Jupiter Bioscience Ltd Management Discussions

JUPITER BIOSCIENCE LIMITED ANNUAL REPORT 2010-2011 MANAGEMENT DISCUSSION AND ANALYSIS 1. INDUSTRY STRUCTURE AND DEVELOPMENT: Outlook on Peptide Therapeutics: The market for peptides continues to grow in-spite of the prevailing recession due to progress of several peptide based new drug development projects particularly in identification and targeting specific peptide receptors and innovative formulation methods. Some of them are in market and many are in various clinical phases covering a range of diseases such as infections and cancer etc. Pharmaceutical companies are developing more complex peptides with defined structural characteristics designed to achieve a specific biological function. Producing these sophisticated therapeutics requires expertise beyond conventional peptide synthesis capabilities. Similarly, value-added technology will be the key to survival in the highly competitive non-GMP peptide industry. Peptides play an important role in fundamental physiological and biochemical functions in the body. Peptide is a molecule formed by joining two or more amino acids. When the number of amino acids is 50 or less than 50 these molecules are named as peptides while larger sequences are referred as proteins. Peptides are key molecules in the human system and exist as hormones, chemical mediators, and structural components are responsible for maintaining the structure and function of the cell and on the whole entire system. During the past year, some companies have demonstrated success in using its CLIPS (chemically linked peptides on scaffolds)-based peptide mimics of discontinuous protein domains as immunogens in synthetic vaccines. Peptide Manufacturing companies in US & Europe are having multiple synthesis projects under way for peptides in various phases of clinical development, including in Phase III testing. The market for peptides continues to grow in spite of the prevailing recession due to progress of several peptide based new drug development projects particularly in identification and targeting specific peptide receptors and innovative formulation methods. Some of them are in market and many are in various clinical phases covering a range of diseases such as infections and cancer etc. Multinational companies with focus on peptides are establishing manufacturing sites for large-scale cGMP peptide production using solid- phase and Solution-phase. Ongoing manufacturing projects range from very small peptides of 3 to 5 amino acids, to the synthesis of long peptides, exceeding 40 amino acids in length Applications of peptides are growing continuously. The outlook on some of the areas is mentioned below: Peptides in Cancer Therapy: Therapeutic peptides have great potential as anticancer agents. This is because of their adaptability and ease for designing as a drug candidate and also their specificity for target. Leading commercially available drugs in the market in this segment are Leuprolide, Goserelin, Triptorelin, Buserelin etc which are administered for treatment of prostate and breast cancers. Many more drugs are in the pipeline for treating various types of cancer. Various radiopharmaceuticals based on peptides are also being used for diagnosis and therapeutic purpose in cancer. Peptides in Diabetes: Diabetes is an important segment for peptide drugs. Some of the drugs in the market include Desmopressin, Exanatide and Pramlinitide. Desmopressin a generic peptide drug is used for treatment of type 2 diabetes associated with frequent urination and bedwetting. Exanatide is approved as an adjunctive therapy to improve glycemic control in patients with type 2 diabetes who have not achieved adequate glycemic control using metformin, sulfonylurea and/or thiazolidinediene which are common oral drugs for type 2 diabetes. Pramlinitide is the first and only approved medicine in a new class of compounds called amylinomimetics. It is approved as an adjunctive therapy to improve glycemic control in patients with either type 2 or type 1 diabetes who are treated with meal time insulin but who have not achieved adequate glycemic control Peptides in Cardiovascular Disorders: Some of the drugs in this category are Lisinopril and Ramipril. These molecules are derivatives of peptide and are used in treatment of hypertension, congestive heart failure, heart attacks and also in preventing renal and retinal complications of diabetes. Peptides as Growth Factors for Tissue Repair: Peptide fragments are being developed for tissue repair process. When there is damage to the tissue due to injury, peptides and peptide fragments play an important role in the tissue repair process and also act as natural analgesic. Peptides as Vaccines: Live attenuated vaccines have limitations that they have to be stored at low temperature to retain their potency. Moreover, live attenuated vaccines are not available for treating pathogenic bacteria. Killed vaccines are less potent, as they can stimulate the immune system to a limited extend. Hence, the pharma industry has turned its attention towards molecular vaccines. Among the various types of molecules, peptides are attractive candidates for vaccines. One of the areas where peptide molecules are being tried as vaccines is for treatment of large variety of cancers such as breast cancer, cervical cancer, gastric cancer, Peptide vaccines are also being developed for infectious diseases such as Tubercolosis, influenza and SARS. Further peptide vaccines are under investigation for prion diseases and also for neurodegenerative disorders such as Alzheimers disease. Peptides as Anti-Infective Agents: Virtually all life forms express short antimicrobial cationic peptides as an important component of their immune defenses. These peptides serve as endogenous antibiotics that are able to rapidly kill an unusually broad range of bacteria, fungi and viruses. Consequently, considerable efforts have been expended to exploit the therapeutic potential of these antimicrobial peptides. In the last couple of years, it has become evident that many of these peptides in addition to their direct antimicrobial activity, also have a wide range of functions of immunity. For one class of antimicrobial peptides, such as the human defensins, their primary role may even be as immuno-modulators. These properties potentially provide entirely new therapeutic approaches to anti-infective therapy. Peptides in Cosmetics: Peptides have great potential in cosmetics which is emerging as an important area for peptides with several companies entering this segment. Skin is made up of mostly collagen which gives the skin its support and thickness. Young people have lot of collagen because of which their skin is taut and smooth. In contrast, older people have much less collagen which leads to thin and wrinkled skin. Collagen is a protein and is made up long chains of amino acids. When it is broken down, short peptides are formed. Application of topical peptide containing creams increases the formation of collagen in the skin thereby reducing wrinkles. Many peptides are being used and new peptides are being developed for such properties. 2. RESEARCH AND DEVELOPMENT: The company continues to invest in research and development to develop new products, new methods for analysis of these products and improvements in manufacturing process for existing products. Advanced Organic Chemistry: The Advanced Organic Chemistry platform is directed towards process innovation, process development and process optimization to arrive at cost effective processes for manufacture of advanced organic intermediates /penultimate intermediates and generic APIs where cost is the major driving force. During the year the company added special emphasis on process optimization to improve the yields of all the products manufactured by the company Peptide Chemistry: The Peptide Chemistry platform is directed towards developing leadeship across the peptide value chain of peptides starting from peptide building blocks for therapeutics, vaccine and diagnostics for wide range of diseases. Some of the processes were continuous efforts for enhancing the capabilities are as follows: * Friedel crafts reaction * Esterification * Active esters * Mixed anhydrides * Chloro carbonation * Curtious 3. OPPORTUNITIES AND THREATS OPPORTUNITIES: * Market for peptide pharmaceuticals is one of the fastest growing segments in pharmaceuticals * Demand for peptide pharmaceuticals to grow rapidly with large number of molecules in clinical trials * India emerging as a manufacturing base for global pharma * Diversified product range THREATS: * Multi-national companies setting up manufacturing bases in India and China to compete with company * Protectionist policies in Europe, Japan and USA for importing * Increased competition in the industry from entry of new players in both domestic and international markets 4. PRODUCT-WISE OR CATEGORY WISE PERFORMANCE: Sales Rs. in Lakhs Peptides (Peptide Reagents - 11555.04 & Amino Acids) Drug Intermediates - 10581.62 Fine Chemicals - 2690.36 Others - 483.80 Total 25310.82 5. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: Your Company has adequate internal control procedures commensurate with its size and nature of the business. These business control procedures ensure efficient use and protection of the resources and compliance with the policies, procedures and statutes. The internal control systems provide for well-documented policies, guidelines, authorizations and approval procedures. Your company has professional firms on its internal audit panel who review the adequacy and effectiveness of all internal controls laid down by the management and suggest necessary improvements. The senior management reviews on a monthly basis the findings of the internal audit department while the Audit Committee of the Board reviews on a quarterly basis the internal auditors findings and recommendations. 6. HUMAN RESOURCES: Our Philosophy: Your Company attracts and retains qualified, productive and motivated employees. Our Human resource programs are based on the business philosophy and the operational strategy of the Company. Commitment to Excellence: Your Company is committed to multi-skills development of its employees to enhance their performance. Your Companys endeavor is to provide projects which would facilitate the employees to take on a wide range of responsibilities and prepare them with skill sets in broad areas of operations. Commitment to Innovation: Your Company encourage its employees to be innovative and would foster this spirit in all areas of operation particularly R&D. Performance Measurement: Rewards and growth of employees will be based on completely on performance for which the goals will be clearly defined and agreed by the employees. Training and Development: The Training & Development program is designed to provide sufficient training and counseling the employees to successfully perform their jobs and the goals set up for them. In addition your Company also arranges and supports its employees pursue further academic studies such as PhD programmes by post graduate employees. Employee Communication: Employees will receive clear and timely communication on all work related issues. Employee Relations: Employee relations continued to be quite satisfactory. Management never intends to have any bias towards its employees on the basis of race, sex, age and creed. By Order of th Board for JUPITER BIOSCIENCE LIMITED Venkat R. Kalavakolanu Chairman & Managing Director Place: Bidar Date : September 5, 2010