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Seeking Full Partnership

Founders of Indian contract research organization Anthem strive for research alliances with drug industry customers

by Michael McCoy
September 29, 2008 | A version of this story appeared in Volume 86, Issue 39

Brain Power
Credit: Anthem
Anthem says its scientists are intellectual participants in their partners' projects.
Credit: Anthem
Anthem says its scientists are intellectual participants in their partners' projects.

WHAT DO YOU DO after being a pioneer of the Indian chemistry outsourcing industry and helping to build one of the country's largest contract research organizations? If you are Ajay Bhardwaj and Ganesh Sambasivam, you leave the company you helped found and start all over from scratch.

Bhardwaj and Sambasivam are chief executive officer and chief scientific officer, respectively, of Anthem BioSciences, a year-old contract research organization (CRO) based in Bangalore. But many people in the outsourcing community know them better as two of the first employees of Syngene, the venerable contract research subsidiary of India's Biocon.

Sambasivam was Syngene's first Ph.D. chemist when he joined the company in May 1994. When he left in July 2006, he was chief scientific officer and a vice president. Bhardwaj was also an early Syngene employee and had risen to the role of president when he left the firm along with Sambasivam and Ravindra Chandrappa, Syngene's former head of manufacturing.

As Sambasivam and Bhardwaj tell it, they had helped Syngene expand to the point that, by the middle of 2006, it employed 800 chemists. It had dozens of clients, including Bristol-Myers Squibb, for which it has since built a dedicated lab intended to house upward of 400 scientists. But the two executives were getting restless.

"Ganesh and I got to talking," Bhardwaj recalls, and they realized they both felt they had outgrown Syngene. "Being creative people, we felt it might be a good time to do something else."

Although Syngene was big by CRO standards, it accounted for less than 10% of Biocon's revenues. The situation was the same at other large Indian CROs, such as GVK Biosciences and Jubilant Organosys. Although sizable, they were small pieces of large industrial conglomerates and often, Bhardwaj claims, didn't get the management attention they deserved.

More important, the three executives thought they could create a company that offers a deeper level of science and service than does the typical Indian chemistry outsourcing firm. Instead of just another CRO, they wanted to build what they like to call a DRAP—a drug research alliance partner.

"The CRO business often has the connotation of warm bodies," Bhardwaj says. "We are bringing an intellectual contribution to projects with our clients."

The partners formed their new firm in August 2006. Rather than accept an investment from heavy-handed venture capitalists, they sold some of their Biocon stock, got a loan from the State Bank of India, and took an investment from DavosPharma, a New Jersey chemistry services firm that now represents Anthem in the U.S.

They bought a former textile company facility in Bangalore and stripped it of almost everything but the support columns. A whirlwind building project followed, and by June 2007, Sambasivam's team was doing chemistry. Today, Anthem employs 150 people, including about 100 chemists and more than 25 biologists.

Whole Cloth
Credit: Anthem
Anthem built its labs in the shell of a former textile company.
Credit: Anthem
Anthem built its labs in the shell of a former textile company.

According to Bhardwaj and Sambasivam, it's the quality of its scientists that distinguishes Anthem from other CROs. Sambasivam, a process chemist by training, says he lured Syngene's top three or four process chemists to Anthem. They now form the core of a 25-strong process chemistry group, unusual for the Indian CRO world.

Running Anthem's medicinal chemistry group is Natesan Selvakumar, the former head of medicinal chemistry at Dr. Reddy's Laboratories, one of India's most prominent drug companies. Other chemists were recruited from blue-chip Indian firms such as Dr. Reddy's, Ranbaxy Laboratories, and Advinus Therapeutics. Anthem works to hold on to its researchers with an employee stock ownership plan intended to allow scientists to share in wealth creation.

The result, the executives contend, is a company that offers drug discovery services not found elsewhere in India. Rather than typical CRO tasks—synthesizing compound libraries at the direction of a drug industry customer, for example—they say Anthem scientists use tools such as protein structure analysis and computational chemistry to conceive and create libraries that they then screen against a customer's drug target. Using structure-activity relationship studies, they refine the resulting screening hits into drug leads.

Sambasivam calls what many other CROs do for their clients "dumbed down" medicinal chemistry. "You participate as a customer's synthesis arm, but you have no intellectual input," he says.

FOR ONE CUSTOMER, Jacob Westman of the Swedish consulting firm Medchemcon, Anthem's attraction is not so much its scientific prowess as its personal touch. Westman is a former Pharmacia chemist who now consults for start-ups that have spun off from Karolinska Institute, Sweden's largest medical research center.

For years, Westman says, he would send clients that needed chemistry assistance to Syngene. "I worked with Syngene quite a lot," he recalls, "but it got larger and larger, and as small customers we were at the end of the line."

Westman e-mailed Sambasivam a few months after hearing that he had left Syngene and learned about his new company. Since then, Westman has moved some of his Swedish clients from Syngene to Anthem, where he says they don't feel lost in a big, impersonal machine.

"As small companies working with a CRO, we need a contact person we know. It's easier to put pressure on delivery times if you know someone," he observes wryly.

Although the Indian contract research industry continues to grow rapidly, it's still a club in which all the executives seem to know each other. Goutam Das, Syngene's chief operating officer, tells C&EN that his company boasts 1,100 employees today and that its business didn't suffer due to the defections. Indeed, Sambasivam and Bhardwaj confirm that most of their customers are new rather than former Syngene clients.

Still, there's clearly some bad blood between the rival companies. In the same breath, Das wishes the Anthem executives well and wonders how they can claim to provide more sophisticated drug discovery services than Syngene does when Anthem's research efforts are being led by the same chemist, Sambasivam, who until recently led research at Syngene.

He also questions the logic of splintering the Indian contract research industry like they have. "In this era of consolidation, how will further fragmentation help?" he asks. Das contends that, managed correctly, a big company such as Syngene can continue to offer personal service.

For their part, Bhardwaj and Sambasivam are careful not to knock Syngene too hard. They do claim that despite its smaller size Anthem offers a range of chemistry and biology services that Syngene and other Indian CROs can't match. And Bhardwaj says he's not enamored of serving clients like Bristol-Myers with dedicated labs, which tend to siphon off the best scientists.

But the Anthem founders do want to emulate their former company in at least one way. Bhardwaj says one of his goals for Anthem is to be twice as big in three years as it is today.


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