Materia Medica Malaysiana

RM75 mil biogenerics plan

Two years ago, the Malaysian government quietly invested RM75 million in a biotech venture to make "biogenerics" or off-patent biotech drugs. The company, a wholly owned subsidiary of the Ministry of Finance, is Inno Biologics Sdn Bhd. However, up until now, the government has still not made a formal announcement on the investment.
This lack of information on Inno Biologics has drawn much criticism. Some believe the company failed in its first attempt at making insulin. Others reckon that Inno Biologics spent too much money paying hefty licence fees for access to certain process technologies.
Yet others question the appropriateness of the deal - how did the Science Adviser (Tan Sri Datuk Dr Ahmad Zaharudin Idrus) to the Prime Minister end up as Inno Biologics' chairman?
But in an interview with netv@lue2.0, Ahmad Zaharudin explains that the main reason for the low-key nature of Inno Biologics' formation is purely strategic. "We didn't want our neighbouring countries to know early on what we were planning as many are getting into the biotech space as well."
He also denies failed attempts at making insulin, saying that since the company was set up in December 2002, it has been busy designing its plant and enhancing and pilot-testing the process technologies involved in the making of biogenerics.
Ahmad Zaharudin says there is no conflict of interest in his position as both Science Adviser and chairman of Inno Biologics. Apart from being a government representative to oversee the development of the company, he says there is so much to be done in science and technology that conflict of interest is not relevant in this case.
He adds that he does not earn any money from Inno Biologics or ask for special favours from the government to help the company. "We could have asked the Ministry of Health for an exclusive contract to buy insulin from us but we did not," he stresses.
The raison d'ztre for Inno Biologics is to kick-start the country's manufacturing foray into the biotech arena, Ahmad Zaharudin says. "This company represents the business content aspect of the country's plans to embrace biotechnology while the three institutions in the BioValley are focused on research."
(The three institutions are the Agro-Biotechnology Institute, the Pharmaceutical and Nutraceutical Institute and the Genomic and Molecular Biology Institute.)
The bulk of the RM75 million investment will go towards the design and building of a plant, which includes a bioreactor - a container in which a biological reaction or biological activity takes place for the production of biotech drugs. A Europe-based consulting firm designed the plant according to European standards at a cost of RM1 million. At the time of writing, Inno Biologics was preparing to open a tender for the building of the plant, likely to be done in Europe. The plant will be shipped to Malaysia after passing necessary tests for such certification as GMP (good manufacturing practice) and US FDA (Food and Drug Administration) approval, explains Ahmad Zaharudin. However, he declined to reveal the estimated cost of the plant, which is expected to start operations in 2006 at the Nilai Science and Technology Park. It will have the capacity to produce 1,000 litres of mammalian cell culture, which will be used to produce biogenerics. (The large-scale culturing of mammalian cells allows for the production of biogenerics such as proteins that are otherwise difficult or expensive to extract from living organisms.)
Although Ahmad Zaharudin specified that the plant will be producing insulin and erythropoietin (a hormone normally produced by the kidney that stimulates red blood cell production), Inno Biologics' chief executive Dr Mohd Nazlee Kamal says those are just examples of the kind of biogeneric drugs that the company can produce.
The plant will also be able to produce monoclonal antibodies and be used as a facility to make drugs for companies that are conducting clinical trials for their drugs, adds Nazlee.
Inno Biologics has hired five Malaysian PhDs, including Nazlee, a qualified engineer in bio processing who was previously with Amersham Biosciences (as business area manager), Sartorius (business development manager) and B.braun biotech (sales manager). Prior to that, he had spent 10 years as a lecturer in bio processing engineering at Universiti Teknologi Malaysia. Inno Biologics' chief technology officer is Professor Dr Mohd Sanusi Jangi, a microbiologist who was a professor at Open University Malaysia and Universiti Kebangsaan Malaysia before that.
Apart from making biogenerics, the company also plans to offer contract research and manufacturing services. In the pipeline for Inno Biologics is a much larger plant, with the capacity to produce 10,000 litres of mammalian cells. It is unclear how much Phase 2 will cost and how Inno Biologics will raise the additional funding. What is clear is that Inno Biologics has started work on the design of the plant in Phase 2 and that it will be located within the BioValley.
Ahmad Zaharudin does not rule out more funding from the government (for Phase 2) but adds that they will look at other options too, such as the capital market.

Will Inno Biologics survive?
Large government-funded projects like Inno Biologics typically face criticism that they are not viable. Otherwise, why wouldn't private investors fund the project? And the typical response to such criticism is that a project like Inno Biologics is driven by national interest, not the profit motive.
In this case, the rationale for the investment is not only capacity-building (an oft-used justification these days in government-funded science and technology projects) but also that it is an opportunity that promises good returns in the long run, according to Ahmad Zaharudin.
"The government was pleased because there was a bunch of competent people who were gung-ho enough to take the risk and propose the project. There is no profit motivation from the people and we cut all costs to a minimum," he says.
Nevertheless, Ahmad Zaharudin is confident the company will break even in five years and become a RM100 million company in terms of revenue by then. It will first target the domestic market and then venture into regional markets such as Thailand and the Philippines to sell its drugs.
The competitive edge that Ahmad Zaharudin hopes will spur its success is the simple, high-quality, low-priced model. "We are doing things very cheaply yet we have the necessary scientific brain power to ensure our products are of high quality."
But it can be argued that this is the same model that others in the region are toying with. Even at home, Inno Biologics will possibly face competition from an insulin plant being built in Penang. In June last year, it was announced that a US$34-million (RM129.2 million) human insulin plant will come onstream by mid-2005 in that state. The project is a joint venture between the Penang Development Corporation and London-based GeneMedix plc. The latter was founded by well-known Malaysian biotechnologist Dr Kim Tan. GeneMedix will license its insulin-making technology to the Penang plant, which will then manufacture and commercialise human insulin.
Inno Biologics would have passed its final test when it is able to market enough of its biogenerics and other services to see it break even in its fifth year, and report the RM100-million turnover its chairman is confident of.