Sun rises in the East
Our News Bureau – Mumbai
The global biopharmaceutical industry is ailing. The main symptom is a deceleration in new drug development. So says the Boston Consulting Group (BCG) report ‘Looking Eastward’. It also says that the remedy lies within the industry’s control. The report highlights the potential offered by offshoring R&D to China and India and the inherent differences between the two countries. It also suggests ways to capitalise each one’s strengths and offers guidance for integrating both countries into a global R&D strategy. Rightly so, the time has come for the global biopharma industry to look eastward!
China and India have become R&D hotbeds and offshoring destinations of choice for MNCs. The global biopharma industry lagged in offshoring activity, largely because of the regulatory and competitive environment in both the countries. They were not conducive to multinational pharmaceutical companies’ (MPCs) investment until now. But things have changed, the report states. Each month brings reports of new R&D centres being established or new therapeutic areas being investigated in China and India. What are the major factors that are driving multinational pharmaceutical companies (MPCs) to invest in these areas?
Benefits: Numerous and Varied
The potential to reduce costs, the opportunity to tap the two countries’ burgeoning biopharma R&D capabilities and resources and the prospective pay-offs from establishing a foothold in these rapidly growing markets are the reason for most companies investing in India and China. When it comes to tapping the two countries’ capabilities and resources, one must consider these advantages:
A huge talent pool: In both India and China, annual graduates in chemistry outnumber their US counterparts by five times at the bachelor’s level and more than three times at the master’s level. Indian graduates are also proficient in English to add to its advantage.
Considerable government support: China has a tradition of government sponsorship through state funded research institutes. India’s government too is impressively involved in promoting India’s biopharma industry
An increasingly favourable infrastructure: A network of lifesciences parks has developed in both the countries, offering MPCs the basic amenities in the form of new laboratories and research centres equipped with state-of-the-art technologies. They are also throwing in several fiscal and regulatory incentives from them to set up shop
A burgeoning market: The potential commercial pay-off coming from both the emerging markets is an added attraction
Though the benefits of off-shoring are largely similar for both the countries, there are several differentiating factors that MPCs need to consider before deciding upon the destination for specific R&D initiatives. While India offers a substantial boost in terms of R&D productivity, China demonstrates lucrative commercial prospects by alluring MPCs to increase their share in its burgeoning market. India’s special advantages reside in its vendor base, which is abundant, nimble and resourceful. India gives an MPC more in terms of voluminous high quality output at lower costs and helps it boost its overall efficiency and flexibility.
China on the other hand, can pull MNCs on the basis of its ambitious R&D projects on newly emerging country diseases. Also, by investing in China, a company can expect a proportional fund of governmental goodwill and it will also find it easier to secure approvals and get on reimbursement lists.
The report analyses both the countries’ capabilities in different spheres and concludes that in the near term both India and China show promising opportunities in chemistry phase activities and clinical trials. China could be a more favoured destination for biology related activities in the long term as it has better capabilities and more number of potential partners than India. Though both countries are held high in regard as far as chemistry is concerned, India has the upper hand here as it has far superior expertise and experience in chemistry than China.
Yet, despite the immense opportunities and attractions, MPCs are apprehensive about data protection and IPR issues. But the report informs that such issues are no longer as intense as they used to be because increased competition among most vendors in India has driven them to maintain strict standards of confidentiality. Moreover, the legal environment too has changed after both the countries realigned their policies in agreement with TRIPS.
Pre-clinical capabilities hold a budding potential for both India and China and need to be developed further in compliance with international standards. The report analyses the pre-clinical landscape and suggests changes so as to convert the improving scenario into a fully blossomed one. In contrast to the pre-clinical phase, clinical trials in both China and India are flourishing due the countries’ lower costs, higher patient concentration and faster patient enrolments. The advantages in both the countries are compelling especially in India, since it has an edge over China in clinical data management due to its legal framework, which ensures data security.
|In the recent BCG survey of 27 leading providers of biopharma R&D services in India, a total of seven (26 percent) had basic capabilities in rodent ADME and six were able to perform toxicology studies. But only two had conducted canine studies and only one had demonstrated primate testing capabilities. At the time of the survey, the three vendors with the most advanced pre-clinical capabilities Zydus Cadila, Aurigene Discovery Technologuies and Advinus Therapeutics offered a wide range of services including in-vitro ADME tests such as solubility, metabolic stability, CYP-inhibition and protein binding studies. They also did in-vivo ADME tests such as pharmacokinetic, tissue distribution, metabolism, permeability, and selected disease specific safety studies. In addition to this, they carried out toxicology tests such as reproductive toxicology, cytotoxicity, genotoxicity, immunotoxicology and hypersensitivity tests.
Some vendors are developing specialised pre-clinical services. Despite all this activity, India’s overall pre-clinical track record must be regarded as limited. Facilities with good laboratory practice (GLP) certification are fairly scarce resources there, and so are capable and experienced pharmacologists. So any MPC planning to outsource pre-clinical work to Indian vendors must first satisfy itself that there really is adequate scientific support in the design and conduct of the study and in the analysis of results.
Proposed business models
Pre-clinical capabilities hold a budding potential for both India and China and need to be developed further in compliance with international standards
After looking at the biopharma capabilities of both the countries with specific details, the report suggests five business models and flexible strategies that could be adopted by the countries in order to optimise their industries. Both the countries demand a different business model according to their existing capabilities.
The report assesses that a captive R&D centre is best suited for China and the vendor based outsourcing model is best suited for India. According to the captive R&D centre, an MPC can develop drug candidates at a fully owned site. And in India, MPCs can look at outsourcing selected discrete activities to third party vendors in the country.
The sun has gradually risen to modest prominence on the eastern horizon. It is still doing so at extraordinary speed. It is now up to the MPCs to access the lucrative options there and hence, optimise their image, productivity and profitability as a whole.