Turning tides for Cymbiotics

Nandini Patwardhan speaks to Raj Barathur, President and CEO of Cymbiotics, as he unveils the strategies the US based company has employed to foray into the burgeoning Indian market.

What marked Cymbiotics’ alliance with Dr Reddy’s with respect to Celadrin?

Cymbiotics is a US based company in Southern California in San Diego. We have two companies, one is a CRO called ClinCyte, which was founded in 2000 and the other one is a company called Cymbiotics, which was established in 2002. Currently our products are going through regulatory processes in about 11 countries and we have commercialised them in three countries, Malaysia, Indonesia and India. We got this product, Celadrin to India and allied with two companies for the marketing of the product. Dr Reddy’s is one of them.

The response has been phenomenal, especially from the Indian orthopaedic surgeons and others who have used it in treatment. Part of the reason for this is that the drugs that were in use had side effects, making health care providers and general public apprehensive of their long-term safety. Celadrin, which is used for the treatment of Osteoarthritis and Repetitive Strain Injuries (RSI) is under license from Imagenetix, USA and Cymbiotics (USA). Dr Reddy’s has taken the product from us and has put in a lot of muscle into it by marketing the product, using a business model very similar to the US business model. They have dedicated a large number of field-force to it and have set a budget for it. Additionally, they have pulled all the stops to sell it. As a result, they have become very successful.

In addition to Dr Reddy’s, the product is being marketed by another Indian pharma giant under a different name. The benefit that we got from these sales and marketing alliances is that these two companies are well known to rest of the world. They have a presence not only in USA and Europe, but also in South Africa. These alliances have helped us get several licences in other Asian countries too. This is because when a company like Dr Reddy’s distributes the product, you get a wider reach.

Why did you choose to have alliances instead of exploring the option of setting up a base in India, to market your products?

Every year quite a few foreign companies establish their offices in India. But this is a very risky proposition. Our partners know the market better. They know about the marketing strategies in the Indian context. They also have connections with the channel partners in place. For Cymbiotics to come in and develop all the expertise effectively, would be a long and cumbersome process. As of now, the companies we ally with are exploring such opportunities for us. They are reviewing our products and the data that we give them. Then they assess the product in question and once they approve of it, they put in major revenues or investments towards marketing it in the right manner. Therefore the risks are shared in such a way.

Why haven’t you looked at exclusive arrangements?

This is also a part of the business model. We feel that we might have to face an added risk in case of exclusive arrangements—a huge risk of the product being successful in the market or not. However, this does not just depend on the partner company or the strategic distribution partner but also on the product response from the consumers. If the product response after using the same is not good, it may die. So given that, we are very careful in the way we bring the products to the market.

What is the business model that has been adopted by Cymbiotics?

We are in the property development, validation and licensing business. Cymbiotics has adopted a unique business model. We are not into sales and marketing, instead we look into business development. We look for potential partners, enter into discussions with them and if found suitable, we go ahead and license our products to them. We have an R&D set-up in addition to tie ups with universities, which are working on a few molecules. We publish the results of the same, in scientific journals if the results are good and if the product is worth taking forward. Further to this, we look at finding partners to sell and market the product in various countries. Thus we talk to pharma companies world-wide and demonstrate our work and post discussions, we sign an agreement and thus find a sales and marketing partner. We deliver the finish product to these partners, who hence do not have to go through the manufacturing process. An interesting aspect to this is that we too do not manufacture the products ourselves. We outsource them to a contract manufacturer located in, say Hyderabad or San Diego. In this way, we are involved in every aspect of the chain, from developing a product to marketing it. Adhering to yet another part of the business model, we assist our partners with product seminars in addition to designing the product literature, in certain situations.

There is no major risk associated with this business model. The only problem we face here is that the entire process takes a long time. Our risks are associated with the development of the product and so are our expenses. An added risk that we face is that of the marketing company’s failure. However, it also allows us to take the risk of developing a product and identifying the partner and transferring it into the market. This is our business model and we have been very successful with this.

Why are you establishing your research operations in India?

There are two reasons for this. Firstly, the talent pool that India has cannot be matched to that in the US. The second factor is the Indian economy. Each year at least 30-40 companies venture into India for research purposes, either through a joint venture or by setting up operations of their own. The reason for the same is access to better talent and a relatively low cost labour.

What are the challenges associated with managing a research based company like Cymbiotics?

As the company is growing, finding people is becoming a key challenge. Not just employees, but finding loyal employees is the biggest challenge that I face in the management of the company. Another problem is associated with controlling the attrition and safeguarding the company’s secrets. When we hire employees, we disclose some important information about the company and the projects that are in the pipeline, to them. But if a person leaves the company eight months down the line, it becomes a major issue. In such a case the project under progress is at stake. The point is that, we don’t have to and cannot guard information like this. Thus, keeping your IP to yourself is a big challenge.

What are your future plans for the upcoming years?

Most of the diseases are contributed by man himself through lifestyle changes. Thus we are looking at lifestyle diseases in particular—a group of disorders called the Repetitive Strain Injuries (RSI). RSI is related to the incredible technology explosion that India has experienced. Any repetitive task, like sitting on the computer, leads to this harmful syndrome. We are communicating with Dr Reddy’s along with other groups, for developing drugs in this therapeutic area. A doctor in Bangalore is world renowned as patients come to him from all parts of the world to cure such disorders. He featured in the Wall Street journal too. We are collaborating with him for a large clinical trial that has already begun. This trial will carry on till March and the study will be published in recognised occupational and scientific journals. RSI affects nearly 30-40 percent of the occupational population, especially in companies like Microsoft, Intel, McKinsey, Infosys and Satyam. Other professionals like dentists and surgeons too are affected by it. Thus we saw a huge opportunity here and decided to focus on it. We have been undertaking such trials through tie-ups with other universities. However, in January we are opening our R&D Centre in Hyderabad, which will undertake the developmental aspect of our drugs that are in the pipeline. This is going to be the company’s major focus for now.