US, but increasingly we have opened discussions elsewhere for collaborations and licensing agreements and India is certainly on our radar.
Immunotherapy has arguably emerged as the latest frontier in oncology research and Roche is a big player. With products already in the market from your competitors, how do you see Roche reacting to competition?
I certainly believe we are one of the leaders in this very promising area of immunotherapies.We are leading in certain indications like in bladder cancer where our molecule is in the lead and will be the first company to launch a new medicine in this very important area.
We recently presented data on lung cancer, so while certain companies have already launched their medicines in this area, we have a good chance to be the first in first line lung cancer treatment and I would also like to point out that in our portfolio, we have seven new molecular entities in clinical development and there are 20 programmes in total. We are well positioned to take a leading role in this exceptionally interesting area.
Given the rapid changes in this segment, do you foresee suitable changes in the regulatory guidelines that are directed at speeding up the drug development process?
Five years ago, I heavily complained about the US Five years ago, I heavily complained about the US FDA being slow in their approval timelines. Then the regulators, industry, patients and the US Congress got involved saying it cannot carry on like this. Now, it has completely turned around and the FDA is now almost pushing us as a company. If they see innovation, they are extremely supportive and collaborate. The authorities are interested to bring true innovations to patients from the regulatory point of view.
(The writer was in Switzerland on an invitation from Roche)
Roche Global CEO Severin Schwan said that while India will be on the company's radar, government steps towards healthcare allocation and a protected environment in intellectual property will help attract investments. In a wide-ranging conversation with ET's Vikas Dandekar, Schwan discussed the company's business outlook in India, pricing, access issues and the recent volatility in emerging markets, and much more. Edited excerpts:
The world of Big Pharma seems to be divided on the issue of drug pricing -while some companies believe pricing of medicines should not pose a barrier to access, others emphasize that research for newer drugs needs to be sustained. How does Roche see these changes, given its significant presence in cancer medicines?
I think this is a very valid point. What's all the nnovation for, if it does not reach the patients?
But what I would say is the question of access is not limited to pricing. Pricing is an important element but typically it's a much bigger issue.Very often, the healthcare infrastructure would not be in place -you need labs, you need educated decisions of doctors and patients, then there is need for surgery, infusions, and all these need infrastructure to be able to help with those mportant medicines.
Therefore, if we look at access we try to nclude all the stakeholders and we try to work with NGOs and with political decision makers to make sure that the overall nfrastructure is in place to provide medicines. Pricing is also an important component and that is something where we continue to work. We actually go for a much more differentiated approach in pricing. It's an ongoing paradigm shift. Five years ago, the industry had more or less uniform global prices for patented medicines.Today, we see the industry -and Roche is one of them -doing much more differentiated pricing according to the purchasing power of the respective countries.
How do you plan to make your cancer drugs available in India?
We always keep India on our radar. The country is so big that you cannot ignore it. There is however high political volatility, and political decision making isn't always easy. But trust builds over time. If volatility goes down a bit, if the government invests in healthcare, if IP is protected, I can guarantee every (healthcare) company in the world will come to India. India is all about talent and the country has really highly educated people.Also, Indians understand both the west and the east, so it is almost like a vital link to both sides of the world.
In India, our market position is relatively small and the reason is two-fold. One is we are facing challenges of intellectual property protection.There is a patent law in place but the execution is challenging from our perspective. I hope Indian companies invest in research and development and then there could be more interest from the country to provide an environment that protects intellectual property. The same thing is happening in China. That country wants to build a local life sciences industry and so they protect their IP, which is also attracting others to the country. h is also attracting others to the country.
Next, in India there is limited money for overall health expenses. As a result, the penetration of high level healthcare is also limited. The very rich people from India fly to the UK or US to get treated, and then there is a vast majority that does not have any access to healthcare.
Coming to emerging markets, there's been high volatility recently and some big companies have even seen a slowdown. How does Roche react to this and where do you place India?
I am optimistic of the development of emerging markets. Volatility is there, but the long term trend is clearly a positive and I am convinced that we will see above average growth rates in emerging markets.
For India, the observation that I would share is that apart from discussions on pricing of specific medicines, one fundamental topic is how much India wants to spend on its overall healthcare system. It is not for me to make that judgment but from outside, what I observe is that the healthcare spend relative to GDP is very low compared to economies such as China which spends about 5% to 6% of their GDP on healthcare. In India, it is 1% to 2%. Even if you double the healthcare budget over time in India, it will still be lagging to comparable economies.
How does Roche see the quality of research in India? It did a deal earlier this year with Curadev, a relatively new outfit.
We go where we see innovation and it can happen anywhere. A lot of it happens in the US.Most are still in the US, but increasingly we have opened discussions elsewhere for collaborations and licensing agreements and India is certainly on our radar.
Immunotherapy has arguably emerged as the latest frontier in oncology research and Roche is a big player. With products already in the market from your competitors, how do you see Roche reacting to competition?
I certainly believe we are one of the leaders in this very promising area of immunotherapies.We are leading in certain indications like in bladder cancer where our molecule is in the lead and will be the first company to launch a new medicine in this very important area.
We recently presented data on lung cancer, so while certain companies have already launched their medicines in this area, we have a good chance to be the first in first line lung cancer treatment and I would also like to point out that in our portfolio, we have seven new molecular entities in clinical development and there are 20 programmes in total. We are well positioned to take a leading role in this exceptionally interesting area.
Given the rapid changes in this segment, do you foresee suitable changes in the regulatory guidelines that are directed at speeding up the drug development process?
Five years ago, I heavily complained about the US Five years ago, I heavily complained about the US FDA being slow in their approval timelines. Then the regulators, industry, patients and the US Congress got involved saying it cannot carry on like this. Now, it has completely turned around and the FDA is now almost pushing us as a company. If they see innovation, they are extremely supportive and collaborate. The authorities are interested to bring true innovations to patients from the regulatory point of view.
(The writer was in Switzerland on an invitation from Roche)
