15 billion reasons to be optimistic
All over the world the pharmaceutical industry is under pressure to streamline processes, reduce cycle time, cut costs, and improve productivity of research efforts, writes Arun Chabria
BIG Pharma’s increasing R&D expenditures and the depleting pipeline has necessitated a structural shift in research strategies namely a sharper research focus and outsourcing for cost containment. Outsourcing has become a requiem for the pharma industry and has resulted in the creation of a huge opportunity, particularly for clinical trials in India. This market insight analyses the opportunities and challenges for this sector in India and suggests growth strategies for the sector.
Raison D’ etre for Outsourcing Clinical Trials to India
The popularity of India as an outsourcing hub is evident from the fact that varieties of firms across different verticals have set up their operations here. The factors that outsource clinical trials to India are rise in prominence of India as a research and development (R&D) destination for big pharma. The large pool of English speaking researchers and the genetic diversity among the patient population makes India an ideal destination for clinical trials.
Moreover, the costs of conducting clinical trials in India are at least 40 per cent cheaper. The rates for trials in regulated countries cost approximately USD 5,000, whereas the going rates in India are around USD 85 (Rs 4,000).The above points amply illustrate the logic of outsourcing clinical trials to India.
The size of the opportunity zone
The Indian contract research outsourcing (CRO) market is currently in the embryonic stage. India’s contribution to global clinical research industry is currently less than a percent. Industry sources have pegged the growth rate at 20 to 25 per cent per annum. The industry potential has been estimated at USD 34 million (Rs 160 crores) by 2008. India has been tipped to become one of the hotspots for outsourced clinical research and is likely to account for more than 20 per cent of the global industry revenues by 2020. With the growth factors firmly in place, the industry is set to experience accelerated growth in the next five years.
Key participants in the opportunity zone
The advantages in outsourcing have translated into setting up establishments for clinical research in India. Among the multinationals, the world leader Quintiles Transnational, set up its India operations in 1997, Eli Lilly India has also started its research initiatives in the country and has more than 18 clinical trials for stages II and III under its belt.
Covance is yet another multinational major that has a presence in India. Pharma majors have also invested in drug development and clinical trials in India some examples of these include AstraZeneca in Bangalore, Pfizer in Mumbai and the alliance between GlaxoSmithKline and Ranbaxy.
Some of the noteworthy participants in the Indian market are Clinigene of Biocon, the firm amongst the first in India to have a College of American Pathologists (CAP) accredited clinical diagnostic lab to support clinical research. Another firm making waves is SIRO Clinpharm; the firm conducts clinical trials in various therapeutic areas. The firm has entered into a pact with Pfizer Global Research and Development (PGRD) for provision of clinical data management and biometric services.
Synchron India a CRO participant aims to provide international standards and compliance with good clinical practice (GCP) and good laboratory practice (GLP) guidelines as promulgated by the International Conference on Harmonisation (ICH). Parexel, a USD 615 million biopharmaceutical outsourcing firm has entered in to a collaborative venture with Synchron to tap the emerging potential of clinical research in India.
Another long time participant has been iGATE Clinical Research. It was created by the acquisition of two companies Mumbai-based, DiagnoSearch and the Pittsburgh Clinical Research Network (PCRN) that were acquired by iGATE Corporation in 2003.
Challenges in the opportunity zone
The considerable promise of the contract research outsourcing sector is accompanied by its own set of challenges. The main challenge faced by the sector is the lack of clarity and confusion regarding the jurisdiction of various nodal agencies in the approval of clinical research. Moreover, the procedural delays in the approval of clinical trials frustrate industry participants. The blanket ban on phase I clinical trials of foreign sponsors is another limiting factor.
Rapidly expanding CROs typically have large staffing requirements. Closely aligning staffers’ expertise with project requirements is the most difficult task facing them. Scarcity of appropriate staff on projects and relatively few scientists with broad expertise in various therapeutics areas pose additional problems. With growth rates projected in excess of 20 per cent this could be a serious hurdle faced by companies in delivering quality research work.
Repeat business accounts for 85 per cent of all business. Maintaining close client relationships is a burning issue for budding CRO’s. Sponsors are compelled to come up with new product candidates and quickly rush new drugs to market. This makes it difficult for the CRO to fulfill client expectations.
Keeping in mind the nature of the industry, data integrity and confidentiality are also key issues. Firms are yet to ramp up their data management capabilities to match the ICH guideline requirements in an adequate manner. However, other challenges such as the ban of phase I trials for drugs developed outside India still exist. Additionally, for clinical trials to take off in a significant manner, the providers in the healthcare space will have to upgrade their information systems infrastructure. For clinical trial outsourcing to fulfill its stated potential, addressing these issues is vital.
Strategies to overcome challenges will address two key areas namely, the regulatory set up and the development of internal competencies to match global standards.
As far as the regulatory set up is concerned establishing clarity of jurisdiction of nodal agencies involved in clearance of clinical trials at the national and at the state level is vital. Moreover, shortening of approval time spans for clinical trials from four months to 30 days (as in the United States) would expedite large scale clinical trials by CROs. The government also needs to revise its stance on the blanket ban for phase I trials of foreign sponsors.
Moreover, the government needs to play a vital role in the development of the required infrastructure by promoting creation of research clusters around biotech hubs or parks.
The government has to play the role of technology incubator for biotech start ups. Above all, the government should ensure that positive developments on the IPR front are followed through. All these measures have a cascading effect of generating increased research outsourcing opportunities.
The issue of staffing requirements can be handled by switching to temporary and contract staff. The advantages of temporary and contract staff are availability of workforce on short notice and immediate re-deployment of staff after project completion is avoided. The caveat would be for CRO to set up appropriate internal systems to manage them to their fullest potential.
Few CROs regularly measure client satisfaction on an ongoing basis. In the absence of feedback from clients on expectations and fulfillment, firms have no reliable way to evaluate client satisfaction. This is vital when we consider that the industry thrives on repeat business.
As far as the issue of maintaining the data integrity and security, the contract firms will have to adopt data requirements posed by ICH on a war footing. Perhaps there is an opportunity for CRO to leverage the expertise of IT enabled Services (ITES) companies and Indian software majors for issues concerning security, integrity, and interoperability of data sets.
Indian CROs should also attempt to embrace the best practices such as GCP and GLP that have been laid down by international forums such as the ICH. A collaborative venture between the industry and teaching institutions to incorporate these standards into the curricula and also jointly develop centres of excellence in the area of clinical sciences could be a possible strategy.
The opportunity beckons
In the high stakes pharma game, time and money are literally synonymous. All over the world pharma is under pressure
to streamline processes, reduce cycle time, cut costs, and improve productivity of research efforts. This has resulted in pharma companies identifying outsourcing as a long term strategy to achieve these goals. India is aptly poised to leverage the benefits of this symbiotic partnership by virtue of its inherent strengths. India also has the edge over rivals countries such as China when issues such as protection of intellectual property rights and the vast pool of English speaking researchers are considered.
Such an arrangement could well lay foundation for the next generation of global pharma, biotech firms companies emerging from India. With a possible global market potential of $15 billion by 2007, the land of unlimited opportunity beckons.
The writer is Research Associate, Frost & Sullivan, Life Sciences Division Asia Pacific Practice