By W.A. Wijewardena  –

Developing SL pharmaceutical industry: Concentrate on research and producing biomedical scientists

A worthwhile suggestion that has been ignored

At the pre-Budget meeting which the Treasury Secretary P.B. Jayasundera had with business leaders, an important proposal to take Sri Lanka to the future was made by Hemas Holdings Chairman Husein Esufally (available here). He said that local pharmaceutical companies today account for only 10% of the pharmaceutics used in the country. He suggested to the Government that the facilities at the National Science Park in close proximity to the Sri Lanka Institute of Nanotechnology should be used to create an ecosystem conducive for the development of a pharmaceutical industry in the country.

His suggestion was that the Government should develop the infrastructure to facilitate the industry players to invest in plant and machinery and relocate their existing facilities to the National Science Park. This includes the manufacture of not only the Western medicines but also the other healthcare products. Esufally’s suggestion was to develop the existing industry to meet the local demand and therefore it is narrow in scope. But, he has indeed presented a viable policy proposal for Sri Lanka to venture into a new industry by expanding its objective, scope and coverage.

What is needed is Greenfield and not Brownfield strategies

Though the Treasury Secretary had given an undertaking to business leaders that the Government will “duly recognise all the proposals put forward”, the Budget 2015 does not have evidence that the undertaking has duly been fulfilled. In the policy proposals for realising development goals set for 2020 and beyond, there is passing reference to the National Science Park and the formulation of a National Drug Policy to regulate the usage of drugs, clinical trials and research activities in specialised hospitals (p 17).

Sri Lanka is planning to become, according to the development goals in the Budget 2015, a higher middle income country by 2020 by reaching an average income, known as Per Capita Income or PCI, of $ 7500 (p 19). In a separate public address delivered at the Defence Seminar 2014, Treasury Secretary had pronounced the Government’s plans to make Sri Lanka a $ 100 billion economy by 2016 and become a rich country by 2035 (available here ).

However, the proposals made are to make marginal improvements in the existing production system known as ‘brownfield strategies’. But what is needed is to get into new fields, called ‘greenfield strategies’, so that Sri Lanka could sustain its economic growth efforts in the next five to 20 years. What was proposed by Esufally has provided seeds for this latter strategy.

The need for long-term planning

A country cannot establish a viable and strong pharma industry overnight. That is because this industry is in high-tech category and a country cannot gain high-tech capability overnight. It requires years of intensive and extensive planning for developing the necessary human skills, research infrastructure and local and global marketing channels. It is the physicians and marketing reps who decide the demand for various drugs – distinguished by their brand names and not by their generic names. Hence, the consumers are at the mercy of these two economic agents who cannot be expected to function in the best interest of the consumers at all times.

In addition, the long term effects of newly developed drugs will have to be ascertained before they are released for consumption by consumers. Because of these requirements, the pharma industry has to be effectively regulated and therefore appropriate regulatory mechanisms have to be established simultaneously with the development of the pharma industry. It is the trust, confidence and credibility which the regulatory mechanism has earned from the consumers and governmental bodies throughout the world which will eventually decide on the long term sustainability of the industry. If the regulatory bodies are governed by political interests as in the case of many public regulatory bodies in Sri Lanka today, the pharma regulatory mechanism will fail to earn this essential requirement.

Long-term commitment of the Government a must 

Hence, the Government has two important roles to play if it is interested in establishing a viable pharma industry in the country. One is that it has to facilitate research by establishing the needed research infrastructure in the country. The other is to establish an effective and credible regulatory mechanism which is free from politics to win confidence of consumers and governmental bodies throughout the globe.

Both these roles need money to be allocated by the Government today as well as for many more years into the future. For that, a Government should have a firm commitment to developing the sector no matter which political party is in power. But a common problem faced by many countries, especially the developing countries, is that politicians, irrespective of the colour of their political affiliation, will love to allocate money for projects that will not generate adequate social returns but serve only to boost the personal egos of the politicians.

Singapore built a regional hub for research

A good example is provided by Singapore as to how the city-state managed to build a viable and strong pharmaceutical and biotechnology industry in that country within some 25 years (available here ). In making Singapore a regional hub for research, it built a strong scientific foundation with seven research institutes and five research consortia in key fields. These fields included clinical sciences, genomics, bioengineering, molecular/cell biology, medical biology, bio-imaging and immunology.

Under this program, more than 50 private companies were engaged to do research alongside with these research institutions in drug discovery and translational and clinical research. The translational and clinical research is essential for the discovery of new drugs by testing the drug in clinical use and thereby helping it to go through the process of getting translated into commercial production.

It serves two purposes. One is the testing of the drug in long term trials before its acceptance. The other is the development of the scientific base of the country through the process. Hospitals in Singapore play two roles: treating patients and conducting clinical research. The outcome of clinical research is made available to industry and other hospitals in the form of new therapies and technologies in treating patients. The biomedical research institutes in Singapore which are affiliated to many of the world-class such institutes constantly provide important leads to new therapies.

Government should support research and not unproductive capital investments

A large, constantly growing base of clinician scientists is a must for the development of a viable pharma industry. The Singaporean Government has supported this by several initiatives it has introduced.

First, it is necessary to build a platform that facilitates the researchers and clinician scientists to collaborate with each other in solving scientific problems involved in translating research into quality healthcare solutions for patients, a process known as bench-to-bed solution. For this, the Singaporean Government has funded an initiative known as ‘flagship program’. Second, to broadbase research ideas, a competitive research program has been designed and funded. Research ideas normally generate at individual levels and then they are passed onto the top.

This important feature in a broadbased scientific community was ensured by the competitive research program. It thus helped Singapore to identify new potential strategic research areas in which Singaporean industries could excel in the future. They covered both biomedical science and translational and clinician research. Third, to encourage health services related research and translate the outcome of such research, a competitive research grant was also established targeting the health sector.

Fourth, a biopharmaceutical manufacturers’ council was established to link the manufacturers with Government agencies. Its task was to develop a skilled biomanufacturing workforce and ensure quality and process development capabilities by upgrading skills, providing training and establishing best practices. Every dollar spent by Singapore Government in this enterprise helped the country to become a leading pharma manufacturer and researcher in the world.

Biomedical science is the backbone of pharma industry

Biomedical science is the backbone of the pharma industry. Scientists who are developed by this field of study help medical practitioners to diagnose diseases and identify curative procedures by analysing human cells and tissues. Though Sri Lanka has an expanded medical education system at the university level, its attention to develop the needed biomedical scientists has been far from satisfactory.

One reason for large pharma companies to shun Sri Lanka as a suitable place for locating their manufacturing facilities has been the non-availability of a sufficient pool of biomedical scientists on a continuous basis within the country. A very small number of such scientists who had acquired their qualification from universities in India, UK, Australia, Canada or USA has left the country since the country’s industrial base has not been able to absorb them. However, these scientists are in a position to return to Sri Lanka for a brief period with their rich experience provided they are paid an attractive remuneration to work in Sri Lanka.

Since a dollar earned in Sri Lanka could on average buy two dollars’ worth of goods which he could have bought in USA as per the Purchasing Power Parity or PPP income numbers, it is not necessary to pay the same high salaries which they would get in a developed country once they are in Sri Lanka. This option should be seriously considered until Sri Lanka has been able to produce its own biomedical scientists in required numbers.

Singapore set up a large number of biomedical science institutes

In this regard, Singapore has shown a remarkable foresight which none of the countries in the region has shown. It encouraged its universities to produce biomedical scientists in large numbers. In addition, it has established seven biomedical science related institutes to conduct research in the area (available here).

These institutes cover a wide range of areas coming under the broad biomedical science field. A quick run-through of these institutes will show the enormous importance which Singapore Government has given to the development of biomedical science in the country. The Institute of Bioinformatics will do research on computational biology – a system that enables researchers to use the data to understand the underlying relationships. The bioprocessing technology institute will come up with cutting edge technologies to improve human life more. The genome institute will develop systems to come up with new theories.

The bioengineering and nano technology institute will ensure the delivery of drugs and genes, undertake tissue and cell developmental work, develop biosensors and devices for use by consumers to improve their own life.

The medical biology institute is to conduct research on different aspects of human body. The molecular and cell biology institute is to enhance the biomedical research and development in Singapore. The clinical sciences institute has been established to develop methodologies for clinical and translational research.

Singapore has become the envy of its neighbours mainly due to the far reaching institutional structure to deal with issues relating to biomedical science. These institutes are required to lay foundation for continued development research.

Regulatory system should facilitate research and good practices

Singapore also has developed an effective regulatory system free from political interferences to regulate the drug industry by establishing Singapore Health Sciences Authority. Regulations have to be introduced to the pharma industry without killing its spirit for innovation.

Therefore, the objective of the regulatory mechanism has been to enforce global standards of safety, quality and efficacy on the pharma industry. To maintain international standards, this authority had embarked on collaborative projects with leading regulatory agencies in the world.

Sri Lanka’s aim should be to get into the export market

Sri Lanka’s aim of developing a pharma industry should be to penetrate the global market since the internal market is not sufficient for any big firm to operate at optimum levels. According to a report published by Indian Council on International Relations in December 2014, the global market of pharmaceuticals is about $ 1 trillion today. India’s export of pharmaceutical products in 2013 amounted to $ 13 billion – about 30% more than Sri Lanka’s total exports.

Pakistan, an up and coming drug manufacturer, has shown its presence in the global market by exporting pharmaceuticals to a value of $ 844 million in the same year. Hence, pharma industry offers a very valuable opportunity for Sri Lanka to diversify its manufacturing and export base and thereby reach the goal of upper middle income country by 2020 and a rich country by 2035.

No need for reinventing the wheel; just follow the success stories 

To develop a viable pharma industry, Sri Lanka does not have to reinvent the wheel. It can learn from the experiences of other countries, especially Singapore. By creating a sufficient pool of biomedical scientists and investing in research infrastructure, it can create the ground conditions necessary to attract pharmaceutical giants to Sri Lanka.

The objective of this enterprise should not be just to supply the local market. It should aim at penetrating the global market and thereby enjoy the economies of scale.

These are some thoughts that have to be taken into account by whatever the Government that will come to power in January next year when it plans the country’s long term growth in a sustainable manner.

*W.A. Wijewardena, a former Deputy Governor of the Central Bank of Sri Lanka, could be reached at waw1949@gmail.com