Wockhardt's US FDA approval of Zaynich, an antibiotic that works against superbugs or difficult-to-treat bacterial infections, marks a historic milestone for both the firm and the Indian pharma industry. This is the first-ever drug entirely developed by an Indian company and approved by the FDA. Behind this milestone and the journey that led to it is Habil Khorakiwala, a leader who held his nerve through financial turbulence, regulatory hurdles, and asset sales, never abandoning a 25-year bet on innovation. In this conversation with Ra Batachara and me, the Wockhardt chairman talks about the research pipeline, his international plans, the commercial roadmap for the US with his daughter Zahabia Khorakiwala steering it, and the pipeline of blockbusters that could redefine the company's future. Altogether, a complete switch from generics to the daunting yet rewarding world of innovation.
It's Thursday the 4th of June. I am Vikas Dandekar, ET Pharma's editor. This is Corner Office Conversation.
Zaynich is being seen as a milestone in the Indian pharma industry. So from a Wockhardt point of view, if you could tell us how significant is this approval for Wockhardt and what is the road ahead here on?
I consider it very historic both from Wockhardt and India because in a very competitive market which is dominated by global large pharma companies, we could find a new drug. Now you look at the size of our research program in terms of resources, both financial, people, and ecosystem, we are at a disadvantage everywhere. So what it shows is we can do it if we decide to do it. So it is breaking a barrier of thinking.
It's breaking a barrier because the industry started six, seven companies, today out of that they all have closed up. As far as new drug discovery is concerned, technology, yes, we have a lot of successes. But in finding a new drug, some minor traction is there where people have introduced for India. But one of the requirements of a new drug globally is it has to be better than what is available. The second aspect which is very important is how you think strategically long-term, because it has come out with a very deliberate strategy of picking the area of research: antibiotic. Because in the 90s all the companies came, I looked at research at that point in time, drug discovery in a competitive sense. So therefore we found a niche where over the years I will not have competition but the problem will be there. So that was a very important part of it and your ability to believe in it and sustain it.
So this is a very different research, sir. I mean, normally we would see that companies follow what is already known and do something incremental. What gave you the courage of really looking at something very different, the breaking of the PBP, the binding three, two, and three? You know, it was something that was very new and still you pursued it right from the beginning.
Yeah. See what happened was that somewhere along the line inhibitors were there. So when you say that you inhibit some of the enzyme, they develop a new enzyme. Therefore these people rethought of finding another method of doing it. So that is how PBP2 resistors were there and if you have something attached, it gives you entirely a very different synergy. The synergy of the two is powerful, they're beta-lactam, they are effective at relatively low doses.
Was it more of a scientific bet or a business bet, or would you call it the mission to innovate? Also, a part two of this question is about the economics of antibiotics.
See, one thing is that the economics of antibiotics was not very good for big pharma, that's why they were exiting. And the hurdles of using antibiotics, you keep it reserved, you don't use it almost. So obviously for that size of company it may not be worthwhile. But from our perspective, our approach was, okay, let's do it. Whether we are number one or number three or four doesn't matter. We have India emerging as a very large market, price point we don't have to worry about that. But the fact that our team delivered so many drugs which are globally competitive and better than what anybody could find, basically we understood that process. You need to be a long-term player. Therefore, we went into one space. But if you look at other companies, they went to three, four, five areas relatively. So the only area for short-term usage were cancer, antibiotic, and pain. These were the three therapies. So that was the first choice. So it took me about two, three years. We were late starters in research. But I was trying to understand the research. I talked to a lot of guys. I visited a lot of facilities, understood the complexity.
So knowing that research takes so much before you really see the result, and you still stuck with the whole idea that we will go the long haul even at a time when Wockhardt had actually seen so many challenges. You had to sell the businesses. A lot of FCCB issues came up. I mean, no one probably thought that Wockhardt will ever rise back in those difficult times. How did you hold back? How did you actually want to still come back with the same inspiration?
Very difficult question to answer but it is simple perseverance and belief and something which is more important than something which is less important, and that is a choice we made. Sometimes activity gets a little slowed down also because of financial challenges. Yeah. So that did happen at a certain point in time.
So now, sir, that you have the biggest achievement for all of your 15 years of continuous research and perseverance, can you give us some idea about how you are actually shaping your US operations?
See, our approach fundamentally is that I had one molecule, I could give it out to somebody provided I get a right price. But we have a long-term perspective of that. So we did explore that possibility but somehow we were not getting the kind of value we deserve. But at the same time we were working on other alternatives. But to do research and find a new drug is far more a tougher job and creating an organization of a different kind. Second, today I can tell you the team we are able to collect for us, and we are only focused on creating a top team of people for medical, sales and marketing, and whatever market access, whatever team, yes, we are outsourcing it. So it's like a brain you keep it with you and let the body be there. So there are no major changes required. So leadership is in-house. In other words, all areas of leadership we have kept in-house and that is why we are building the organization.
What's the leadership like? Sir, can you tell us who is leading the US operations now?
No, my daughter is going to look after the US operations. Yeah. And this next level of four, five people, you already recruited. One or two are on the way. They are already there. My team is there.
Wow. Does she have the experience of...?
She is basically a liberal arts graduate. She's running a hospital and you go and talk to her. She will tell you everything better than any doctors will tell you.
Any estimates of how much you think can be made in terms of your...?
We estimate the peak sales of this drug would be what, $1.5 to $2 billion.
Peak sales. Which will be maybe in three, four, five years mostly. Peak sales, four, five, six, yeah, maybe more. But total market size is $9 billion.
Yeah, exactly. So a 20% market share is reasonable. Right. And your patents will be till 2038 or...?
Yeah, '38. And for all new drugs I get 10 years exclusivity anyway. Because of that, so even if other drugs we take to Western markets, I get 10 years anyway.
Yeah. So this will also lead to European approval?
No, this may not lead to European. We already filed in Europe in January. We filed three, four months later. So it will come through. That is also fast track there. Yeah. So, how about the pricing? You know, this 8 to 10 days, I think the treatment...
How about the pricing? You know, this 8 to 10 days, I think the treatment...
It will cost between $10,000. Per day cost will be about $1,200 to $1,500. Treatment cost will be about $10,000 to $12,000, $15,000 depending on... That is in the US.
In the US, correct. And in India that will be significantly lower, right?
It will be about 25% of that cost. 20, 25%.
25% of that cost. Yeah, you have to have heavy discounting ready for the rollout, sir. I mean, you can launch...?
Six months it will take us because after approval you have to take batches. So by end of the year we should be able to. Two, three months maybe earlier in India compared to the US.
It's said that Zaynich is being described as a beta-lactamase inhibitor compared to conventional inhibitors. So, you know, how defensible is this scientific platform to future competition? And also, are you already seeing interest from global players to collaborate or in...?
There are existing antibiotic businesses, you see. Because today the challenges of antibiotics in the size of the market of a billion dollars, $2 billion, $3 billion, is today all your drugs are high-end, $20 billion and $100 billion dollars now, anti-obesity. So the ball game is different. That's why they're losing interest in that. All the new treatments you're getting are $100,000 per treatment.
Will you like to branch into something more, sir? Because...
No. It will continue to be. We want to maintain leadership in the antibiotic space for all time to come because you could get in a lifetime rare opportunity where you are today ahead of everybody in molecule and research. Now to maintain that is very important. But our long-term strategy is a very different business model which I'm not sharing with anybody. Our business model does not get expired when that product expires. We will compete even when it becomes off-patent because my cost would be lower than anybody else's learning curve. My brand would, in the doctor's mind, be the innovator brand.
So why would I give up the space? The volume will multiply three to five times or 10 times. So top line may not change very much. And if I maintain a large market share in the generics off-patent space, why would I give up that? India would be the most competitive, but most markets are not as competitive.
You'll do a CDMO also for the Indian market? Or will you source it from outside?
India we are making ourselves. Technology is ours. Even externally we have given technology.
It's said, sir, that one drug changes the face of an organization. You need to get that one big blockbuster. This probably will be for...?
We don't have one. We have a series of blockbusters.
So it is a platform that you are...?
Antibiotic is a platform. My platform, I have got say five products, six products with QIDP status. So we will be launching. We didn't do phase three, I had to pick up one drug. So that's what we did with one product. The others are equally big, they are not small.
Yeah, equally promising, yeah.
No, the other drug we have with Wockhardt is a backup which is once a day. Now once a day is a massive market. Half of the antibiotics are used outside the hospital, even the hospitalized patient. In the West, they just after three days you go home, four days you go home. So all are going to be large products which we will take globally. And we have some other pipeline which we have not even announced.
Only antibiotics. We are not going away anywhere.
So, sir, with this coming up, will you look at higher allocation of funds for R&D or will you continue to be the same?
See, the point is, most of our drugs which are there, they have already gone through phase one, phase two clinical trials. Like Myroc, we have done phase two trial. 67 is phase one is done, only phase three clinical is open basically. So there is a timeline of two years, three years max. So we will choose because we can't market three products together. So we will have to space it out. But we get ten years data exclusivity because of QIDP status plus data exclusivity. So max we get is 10 years from date of approval. Not from the date of patent filing. That is 20 years. So even if my patent expires earlier, I still get 10 years later exclusion because approval comes much later. Now suppose my patent expires in say '35 or '33, and I get approval in '30 or '31, I'll get 10 years data exclusivity. Natural extension. So that is what I have been arguing in India also, I have to have data exclusivity.
Exactly, that is something that you would also want now.
