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Contract research and manufacturing services is one of the fastest growing sector in pharmaceutical and biotechnology industry. The pharmaceutical market uses outsourcing services from low cost providers in the form of contract research organization (CROs) and contract manufacturing organizations (CMOs).Huge investments followed by low productivity in R&DS are driving companies to cut the manufacturing costs by outsourcing their research and manufacturing activities to low cost countries like INDIA. Outsourcing to India offers a very significant benefits over the other matured pharmaceutical hubs in North America and Europe.India emerged as one of the leading economical, quality manufacturer of pharmaceuticals for number of global players along with multi-national companies. Moreover, present economic crisis along with the shoot up in prices and generic agenda are forcing global pharmaceutical companies to leverage the strengths of Indian Pharma manufacturers. The present article explains the role of CRAMs, benefits and risks, challenges & recommendations for Indian CRAMs industry.
To understand CRAMs and present information about its present status in INDIA.
Since 1980s CRAMS have emerged in Pharmaceutical industry but gained importance only in late 1990s as MNC's were under pressure with the interest on profits.CRAMs took years to play a significant role in the areas like preclinical,clinical trials,drug discovery,R & D and extended to Pharmaceutical drug manufacturing. Contract Research And Manufacturing Services (CRAMs) refers to outsourcing services/ products to low-cost providers like INDIA and CHINA which maintains quality, world class standards and meets international regulatory norms like the USFDA, Australian-TGA, UKMCA, and EMEA. Pharmaceutical Industries have been traditionally outsourcing API's (Active Pharmaceutical Ingredients),intermediates and Formulations (Finished Dosage Forms).
Indian contract research service providers have gained a significant hold in the early and late clinical stages of contract research services. However,areas such as pre-clinical and early discovery studies remain unexplored.These segments have untapped potential;services like medicinal chemistry,bioinformatics and regulatory filings are offered,which can form the ground for new drug discovery.This segment under CRAMs is dynamic and evolving into a well established offering.
CRAMs basically consists of the following two activities:
Contract research (including custom chemical synthesis and clinical trials)
A Contract Research Organization (CRO) is an organization that render services on a contract basis in the form of preclinical and clinical research services to the pharmaceutical and biotechnology industries.
A Contract Manufacturing Organization (CMO) is an organization that makes pharmaceutical products under contract and deliver its client with wide range of services from drug development to manufacture.
Contract research and manufacturing services:
A CRO can provide such services as preclinical research, clinical research, clinical trials management, pharmacovigilance and biopharmaceutical development.
A CMOs can provide manufacturing services.This can be divided into two main activities: primary manufacturing and secondary manufacturing.
Focus- companies can concentrate on their core competencies better if they can outsource their production to CMO.
Lack of Control
Intellectual Property right Loss
CRAMS IN INDIA:
Pharmaceutical outsourcing varies from a one-time supply to a partnership agreement. Now a days CRAMs is on a verge of high growth rate with multi-national pharmaceutical companies facing the changes in R & D pipeline surges and slowdowns,internal issues,and global expansion.
Globally India is the only country with more than 175 US FDA approved manufacturing units which makes it a preferred location for multinational companies to out source their manufacturing services.
The Indian CRAMS market was valued at US$2.5 billion in 2009 and is expected to reach US$7.6billion by 2013, growing at a CAGR of 47.2% (2007-2013).
The CRO market will grow at an annual rate of 14% between 2009 and 2013 and it will reach upto US$35 billion by 2013.
The contract manufacturing segment of CRAMs market was at US$1.6 billion on 2009 accounting for the major share (approximately 64%) of the total Indian CRAMS markets.
Drivers of the Indian CMO market include:
Higher number of FDA approved manufacturing facilities
Large and growing talent pool and
Continuing cost advantages.
Resistors of the Indian CMO include:
Intellectual property concerns
Competition from China and safety concerns.
The Indian advantage for CROs
50%lower costs in clinical trials compared to global market.
Nearly 7 lakh hospital beds in Multi-speciality hospitals with state of the art facilities and 221 medical colleges are present in INDIA.
Language-India is one of the largest English speaking countries which offers modern science education in english making it easy for the investigators. All the documentation of clinical trials including laboratory reports,clinical notes are written in English with no need of translation required for Western auditors.
Rich talent pool- Many clinical investigators with experience in world class trials and rich exposure to ICH GCP compliance and international audits for protocol
Diversity in population
India with a wide pool of patient population which includes chronic diseases ,disease characteristics of both developed and developing countries .
Indian Advantage for CROs:
Indian pharmaceutical companies, with their reversible engineering skills have evolved superior chemistry, manufacturing and regulatory skills at low-cost.
Skilled labor are available at low cost ( Labor costs in India is around 1/7th the levels in developed countries)
Cut-capital cost :with locally fabricated equipment and high quality local engineering /technical skills 25-50% of set up cost for a project is reduced. This benefit can be shared on to customers.
Regulatory expertise: Outside the USA, highest number of US-FDA approved plants about 175 are present in India.
Emerging opportunities in CRAMs:
Annually rupees --- were generated by the Contract Research and Manufacturing Services (CRAMs) .
8% of total indian pharma business was made by CRAMs over the last five years
With the help of co-marketing alliances to increase the product life cycle indian companies are looking for market expansion by stretching their foot prints to major geographies.
Increase in competition and saturation of Indian pharmaceutical market space lead the companies to enter into less regulated and developed markets rather than domestic market.
In the past two decades investment on CRAMs is expanded at a double digit pace ,which reached rupees ---- in 2011.
In the coming five years ,on an average 12.0% revenue rise per year in CMO industry will be recorded
By 2016 Indian CRAMs market is expected to increase 30 -50% with the drugs of market worth approx ----rp losing patent protection .
Challenges for India:
Increasing cost structure (manufacturing costs and labor costs): India is no longer the lowest cost destination for the outsourcing companies.
Increasing the competition from other geographies like China, Taiwan etc.,
Big Pharma MNCs setting up their facilities in India (off-shoring).
Though India has enforced patent laws, there is still lingering discomfort among few multi-national companies, particularly small biotech's, with working in India.
Relative to Western countries, there is still a lot of government control (Via Licenses) that leads to additional timelines, than that of those countries.
Focus on safety,health,environment(SHE) is a relatively recent advance, and although it is growing, it needs a much greater focus.
Recommendations for Indian CRAMS Industry:
Develop capacity and expertise in following areas, which are showing a huge growth potential:
Biologics: increased biologics in the discovery pipeline.
Cytotoxic drugs: increasing oncology discovery pipeline.
Pre-clinical studies: in vitro and in vivo studies.
Bio catalysis: increasing emphases on optically pure drugs and stereo-specific and environmental friendly processes.
Why CRAMS is still an attractive business proposition for India?
Despite few challenges, India continues to offer competitive advantages mentioned earlier and has a great potential to become a global leader in CRAMs, because of the following drivers:
Global CRAMs is around US $60-70 billion (estimated to reach US $90 billion by 2015) of which contract manufacturing constitutes around 65% and contract research 35%.
Indian CRAMs business is around US $3.8 billion (estimated to reach US$8 billion by 2015), with almost the same proportion of contract manufacturing and contract research.
Drugs worth US$90 billion are expected to go off patent from 2011-2015 while the sales from new approvals are now here near enough to replace the blockbusters.
Increasing emphasis on generic alternatives by healthcare policies of developed countries.
Global Pharma companies are focusing on marketing and discover, while outsourcing drug development, clinical trials and manufacturing.
Indian companies can also serve as contract marketing partners of multi-national companies who want to setup their presence in India. Multi-national companies leverage the marketing & distribution infrastructure of Indian pharmaceutical companies to sell their products in the domestic market.
Drug manufactures will be extremely cautious about investments in new technologies, equipment or facilities, preferring to outsource to establish experts rather than incur heavy capital costs of building, expanding or upgrading their own internal capabilities, which will stimulate contract manufacturing and research in India.