Big pharma is on the brink of ramping up operations after the recession-induced slowdown. With more departments expected to become outsourced than ever before these multinationals would be foolish not to look at the benefits India can offer.
Cheap start-up costs, a wealth of talent and a multitude of prospective clinical trial subjects are just some of the advantages. But alongside these is a reputation of erroneous and convoluted regulation. The issue becomes, therefore, just how much firms are willing to put in to get the results out.
With two major Arena International conferences being held at the start of 2010 – Outsourcing in Clinical Trials West Coast in San Francisco, US, on 27–28 January and Clinical Trials in Emerging Markets on 1–2 March in Prague, Czech Republic, the issue of where to base outsourced operations is increasingly prevalent.
Outsourcing to India came into its own between 2000 and 2005 and although the rapid rate of popularity may have slowed since, it is still home to more Food and Drug Administration (FDA)-approved plants outside the US than anywhere else in the world. In addition, the majority of generic drugs taken in the US today are manufactured in India.
Strings to its bow
India holds three core competencies with which to impress potential suitors: its manufacturing assets, its pre-clinical research and its clinical trial skills. But in each the country is trying to overcome what some see as unnecessarily complex regulation.
Pfizer was one of the first to realise India's potential in the clinical trials area. Although there is strong competition from Eastern Europe and China – where the number of trials has grown dramatically over the past three to four years – India still reigns supreme.
Most international companies involved with clinical research in India have set up in-house operations on the ground to oversee the outsourced elements of their business. It is still the less complex trials that are outsourced. In the past a trial could only be carried out if previous phases had previously been completed internationally; Phase I trials are now allowed to start from scratch.
These trials must adhere to FDA good practice guidelines and each laboratory or hospital will have an ethics committee, adding additional regulations. The widening of the types of trials permitted will benefit firms such as GlaxoSmithKline, Pfizer and Eli Lilly, all of which have had India-based operations for more than five years.
Much of the pre-clinical research carried out today has its roots in in-house research and development (R&D) centres within Indian pharmaceutical firms that looked to develop their own molecules, according to Deloitte co-leader of the healthcare and life sciences team Sudeep Krishna. "The research focus of these did not pay off but there was good infrastructure with strong scientists and chemists," Krishna says.
Despite the bad target selection, India's pharmacological and toxicology base proved attractive to many international firms and as the majority of these R&D centres did not have the capital to go it alone, some fruitful partnerships were born. Between 2000 and 2005 a steady government and a rapid but stable economic growth rate of between 7% and 9% brought many big pharma firms flocking for its pre-clinical research assets.
Navigating India's legislation
Regulation at the national, state and city level means that there is often a number of hurdles to jump over before trials can get out the starting blocks. One golden rule in manufacturing, however, is that if nothing being produced in the facility is targeting the Indian market then the company does not have to comply with domestic pharmaceutical regulations.
As a whole, regulations do not appear to be altering dramatically but instead firms are getting better at dealing with them. "The regulations are difficult but they are not restrictive," Krishna says.
Streamlining, instead of simplifying, is the way forward, he adds. "I think the government needs to streamline regulations. Big pharma has the resources to ensure compliance but smaller companies struggle."
It is unclear whether the government is addressing this but with India likely to emerge as a potential market in its own right, streamlining procedures to ensure domestic production of India's medicines will be a worthwhile activity.
A number of small ticket mergers look to be on the cards going forward but as outsourcing reaches maturity, big pharma is likely to consolidate its activities.
"Outsourcing to India is a no-brainer and if firms are not doing it, they need to look at their strategy," Krishna says.