India Report,The Emerging Second Wave

It was probably the French drugmaker Sanofi’s buyout of Shantha Biotechnics in June that suddenly turned the global spotlight on India’s biotech scene. Sanofi’s vaccine unit Sanofi-Pasteur paid a huge premium to Merieux Alliance — which owned majority ofshares in Shantha Bio through its subsidiary ShanH — to acquire controlling stake in the Hyderabad based bio firm.

At around $783 million, or roughly eight times more than Shantha’s expected annual $90 million sales in figures, the deal has set a new valuation benchmark for the Indian biotech companies.

Justifying the high valuation, Sanofi’s chief executive Christopher Viehbacher said the deal underscored the growing importance of the emerging second wave of strong portfolio based companies from India. Extremely high quality low cost manufacturing capacities made Shantha a good fit for Sanofi as a hub to pursue Sanofi’s global biotech goals, Mr. Viehbacher added.

Shantha, which claims to have launched the first desi version of recombinant hepatitis B vaccine in India, has already bagged $340 million worth of three-year contracts from the United Nations to supply a pentavalent vaccine in September.

If Shantha-Sanofi deal is any indication, then strong manufacturing capabilities, together with the potential to generate intellectual property, has started attracting strategic investors to India’s biotech space.

This year, San Diego-based Amylin forged an alliance with India’s Biocon for a new peptide drug to treat diabetes. Amylin is expected provide phybrid technology in peptide hormone development for the candidate molecule, while Biocon will utilize its expertise in recombinant microbial expression to manufacture the