India top of the world for contract research business

By Kirsty Barnes

- Last updated on GMT

Related tags: Contract research, Pharmaceutical industry, India

India is holding the lion's share of the world's contract research
business as activity in the pharma market continues to explode in
this region.

In 2005 contract research in India was valued at $100-120m (€78-94m) and growing at a rate of 20-25 per cent each year, according to a report by the Chemical Pharmaceutical Generic Association.

India holds nearly double the business of its nearest rival, Italy, with a market value of $60-70m, and nearly four times as much as the next competitor, Spain, with $25-33m, said the report, titled "Competition in the world APIs market."

The activity in India is being fuelled by the direct presence in the country of over 15 prominent contract research organisations (CROs), who are now operating in the country, attracted by India's ability to offer efficient R&D on a low-cost basis.

Thirty five per cent of business is in the field of new drug discovery, where as the bulk - 65 per cent - of business is in the clinical trials arena - the single largest expense for drug companies during drug development.

Studies carried out by International Bodies indicates that the cost saving for a multinational company moving R&D to India is 30-50 per cent, due to factors such as lower wages and infrastructure, such as equipment and IT support, as well as a plentiful supply of treatment-naive patients that can dramatically speed up clinical trial patient recruitment times.

Players in the region are made up of a few large multinational companies (MNCs), as well as subsidiaries of global international CROs, such as Quintiles and Covance; tie-ups between global CROs and local Indian CROs, such as the one between US-based Parexel and Synchron Research Services; as well as stand-alone Indian CROs, such as Siro Clinpharm; and offshoots of Indian pharma companies, such as Well Quest.

Fuelling the business is also the presence of over ten large multinational pharma companies, which have decided to make India their hub for the cheaper production of active pharmaceutical ingredients (APIs) and finished formulations.

In the contract research arena, India is streets ahead of its nearest Asian competitor, China, which currently only reaps in $23-28m in business.

China is better known for its cheap manufacturing abilities, and is still currently held back in the contract research business by its weaknesses in process know-how, as well as its chemical synthesis abilities, compared with India, in addition to ongoing international fears over intellectual property.

However, the Chinese Government has been introducing several initiatives in these areas of late to turn this situation around and foster foreign investments into the country.

There are roughly 20 major multinational pharma companies with manufacturing facilities in the country and 6 or 7 of these now also have an R&D centre.

The most common outsourcing agreements taking place in China currently involve drug discovery, and Phase I-II clinical trials, as Chinese firms are regarded as having their strengths in the biotech arena.

Several companies are now planning to create an R&D centre in the country, such as Sanofi Aventis, which plans to make China a strategic market for development in the next four-five years; as well as Merck, which is creating a new department in the region from which to run global clinical trials.

As regulations and infrastructure improve, China will continue to climb the outsourcing ladder and begin to present more and more of a threat to India, which is currently operating in this growing market unchallenged.

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