This startup founded by IIT alumni could be a cure for the pharma industry's compliance issues
Vivek Gera and Abhishek Jha are hoping their biotech startup LeucineTech will tackle the one major pain point that the global pharmaceutical industry faces: compliance.
Much like Leucine, one of the nine essential amino acids, is integral to human health, LeucineTech hopes to be integral to the health of the pharma industry across the world. Founded in January 2016, Bengaluru-based LeucineTech is a compliance software solution that automates the entire cleaning validation lifecycle, including design, qualification, and monitoring, for the pharma industry. (Cleaning validation is a key requirement in the pharma industry because one set of equipment may be used to make multiple products. And if the equipment is not cleaned correctly it may contaminate the next product. As such, the cleaning procedures need to be documented and validated by manufacturers of pharmaceuticals to ensure that equipment is free from contamination.)
Vivek Gera of IIT-Kanpur, and Abhishek Jha, who was at IIT-Kharagpur, met through common friends in 2009 and realised that they had a penchant for a peculiar combination of interests: chemicals and mathematics. When they met up again six years later in 2015, they were working for Goldman Sachs and Rio Tinto, respectively. However, the drive to start up let them to ideate. Abhishek, then consulting with pharma companies, realised there was a problem waiting to be solved: compliance.
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What's the compliance issue?
Pharma companies routinely get notices from the pharmaceuticals regulatory body in the US, the Federal Drug Administration, for not presenting production line data on time. According to data available with Leucine, nearly 24 percent of all issues in FDA warning letters relate to inefficiencies in processes to manage cross-contamination. This showed the need for software that could track residues of a particular type of medicine and ensure it did not contaminate a completely different and new batch of medicine.
“I started an independent FDA consulting company and on-boarded large global clients within three months. Abhishek was a VP at Goldman Sachs at the time, responsible for building software solutions for financial risk management and compliance reporting to multiple regulators, including the Fed,” Vivek says.
Soon, he joined hands with Abhishek to launch LeucineTech.
LeucineTech is designed scientifically to eliminate the risk of non-compliance by at least 78 percent, the co-founders claim. In three years, it has signed up six of the top 10 pharma companies in India. The company has raised an undisclosed round of funding from Axilor Ventures and SAP Labs, but both founders refused to divulge details on personal investments and revenues.
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What does LeucineTech do?
For the pharma industry, drug manufacturing is a process that is regulated at every step. From clinical trials to retailing, there is an audit to make sure production processes and checks are followed. The production line often manufactures three or more drugs on the same line. Machines need to be cleaned to remove every grain of residue before starting a new batch of drugs on to the line. Any contamination can spell massive trouble for the pharma company.
LeucineTech’s software helps pharma companies modernise compliance procedures. The predictive digital manufacturing platform enables better drug product quality and patient safety by reimagining drug manufacturing through digitisation, integration, and orchestration. This essentially kicks out paper and brings in digital.
The market opportunity is huge with over 300,000 FDA-regulated facilities in the world doing things manually.
“Most companies use paper and spreadsheets to perform compliance procedures, resulting in errors, oversights, and delays. Most big companies have well-established procedures, but adherence using manual methods remains a challenge. For small to medium companies, it’s even more imperative to go digital,” Vivek says.
“At many facilities, compliance checks are done manually, on a daily basis, using data from production, lab analysis, and drug chemistry. That can lead to errors and delays,” he adds.
LeucineTech shows a single-view compliance status of every drug manufactured in a facility. It tracks all changes in the drug manufacturing process, evaluates impacts, and keeps the facility compliant at all times.
What the business is about
However, selling the product to pharma companies across the world isn’t easy. Every pharma company has a different interpretation of FDA guidelines.
“Understanding these variances and making the client understand the product is challenging. There is a significant effort required from the client side in terms of vendor audits and IT evaluations, and so the barrier to entry is high. It was slightly easier for us being in the FDA consulting business earlier; that helped us sell better,” Vivek says.
LeucineTech, which is in talks with some global clients now, competes with companies such as Chennai-based ValGenesis and US-based Capterra and Ofnisystems. These firms are at least a decade older than LeucineTech. But all of them have the same business model: they charge an annual subscription fee.
According to a report by the Indian Brand Equity Foundation (IBEF), the Indian pharmaceutical industry, which has a current market size of $27.57 billion, is expected to reach $55 billion by 2020. The industry will spend 3 percent of this on technology, an opportunity LeucineTech hopes to tap. According to V Ganapathy, CEO of Axilor Ventures,
“This company solves a niche problem in the industry and we believe the founders can take it to the next stage - scaling up across the world.”
What is LeucineTech planning for the future? The co-founders want to focus on the drug manufacturing industry, but they also aim to diversify in the next couple of years. “The problem of non-compliance is similar in other regulated industries such as medical devices, food, and cosmetics,” they say.