The Indian generics industry got its first big break in 1984, when the US passed what is known as the Hatch-Waxman Act. With this legislation, the US streamlined the generic approvals, thereby making it easier for generic companies to compete in the US drug market. Observers of the pharmaceutical industry consider today’s opportunity for India in biosimilars as not being different from that of the generics industry in 1984.Major countries around the world are now inclined to allow biosimilars. The Indian biogenerics industry is poised to exploit the opportunity they did in the case of generics, although it has no clear advantage at the moment. “Natural advantage is created over time,” says Arun Chandavarkar, CEO of Biocon . Industry leaders think that the right policies and investments can create an advantage over the next decade.A biosimilar is a molecule that is close in structure and function to a biological drug. Small molecules are easy to make and characterise. Since the precise nature and function of biologicals are difficult to understand, it is hard to establish that two products are exactly the same. So, making a biosimilar is not as easy as making a generic small molecule, which is why we need to use a different measuring stick to estimate the potential of Indian industry. “The potential looks like several billions of dollars from a patent expiry point of view,” says Anand Kumar, deputy managing director of Indian Immunologicals, “but the challenges are many.”Observers think that the industry has come a long way in the last decade, and is now poised to tackle bigger challenges. There are a large number of biologicals in India, and the country has gained experience in developing and manufacturing them. “The big X Factor is how we regulate the industry,” says Cartikeya Reddy, head of biologics at Dr Reddy’s. If the country plays its cards well, the industry could take off at an important moment, as part of a global shift from conventional small molecule drugs to biologicals. It would also make biogenerics manufacturing an important part of the Make in India movement.The Indian regulators allowed companies in the country to make biologicals early on with the minimum of clinical trials. Regulators here had then not studied the complexities of biologics very closely then, but have learned to look at them more closely over the decade. The main players in the country now are Biocon, Dr Reddy’s, Zydus Cadila , Wockhardt and Intas.Biocon’s first product was Nimotuzumab, a novel molecule for head and neck cancer. Since then it has launched several products like human insulin and monoclonal antibodies. Dr Reddy’s has a wide portfolio, too, with products like rituximab, filgrastim, darbepoetin and others. Zydus Cadila has nine biosimilars and recently launched the world’s first biosimilar version of the arthritis drug adalimumab. Intas launched the world’s first biosimilar version of ranibizumab, used for treating degenerative diseases of the eye. New products being introduced in the country now undergo more rigorous testing and evaluation, but the regulations are still in the form of guidelines and not formal procedures.Policy-makers in most countries now feel the need to allow biosimilars. As the biologics are priced very high, it is necessary for countries to reduce prices through biosimilars. In recent times, patents of some biologics have expired and more will expire before 2020. Even the Big Pharma embraced biosimilars, beginning with Merck in 2008. Now, there are about 600 biosimilar products in development around the world, according to market research firm Roots Analysis.For an Indian company, there are many challenges to getting a good marketshare in biosimilars. Any biogenerics product has to be cost-competitive. This is a far more ambiguous and difficult proposition in biogenerics than in generics. The threshold of price reduction varies significantly in biogenerics, depending on the product and market requirements. But it is never very low as in generics. To be cost-competitive, a biogenerics company has to develop a good foundation in science and invest heavily in technology.The investments in biogenerics are very high when compared to conventional generics. The development is itself lengthy and expensive, and could cost more than Rs 100 crore and take up to six or seven years. Manufacturing costs are much more. Biocon, for example, spent $200 million on its insulin plant in Malaysia. Compare this to just a few crores and two years needed for a generic drug.It is hard to generate investor interest if a product hits the market only after seven years. So, India is unlikely to see startups in biogenerics, which could also drive consolidation of some players. A successful manufacturer has to have good science and manufacturing technology, and the capability to deal with complex regulations.They also need to develop the trust of regulators. So, it is a hard journey that is difficult to do anywhere, let alone in India. Deep pockets are not enough either.Expertise in biology is essential, and this subject does not yet have critical mass in India. India has fewer research labs in biology than a big state in Europe or the US. And, yet, things have improved in the last ten years, as experience has built up in technology and regulation.“Now, it is possible to develop a product in India and launch it in Europe,” says Sharvil Patel, deputy managing director of Zydus Cadila.If India has to create that advantage in biosimilars, it is not just enough to make the right regulations and conditions for industry. The country has to expand the biology research ecosystem by investing in education and fundamental research.How the country handles the research ecosystem could be a deciding factor in the long run. “China and Korea have nucleated the basic research ecosystem far better than India,” says Cartikeya Reddy. No one should be surprised that Samsung has started building the world’s largest biologics manufacturing plant in South Korea.