Opportunities And Risks In The Global Regulatory Environment

By Bikash Chatterjee, CEO, Pharmatech Associates

Todd and Todd interview Bikash Chatterjee, the President and Chief Technology Officer at Pharmatech Associates.  Bikash provides an excellent overview of the global regulatory environment, along with both the opportunities and risks for the pharmaceutical industry.  Additionally, he offers expert insights into effective cross-cultural business collaborations and highlights science and technology innovations that will be game-changing in the next five to ten years.

Interview transcription:

Todd S:  Good morning and welcome back to Life Science Connect Radio. I am your host Todd Schnick, joined by my friend and colleague, Todd Youngblood. Todd, the countdown continues to New York City and INTERPHEX 2014. After last week's stellar conversations giving us a small taste, we continue to look forward to this great event.

Todd Y: I do too. We are going to get into the pharmaceutical side of things today, which is just a whole other world that plays such an important role in this whole industry.

Todd S:  It's going to be a great conversation. Leading up to INTERPHEX my friends Life Science Connect Radio continues with a great series of conversations from some fascinating industry leaders so let's just get right to it. On today's show is Bikash Catterjee. He is the President and Chief Technology Office with Pharmatech Associates, Inc. Welcome to the show Bikash.

Bikash :  Thank you Todd.

Todd S:  It's good to have you. Thanks for stopping by and joining us. Appreciate spending a few minutes with you. Bikash, before we get into our conversation today, take a quick second and tell us a little bit about you and your background.

Bikash:  I've been in the industry for about 32 years. I've been lucky enough to really touch almost every segment of our industry; vaccines, pharmaceutical, biotech, medical device, in vitro diagnostics, even some nutraceutical and dietary supplements.

I have a nice, sort of broad prospective in terms of what the challenges are in these different industries and what the success metrics are to sort of continue to grow these markets.

I've held several senior management positions in different firms, both large and small. I started off my career in research and worked my way up to the front office.

I have developed about a dozen products in my career and launched them in about 30 different countries. Probably if you've even taken an Aleve that was one of my first products I worked on when I was back at Syntex in the early '80's.

Todd S:  Aleve? Yes, you have now become my most favorite person on the planet. So thank you for that. Well you are now President and CTO of Pharmatech. Give us the 10,000-foot view of Pharmatech. What do you do? What are you all about? How do you serve your market?

Bikash: The company was started in '95 as a validation company, really providing comprehensive validation services. I joined the company about 11 years ago. We expanded our services to technical, regulatory and compliance as well.

That's really been what sort of catalyzed our growth around the world. We provide expertise and guidance in four general spheres; manufacturing, which includes product and process development; a compliance piece, whether it's U.S. or Asia. Europe we have sort of a deep bench in that area.

We have regulatory and then of course the validation work. That's really what folks have been coming to us for since '95. We are sort of this full-service consultancy that can take an idea from molecule identification all the way to phase 4 pharmacovigilance. It's that kind of activity that folks seem to want.

Todd Y: Bikash, I'm intrigued by the whole compliance piece of the business that you mentioned that you're doing. Talk a little bit about that and how it's different in the U.S., Asia, Europe and other parts of the world where you're working.

Bikash : It's really an interesting space to be in. Certainly, the U.S., from a compliance perspective, has had its ups and down really since the 70's as the FDA has sort of evolved its thinking in terms of what its expectations are in terms of good manufacturing practice.

I would say the last five or seven years in the U.S. have been some of the most tumultuous in terms of not only regulatory access by the FDA against manufactures in the U.S. for quality issues but also outside the U.S.

With the growth of the emerging markets, it really turned the industry on its ear. India, most recently, which actually for the last 15 years has been growing tremendously, has just been hit with quite a significant set of high-profile sanctions, import alerts.

Ranbaxy was just levied with a $500,000,000 fine by the FDA, the largest ever levied, for basically institutionalized fraud and quality issues. China has been going through quite a transformation as it made the decision in 2010 to try and compete in the global market and create the capability to compete in the U.S. and European markets.

Understanding those different compliance spaces, which interestingly enough are not the same, has really been a very rich area to be involved in.

Most recently, I just came back from Southeast Asia and Australia and the [inaudible 4:35] markets, which include Malaysia and Indonesia and Thailand, are markets that are posed to sort of enter the global marketplace as well.

You see the regulatory strategies starting to evolve and alignment, really, across the world is starting to become more apparent as folks look to try and sort of level the playing field in something that's both pragmatic but also still provides a level of assurance that the public sort of assumes is there.

Todd S:  Thinking about Asia and hearing you talk about it and setting the table a bit, talk about some of the significant opportunities that are there. It seems to me it's a target-rich environment for some exciting stuff, yea?

Bikash : Oh it is. It's a tremendous place a be. We've been there for a little over eight years. We made the decision to try and get into the Chinese market about 10 years ago. We started off with a series of seminars.

If you start looking at China, which is obviously the largest growth opportunity out there, that's when the U.S. marketplace and the European marketplace such took a hit in terms of shareholder pressure.

Everyone looked outsource and, of course, China was the obvious place to go. They had a rich resource in terms of educated labor that was being offered at a very low cost. Of course, the Chinese marketplace is changing just like every other marketplace is.

There is an active initiative on the government's part to transform the country from that of being a low-cost producer of labor, in sort of the heavy industries, to one that's focused on what they call the four pillars, one of which is biotech and pharma.

These represent sort of marketplaces that are white-collar. You know, energy conservation, environmental protection, which is sort of humorous if when you think about the current state of the environment in China, IT, biotech and then really sort of high-end equipment manufacturing.

They're looking to become the world leader in this particular marketplace. Because of that, there's been a lot of tumult. Nonetheless, the growth that we've seen over the last decade in China in the pharmaceutical and biotech sector have been significant. It's still going to continue although I believe the dynamics are going to change a little bit over the next five years.

Todd Y: Continuing with this global perspective, I think from personally, I grew up in Pennsylvania and spent my young adult life in New York and New Jersey. When I moved to Georgia there was a culture shock literally. It's just a different way of doing business.

That kind of pales, not kind of pales in comparison, it's almost a silly comparison, to doing business around the world. Talk a little bit about the challenges of establishing and developing these cross-cultural relationships for a company based in the West.

Bikash :  For the consultancy the challenge was significant because, particularly in Asian markets, the evaluation of expertise was a completely foreign concept to them. They're used to spending a dollar and they're getting something back that they can touch, feel and is tangible.

Guidance wasn't something that was necessarily valued. There were some, you know, large, multi-national firms that had gone in there over the years in their history that maybe hadn't provided the tangible guidance that they were looking for.

For us, as we've gone into the different marketplaces, and we are in India Japan and China fairly extensively and hoping to expand now into Southeast Asia on a larger basis, being able to provide concrete, tangible expertise, whether it's building a facility or filing a drug, whether it's in the U.S., Europe or China, that's sort of what they’re looking for. They're looking for really a recipe to get you from point A to point B.

As in anything, as you mentioned you went from Pennsylvania to Georgia, there is a different way of thinking. You've got to be respectful of that different style of thinking and spend your time trying to understand what motivates their thought processes.

That's what we've done really. We spent a great deal of time cultivating relationships and beginning to understand what drives, not only the drive to succeed but also the regulatory risks and the governmental risks in these marketplaces.

The one thing that always surprises us, in the U.S. we have the FDA and that's fine. We look at them as sort of a regulatory entity for public safety. In these other marketplaces, and in China in particular, the government role is always omnipresent.

Understanding that and recognizing that and not really eschewing that but really integrating into your thinking and business practice is really paramount if you're going to be successful in that marketplace.

Five years ago the CEOs of these companies that had just IPO'd on the market had been government beneficial up until this point, right. So, their expertise in terms of running a business was limited. Their risk exposure in not doing it well was enormous.

Being able to step into those marketplaces knowing that the CEOs are going to need some help in really learning the business, growing the business, being able to defend, because the largest shareholder often was the government that, that what they were doing was correct was a tangible risk for these folks. So being able to provide that expertise is an area that we concentrated on as well.

Todd S:  Bikash, I made two notes at the top of the show when you were walking through your background. You have 32 years of experience in the industry and developed over a dozen products. I'm curious as to your read on what's really changed.

What have been the big fundamental changes in the industry over those three decades? Then almost more importantly, with that insight and experience what do you see coming down the pike the next couple of years? What should we be paying attention to?

Bikash : The think the level of science that is going into pharmaceutics or just drug therapies as a whole, whether its biotech, pharmaceuticals, or drug delivery has escalated tremendously over the last three decades.

We really were very much reactive in this industry in terms of how we developed our drugs. They would set specifications based on what we felt were reasonable to achieve the therapeutic performance we needed in the body and then we saw how we did.

Now more and more and more you're seeing this drive towards quality by design, by designing the drugs, designing the molecules so that they have the functionality that we want. It's that insight that's allowing us to sort of attack drug therapies in a new and novel way. That has been really quite extraordinary to witness over the last three decades. We are better for it by and large.

In these Asian markets and markets around the world, they're really not polluted by doing it wrong. They don't have that history that they have to unthink.

So really, they're more receptive to some of these new principles than the Western countries and European countries are because we have to change our thinking. That's actually giving them quite a distinct advantage for those folks that are willing to embrace these new principles. I think that's really been an area.

I think you're going to see a lot more collaboration over the next 5 to 10 years. We are already seeing innovator companies that are leveraging sort of early research and manufacturing services in the Asian markets because the GNP risk is minimal there.

We're doing early, early sort of pre-clinical, sort of molecule identification and vetting collaborating with U.S. folks to sort of take it through that proof of concept phase and then partnering with high-value added say drug delivery companies to bring a new and innovative, maybe classical, drug in a better delivery format to treat a therapy even more effectively.

I think this is something you're going to see escalating and our technology has been percolating in the background for probably the last decade. There are 20 or 30 products that have been approved by the FDA in the U.S. alone by using nanotechnology.        

That represents another novel opportunity for the marketplace because, you know, with nanotechnology you can cut the loaded dose many fold over, increase the bioavailability 2 to 15 times and arguably improve the overall safety profile of the drug. We are going to see this escalation, I think, as sort of leveraging that understanding.

The big change, I think, that's going to happen and it will be interesting to see what happens in the U.S., there have been several landmark Supreme Court decisions over the last two or three years that have been geared towards fundamentally providing lower cost drugs to the U.S. marketplace.

The Health and Human Services Act is geared towards fundamentally driving low-cost therapies out there. That's [inaudible12:32]. Back in 1984, it was geared towards the generic drug industry. But, there have been some high-profile missed steps.    

We are going to see how the industry evolves in the next decade to be able to provide low-cost therapies that are really safe and perform the same as branded drugs. How that basic conflict plays out will be very interesting.

The Supreme Court decision on the biotech side to fundamentally not allow anyone to patent a molecule that exists in nature is going to cause all sorts of issues, I think, when it comes to the folks at the end of their drug development journey and they attempt to move into the marketplace.

You're going to see challenges from competitors that are going to kind of muddy the playing field. There are bio-similars that have been doing as bio-betters step into it. I think it's going to very exciting.

We have a government involvement here, a government decision that's really geared towards providing low-cost drug therapies to the U.S. but how that's going to actually play out in the next fine years will really be very illuminating.

Todd Y:  Bikash, one thing that we haven't touched on yet that's always a big issue is security threats and what to do about it. What's your perspective on that issue?

Bikash : Since we do a lot of projects around the world, I think the supply chain has come to be the single most important consideration in any company's decision to outsource or move a portion of their manufacturing outside of their local market.

Obviously, the Heparin debacle that Baxter encountered several years ago that killed 81 people, which was basically institutionalized fraud in which a Chinese API manufacture set up a shell API manufacture for the express purposes of fooling Baxter's auditors into thinking that they were generating very high quality product only to find out that it was really being manufactured by another factory that was making something that looked the same [inaudible 14:17] in this case as Heparin.

That just illustrated the fact that we've got to step up our vigilance. You see the U.S. FDA's decision to put in two offices in China and an office in India and step up their enforcement is really geared towards that.

On the technology side, as we found, we do a lot of facility construction around the world and we try and tell folks, look, this is a different culture. There are different levels of rigor associated with how information is managed in today. Information is as valued or more valued then actually the drug that you're manufacturing out there. So, having adequate security in place is really a paramount consideration to what we call the cyber supply chain.

During this we've identified several technologies that really we think are sort of leading the industry in terms of that. We're technology agnostics but we came across one which you particularly like. It's made by a firm called Blackridge and it was actually developed for the Department of Defense.

What it does is you put this on your existing network infrastructure. It's what they call the TCPIP Layer 2, of you know anything about the different layers of information. They use something very novel. I thought it was just a very clever design concept in which, if you remember back in the old days when he had modems you hear that pinging sound when you go to connect to your network.

What that is is really an authentication, a synchronization an authentication step between your computer and that network. What this firm has done is they've embedded a highly sophisticated encrypted sort of code into that activity and if you're not supposed to be there then they won't acknowledge you. It's extraordinary.

The technology was developed for the military theater where they wanted the ability to communicate in Iraqi and Afghanistan with basically zero chance of someone eavesdropping on the communication. That's what this does.

Since it uses this proprietary encrypted algorhythm and it takes advantage of the fact that you have to make a connection it's virtually impossible to eavesdrop onto the network.

For companies that I'm setting up oversees you have to protect your intellectual property and you want to protect your product information, whether it is an intermediate active ingredient or final product.

By using technology like Blackridge has got you're actually able to create secure lands that are invisible both internally to your company and externally to the folks that want to do a threat.

These technologies are bolt on so you don't have to really retool your IT infrastructure, which is what we like because folks like what they like and we don't really want to change that.

We do want to put some level additional protection onto the IT design so that knowing that there's going to be a cultural bridge that needs to take place at some time, as they gear up they've got the level of protection that they need.

Todd S:  Man oh man Todd. I do sincerely hope our paths cross with Bikash at INTERPHEX because we have a lot more insight to gleam from this gentleman.

Bikash :  You haven't even scratched the surface Todd.

Todd S:  We have not. Bikash, I hate to say it but we are out of time for this conversation. Before we let you go how can people get in touch with you and where can they learn more about your work at Pharmatech?

Bikash :  You can go to our website at www.pharmatechassociates.com and there is contact information. My company contact phone number is on that. We're very active in publishing so you'll probably us.

We've done over 70 different articles in peer-reviewed magazines so our contact information is in most of the major trade journals. We look forward to helping folks as they look to expand their businesses both in the U.S. and across the world.

Todd S:  Bikash Chatterjee, the President and Chief Technology Officer with Pharmatech Associates, Inc. Bikash, it was a real pleasure to spend some time with you. Thank you for joining us.

Bikash : Same here. Thank you very much guys.

Todd S: That wraps today's show. We'll enjoy seeing you at INTERPHEX in New York City on March 18th though the 20th and you can catch Life Science Connect Radio broadcasting live from booth 1265. On behalf of today's guest, Bikash Chatterjee, my co-host, Todd Youngblood, I am Todd Schnick. We'll see you soon on Life Science Connect Radio.