Flat demand for medicines, declining research productivity, shift in drug research from common to complex diseases, impending patent expiries, increasing regulatory and pricing pressures and the sluggish economic conditions in developed markets have prompted many multinationals to move their R&D activities to Asian nations.
Globally, the period between1990 and 2000 had seen a spurt in market demand for pharmaceutical and healthcare products in North America and European markets. However as the growth in these markets slowed down , drug majors started shutting down sites in Europe and the US where budgets are tighter and are looking for new avenues in Asian nations to drive the growth and to improve operational efficiencies.
For Big Pharma, facing drying R&D pipelines and cost pressures, alliances with Indian and Chinese companies could enhance R&D output and leverage innovation outside their labs at lower costs. Therefore companies are looking for strategic partnerships and opportunities to set up drug development units in Asia. Identifying companies and locations in Asia is the way forward for clinical and contract research companies to carve out their future growth paths, according to experts.
Even as the economic slowdown has forced many of the bigger companies to cut down their clinical trial expenses, as the patent of most of drugs are
expiring, the domestic companies in India have been investing in development of copies of existing blockbusters and rolling out similar generic drugs at very low costs.
R&D in pharma and biotechnology sectors especially in India has been improving consistently over the past few years. Today , as India has emerged as a leader with low cost quality pharmaceutical products, many MNCs and foreign players are looking to invest in India especially in the R&D segment. Similarly China too is being looked up on by the global players for their R&D investments.
India has made phenomenal progress since 1994-95. Over the years it had evolved and today has become a reliable source of quality medicines at affordable prices. With over US $ 12 billion in domestic sales and another US$12 billion in exports in 2010, India has shown a remarkable growth.
“Over the past two decades, India has made extraordinary progress in the pharmaceutical and biotechnology sector. But in spite of having a huge talent pool the country is still lagging behind due to insufficient funding in the research and development and innovation. As more and more newer diseases are emerging, most of which are found to be drug resistant, it’s high time to counter such problems with a co-ordinated effort among the global firms. And India’s role is crucial at this juncture as it is recognized as an apt hub for thriving and nurturing industries with innovative ideas and discovering newer areas of research.” said said Dr. Tanjore Balaganesh, Former Head Research and VP Discovery, AstraZeneca and presently working with Council of Scientific and Industrial Research in the Open Source Drug Discovery programme.
“Many MNCs are setting up production facilities in the growing markets through their subsidiaries, or through collaborations with local companies. In many cases, products have to be modified to suit local tastes, conditions, and also locally sourced material or components. R&D facilities were to be created to address such needs and modification of the products and technologies,” said Balaganesh.
Contract research manufacturing is another important area where India is considered as the destination of choice by the foreign companies. Today the country enjoys cost competitiveness, abundance of technical scientific manpower and a large pool of genetically diverse and drug-naïve patients.
From the R&D perspective, many multinational companies want to take advantage of the congenial environment in the country and are now looking to set up R&D centres and are collaborating with public and private firms. Many MNCs are partnering and collaborating with the Indian pharma players in the R&D sector.
Apart from the need for increased cost-effectiveness, many pharma companies are also motivated by their desire to tap the massive healthcare markets in India and China. Foreign companies are also drawn by Asia's rapidly improving R&D environment. They believe that pharmaceutical innovation would accelerate in the east and local R&D would help to develop a more customised solution for these growing and increasingly important markets. Co-operation with local partners will allow companies to develop locally tailored products and make it easier for them to get industry registration and approval for research activities.
As pharma majors are looking for opportunities to co-develop drugs or buy or in-license molecules from Indian companies, such deals have helped India shed the tag of a cheap manufacturing base and gain salience as a genuine intellectual property contributor.
Asian companies will benefit from collaborative partnerships with the multinationals that are exploring new approaches to advancing the clinical development of innovative products in Asia on sound molecular pipelines (the number of products under development), extensive experience in R&D management, strong funding support and global R&D resources.
At the same time international drug makers may benefit from rich clinical trial resources, locally tailored products for Asian patients, technological support for their global R&D networks, cost reductions and easier access to registration and approval.
"The big transformation in Asia is interesting and we are looking not just at India but Singapore, China, Korea, Malaysia and Philippines. There is both cost and quality advantage driven out of the regions, scientific pool and capability" said said Nobel Laureate Kurt Wuthrich, professor, structural biology, Scripps Research Institute, USA and professor, structural genomics ETH, Zurich who was in Bengaluru recently .
“Evolution in the current scenario can be witnessed with India and China beginning to strengthen their patent laws. There is an explosive growth of CROs in India and China – a trend that continues to be unabated even today, said Dr. Ganesh Sambasivam, co-founder and Chief Scientific Officer, Anthem Biosciences Pvt. Ltd.
“Research needs to be more predictive with technologies. The regulatory approval process will change equally substantially. There is also a move by global pharma majors to access local
scientists to drive country specific research because they understand country specific diseases ,” said
Prof. G Padmanabhan, scientist emeritus and former director, Indian Institute of Science.
Drug major AstraZeneca is now looking at India and China to pursue much of their research and development initiatives. A visible trend is to source local talent to as they have a better understanding of their country-specific diseases. The company also hopes to gain a fresh perspective for developing medicines out of the research initiatives from these two countries.
The company‘s labs in Sweden, UK and Boston work in partnership with bio companies, academic institutions, governments and other non-profit organizations, sharing skills, knowledge and resources to achieve a common goal i.e. improved health.
The company has 14 R&D centres in eight countries including Sweden, the US and the UK. It is giving researchers enhanced tools and skills required to make the right decisions to improve performance. “This is where we are looking for local talent for our R&D centres in India and China primarily because scientists will have a better understanding of the diseases prevalent in the countries of their origin", said Dr. Steve Q Yang, vice president, head, R&D, Asia & Emerging Markets, AstraZeneca Global R&D.
Quintiles, the market leader in clinical research, is now viewing Asian countries as new location for drug development. Identifying companies and locations in Asia is the way forward for clinical and contract research companies to carve out their future growth paths, pointed out Dr Amar Kureishi, chief medical officer and Head of Strategic Drug Development, Quintiles in Asia-Pacific. The key objective now is to create a world class, first in Asia strategic drug development unit, he added.
“To this end, one of the first steps my unit undertakes when formulating clinical development strategies in Asia for our global clients is to understand how the new drug would best add value within the Asian context of disease,” he said
Though Asia is rapidly becoming a new frontier for drug development, to fully capitalize on the opportunities, the industry has to abandon its current go-at-it-alone model and move to a new model of drug discovery and development which covers multiple strategic partnerships, he added
Increasing collaborations
According to Jai Hiremath, vice chairman and managing director, Hikal Ltd and chairman CII, pharma majors are looking for opportunities to co-develop drugs or buy or in-license molecules from Indian companies.
Such deals have helped India shed the tag of a cheap manufacturing base and gain reputation as a genuine intellectual property contributor.
Glenmark has become the first Indian company to out -license a biological product to a Sanofi Aventis.
It has also teamed up with Forrest Labs for asthma and anti lung infection, besides Eli Lily for pain relief. Jubilant Lifesciences entered into a entered into a three- year agreement with Endo Pharma to develop oncology drugs, Piramal Research with Merck for cancer and Serum Institute for pneumococcal conjugate vaccine.
Rise in R&D expenditure
While the R&D spend of the Indian pharmaceutical industry was just Rs.30 million in the year 1965-66, it rose to Rs.1400 million during the year 1994-95. In the next two to three years from thereon the R & D expenditure had doubled and touched Rs.2, 200 millions with a growth of 57 per cent. This growth in R&D was mainly attributed to liberalized economic policies of the country.
In the meanwhile a Pharmabiz study last year showed that R & D expenditures of Indian pharma companies showed a substantial growth rate in recent years although none of them could bring out a new molecule into the market. What they have been successful was to file increasing number of ANDAs and Drug Master Files in the US, Japan and some European countries.
The R&D expenditure of 30 leading Indian pharma companies increased by 18.7 per cent to Rs 3,770 crore from Rs 3,177 crore in the previous year with significant higher product filings with regulated authorities in the US, Europe, Japan and emerging markets. The Indian majors like Dr Reddy's Labs, Lupin, Glenmark Pharmaceutical, Aurobindo Pharma and Sun Pharma received higher approvals for ANDAs from US FDA during the first eight months of 2011.
At the same time the government of India during the past one decade has been striving to boost the pharmaceutical and biotechnology industry. It has adopted prudent strategies to develop the industry keeping in view the future needs of healthcare sector.
Regulatory issues
However most of the MNCs are worried over the stringent regulations adopted by the regulatory authorities. “Though the human resource and economic atmosphere is conducive to conduct research and development in India, the contentious regulatory issues in Asian countries which are hampering growth have to be addressed at the earliest in order to facilitate the investments in R&D” says Kewal Handa, Managing director, Pfizer Ltd. The investors want the government to streamline the regulations and introduce a transparent system for granting approvals in time in order to expedite growth.