Gujarat CRO industry on growth curve

Gujarat CRO industry on growth curve

Slated to be as the next biotech hub Gujarat has always been in the spotlight because of its potential and support from the government. Slowly and steadily Gujarat is also making a strong presence in the CRO sector. Suja Nair finds out

“All CROs should be registered, and initiatives should be taken to ensure that Government hospitals too should become more clinical research oriented”

– Dr Kiran Marthak Director

Veeda Clinical Research

India’s stint with the Contract Research Organisation (CRO) industry started more than a decade back with initial activities in this segment seen in 1995-96, with Pfizer and GSK conducting global clinical trials in India. Speaking on the scope of the CRO’s in India, Muralidharan Nair, Partner, Advisory Services, Ernst & Young says, “Currently, big pharma players are increasingly leveraging the India advantage for both basic research and clinical trials, leading to a splurge of new players in the market. However, there is no single reasonable estimate of the true opportunity for the CRO industry in India. Industry estimates put the Indian CRO industry at around Rs 700-800 crore ($175-200 million).” Further he says that compared to an advanced market such as the US (the US CRO industry is around 25 years old), the Indian CRO industry is still in a developing phase growing at an estimated 40-45 percent per annum. At present the Indian CRO industry accounts for two percent of total number of global clinical trials carried out in a year.

The first international CRO—Quintiles Spectral India was set up in Ahmedabad, Gujarat in 1996-97, followed by the establishment of the first Indian CROs in 1998-99 (Siro Clinpharm, Lambda Therapeutics) which included a subsidiary of an established pharma company. The growth of the CRO industry gradually led to the establishment of stand-alone companies focused on providing CRO services. Since then Gujarat has always had a remarkable presence on the CRO front.

An early start

“Keeping pace with the changing outsourcing requirements, the Gujarat CRO industry has started expanding their service portfolio from BA/BE and phase II-IV segments to provide additional services like data management, pharmacovigilance service”

– Muralidharan Nair,
Partner, Advisory Services, Ernst & Young

“CROs should be treated as ‘sunrise’ industry in India. They should get the benefits doled out to software industry many years back. They also should get tax credits and abolishing of service tax is a welcome move by the government. The government also should abolish the cases pending recovery of suddenly imposed service tax on CROs which they never charged all these years. This will build confidence and allow CROs to plan for future investments”

– Dr Shivprakash
Founder and Managing Director Synchron Research Services

The CRO industry in Gujarat was initiated early with Quintiles setting up its first office in India in Ahmedabad, Gujarat followed by other CROs. The State was also the first to undertake pre-clinical safety and toxicology studies in India. The State houses approximately 40 percent of CROs in the country. It is home to more than 20 companies, including Quintiles Research India, Synchron Research, Veeda Clinical Research, Lambda Therapeutic Research, Siro Clinpharm, BA Research India, Accutest, Jai Research Foundation and Zydus BSV Pharma Private; offering services across the pre-clinical and clinical arena. These numbers are increasing with many more companies making a beeline towards Gujarat eg Oncology Services Europe, which is entering the country via its Indian subsidiary (Oncology Services India) in Ahmedabad. According to a McKinsey Report, global clinical trial outsourcing to India in the pharma industry is estimated to reach around Rs 5,000 crore by 2010, and there will be requirement of approximately 50,000 clinical research professionals. All this statistics hardly leaves any room for doubt regarding Gujarat’s plans to cash in on the growing scope of the CRO sector. Nair informs that Gujarat is estimated to account for 30-50 percent of the total industry revenues. He adds, “Keeping pace with the changing outsourcing requirements, the Gujarat CRO industry has started expanding their service portfolio from BA/BE and phase II-IV segments to provide additional services like data management, pharmacovigilance services.”

Advantage Gujarat

Gujarat certainly seems be the right choice for the companies, since it provides many incentives and support by way of infrastructure, electricity etc.

Dr Kiran Marthak, Director, Veeda Clinical Research, feels, “We have found Gujarat state to be the friendliest state. The government officers are very co-operative. Getting patients/subjects is also not as difficult. It can also be credited as a ground (where there) are excellent investigators and hospitals with best facilities.”

Moreover, since Gujarat is a pharma hub and has a significant number of the pharma companies engaged in New Chemical Entities (NCE) development; it provides with a readily available customer base for CROs based in the state. Earlier, the CROs have been primarily catering to the in-house requirements of the parent companies, but now have started offering services to other Indian/MNC pharma companies looking to outsource clinical research activities, thus increasing their demand and need in the market.

Speaking about his experience in Gujarat, Dr Shivprakash, Founder and Managing Director, Synchron Research Services avers, “Gujarat has been the land of risk takers and entrepreneurs. The infrastructure in Gujarat is one of the key factors for the success of all the industries in this state. CROs too have been benefited from this ready-to-use infrastructure in terms of uninterrupted power supply, roads, low start-up costs and trouble free labour etc. These are some of the factors that have significantly contributed to the growth of CROs in the state. Also, awareness amongst public about clinical trials is laudable compared to other states which had their share of problems.”

Lupin recently entered into a memorandum of understanding (MoU) with the Gujarat government. With this MoU Lupin also makes a foray into the CRO scene of Gujarat. Suja Nair get details from S Ramesh, President—Finance and Planning, Lupin

What are the reasons for choosing Gujarat to setup Lupin’s CRO?

Gujarat is the first state in the country to pioneer several new concepts in the pharma sector. Manufacturing of chemical-based drugs has now given way to drug discovery, clinical research and Contract Research And Manufacturing Services (CRAMS). The pharma industry benefits considerably from the talent pool generated by various institutes in Gujarat. Apart from this, strong linkages with allied sectors such as chemicals, well established machinery and engineering sector, large number of Contract Research Organisations (CROs) and a booming healthcare sector give an added boost to Gujarat being the destination of choice for the pharma industry.

What are the problems faced by CROs in India? What do you expect the government to do on the same?

Pharma products are non-discretionary items that impact the health conditions of people, and to make the highest quality of healthcare available to all strata of society is of paramount importance. We look forward to the government providing concessions in the excise duty currently imposed, which will provide much-needed relief to companies and facilitate the entry of cheaper drugs into the market. Another factor that will help drive the price lower would be a reduction in service tax. The industry is also currently benefited by the tax exemption available on EOUs. Available until March 2010, we hope that this is further extended.

While these steps will translate into direct benefits for both pharma companies and the common man, it will also allow companies to invest more on R&D efforts, which will in turn fuel further development.

Setting up an industry also requires a number of approvals and clearances from the government. The government has to ensure all requisite approvals from various government organisations, both from centre as well as the state. A single window clearance system would further speed up the process. Another absolute necessity for the pharma industry is an effluent treatment plant in complying with environmental standards. Uninterrupted power and water supply is another basic necessity that the government has to ensure for industries to flourish.

Please give details of the memorandum of understanding (MoU) that Lupin had entered with the Gujarat government recently?

The Gujarat government has been very supportive through the years in inviting fresh investment into Gujarat with a view to increase industrial output and develop state-of-the-art infrastructure. Gujarat gives a complete cycle of support to grow and sustain the pharma industry—from the talent pool, to the
logistical benefit, availability of land and access to power, water and infrastructure for setting up of large-scale pharma project. The government has given access to single window clearance all requisite formalities, including a no objection certificate (NOC) from the Gujarat Pollution Control Board for Lupin’s proposed 500-crore API project. The government has also promised uninterrupted power supply to ensure peak performance. An on-location common affluent treatment plant has also been assured by the government.

What is your view on the government initiatives? Do you think the Gujarat government is considering the demands of the CROs?

The Gujarat government is doing all it can to ensure complete support to the pharma industry. There are a number of factors that have to be touched upon while addressing this topic. But the most notable of this is the government’s setting up of pharma clusters in Gujarat. The proximity of related industries in close clusters helps cut down logistics involved. In addition, coastal areas in Gujarat and the excellent port infrastructure further our cause in cutting logistical costs and aids in export. There are some areas (as listed above) that need action from the government. But we are confident that the government will consider these as and when the time and situation permits.

suja.nair@expressindia.com

Challenges and expectations

Over the years there has been a growing need for clinical research but how steadily this momentum will continue and on what factors, remains a question. Answering the same Nair informs, “In the next few years, growth of the Indian CRO industry would be driven by increased outsourcing from international pharma companies. Cost pressures faced by international companies are creating the need for pharma companies to implement cost cutting measures across operations, including drug development costs. Further, recent drug withdrawals are creating the need for personalised medicines, which in turn demand multi-locational clinical trials across various gene pools.” Further he adds that from an India perspective, domestic companies are increasing their focus on the development of NCEs which will drive the growth of CROs.

Speaking about the challenges faced by the CROs and how it should be supported by the government, Shivprakash says, “CROs should be treated as ‘sunrise’ industry in India. They should get the benefits doled out to software industry many years back. They also should get tax credits and abolishing of service tax is a welcome move by the government. The government also should abolish the cases pending recovery of suddenly imposed service tax on CROs which they never charged all these years. This will build confidence and allow CROs to plan for future investments.”

On the same lines Marthak also points out, “All CROs should be registered, and initiatives should be taken to ensure that Government hospitals too should become more clinical research oriented.” Giving his views on government initiatives he says that the government should reduce the custom’s duty. Also the export of blood samples should be without Directorate General of Foreign Trade (DGFT) permission and only DCGI should have the right to all the permissions.

  • Gujarat is the only state in the country to issue sales license through IT application with the help of National Informatics Centre.

  • The State has allowed setting up of Special Economic Zones (SEZs) dedicated to pharma sector to boost investments.

  • Establishment of National Institute for Pharmaceutical Education and Research (NIPER) for human resource and development.

  • Incentives to encourage research and development in the sector in terms of various tax benefits.

Impact of recession

All said and done there is no doubt that Gujarat has provided lots of opportunities and scope for development of the CROs, but how can it be taken forward from there? Today, almost all industries have been hit by recession. Talent crunch is also a major issue while attrition also haunts these companies. While the opportunities are plenty, availability of quality human resources poses a great challenge in realising these opportunities.

Gujarat seems to be gearing up to meet the challenges of providing technically qualified human resources for the CRO sector. Apart from 12 medical colleges and Institute of Clinical Research (India) (ICRI), the State’s Gujarat State Biotech Mission (GSBTM) is setting up Gujarat’s first private-public partnership (PPP) institute called Shivrath Centre of Excellence and Clinical Research for clinical research in collaboration with a group of clinical research professionals. Speaking on the same, Shivprakash avers, “Government of Gujarat is very bullish on biotechnology and keen on nurturing the home grown talent. They realise that talent is an essential element in the growth of biotech industry in Gujarat. Hence, they invested in a training centre to train the local scientific pool to use them as talented scientific workforce.”

Nair said that the Government has further initiated the establishment of a biotech park at Savli, near Baroda. It proposes to invest around Rs 30 crore in establishing an animal house at the park for the use of CRO companies to conduct pre-clinical and toxicology studies. Gujarat further proposes to upgrade the healthcare sector by introducing the Public Health Act, which would help in streamlining the requirements of CROs with respect to healthcare institutions as well as assist development of the CRO industry.

Nair informs that, “Further good health infrastructure (Gujarat has 1.4 beds per 1,000 people, the third best ratio in the country) relatively low infrastructural costs (like lease rentals), positive experiences in terms of government support in an industry that is fraught with social risks, reputation of the state as industry friendly state and better quality of life in cities like Ahmedabad when compared to that in other metro cities are enabling the growth of the CRO industry in the State.” Knowing this, one can estimate that the Gujarat government is bent on taking their CRO industry to greater heights.

suja.nair@expresindia.com