The global pharmaceutical outsourcing market was estimated to be USD 115.7 billion in 2016, of which 49 percent is accounted for by contract research organisations (CROs). Within India, the contract research market is scheduled to grow from around USD one billion in 2016 to USD 1.97 billion by 2023 according to a 2018 Market Research Future report. Indeed, the future looks rosy for the CRO industry in India as the country moves towards greater acceptance of international guidelines and intellectual property rights and recognition grows of India’s educated, accessible and low-cost workforce and large pool of ethnically diverse patients for clinical trials.
“We expect the growth rate for contract research and manufacturing services (CRAMS) to be higher than the average growth rate of the overall pharmaceutical industry”
Daara B. Patel, IDMA
Indeed, as Daara B. Patel, secretary general of the Indian Drug Manufacturers Association (IDMA) notes, “We expect the growth rate for contract research and manufacturing services (CRAMS) to be higher than the average growth rate of the overall pharmaceutical industry.”
J.R. Vyas of Dishman Group – which brands itself as a CRAMS company and hit the headlines back in 2006 with its acquisition of the Swiss-based CARBOGEN AMCIS – posits that the high generic penetration in the Indian market informs the activities of companies in his sector. He notes that, “In India the generic industry is very predominant and is still a high priority. This is mainly due to the fact that, for Indian companies, researching a large number of molecules, starting from basic molecules to the late stage of clinical trials, is too expensive.
The only option is, therefore, to look at existing drugs and develop the API. In India, we do not have a developed clinical trials scene, so we rather conduct bioequivalence studies, which are aimed at studying whether the generic drug behaves in the same manner as the innovator drug.”
Through the CARBOGEN AMCIS acquisition, Dishman has been able to transform its international image and establish the combined organization as a go-to destination for contract research and manufacturing over the last 12 years. Vyas exclaims that, “From the very beginning I realized that Western customers would not consider India as their ‘go-to’ address to develop new chemical entities or make any other type of investments and this is the very reason why I decided to purchase a company based in Manchester, UK. I understood that to attract Western customers, especially from the US, I would need a Western, high-tech, high-quality front-end to my business. After establishing a relationship with customers, this front-end then could support the growing needs of Western pharmaceutical companies by connecting them with the back-end of the business in India, where they could provide large scale manufacturing at competitive costs and with a robust quality assurance system. This is how I came to buy CARBOGEN AMCIS.”
For GVK BIO – one of India’s leading companies in the contract research and development space with revenues of USD 120 million and aspirations to break the USD 200 million barrier by 2021 – the key to success has been capitalizing on India’s human resource base to grow its business, taking its cue from the country’s booming IT outsourcing industry. As CEO Mani Kantipudi explains, “We have an extremely high density of PhD students and scientists in the company across the country (around 200). We try to develop R&D solutions for our customers and our basic value proposition is very much like the one in the IT industry in India.
The IT industry has a large number of engineers, the country is producing very hardworking and relatively inexpensive engineers, thus IT outsourcing is a big trend here. Similarly, in pharma outsourcing we see a large number of English-speaking and very hardworking scientists who are reasonably inexpensive, allowing us to charge around USD 60,000 per Full-Time Equivalent Agreement (FTE) to do something that in the US would cost USD 300,000 per FTE.”
Kantipudi feels that GVK BIO has managed to differentiate itself from the stiff competition in India through its full integration; preferring to refer to his company as a contract research and development organization (CRDO) than a CRO. Indeed, GVK BIO’s development business grew 30 percent in 2017 and Kantipudi expects 40 percent growth for 2018. He asserts that, “there are many CROs in India but most of them focus only on one aspect such as analysis or formulations. However, you can come to GVK BIO with an idea and we discover the molecule for you, develop it and manufacture it – we are fully integrated in that sense.”
Kantipudi has also overseen an increased international footprint for GVK BIO, proclaiming that “we are one of the very few CRDOs in the country that operates in multiple sites … we have facilities in Hyderabad, Bangalore, California, in the bay area in San Francisco and we have a campus in Vizag, a Special Economic Area (SEZ) with many pharmaceutical companies. We also have a global customer base, which helps us think globally.”
The final differentiation factor for GVK BIO is its move into the biologics space with the acquisition of Aragen Biosciences in the US. Kantipudi explains, “We are not only into small molecules like most companies in India that are only chemical companies, but we are also into biologics because many pharmaceutical companies are becoming biopharmaceutical companies. We are one of the few companies in India that has acquired a company internationally. Many biologic companies are learning from the previous generation of pharma companies that they do not need to set up their own infrastructure, laboratories, and facilities, they can outsource that part. The decision we took was not focusing on setting our biologics in India but to go to the United States, go to the best, acquire the talent, and look at the strong service players. That’s how we settled on Aragen.”
Writer: Patrick Burton