Contract Research Organizations (CRO) can play a vital role in each of the key stages of drug development to commercialisation- basic lead development, pre-clinical, clinical trials, regulatory approval & pot-marketing surveillance. The CRO industry is on a rapid growth with the rise of genetics and genomics. Being linked to genetic variations, genetics and genomics can provide drugs which could have a dramatic effect on drug development and the CRO industry. Genetic profiling is expected to increase leading to smaller and faster trials.
Through providing services to the pharmaceutical, biotechnology, and medical-device industries, CROs allow their clients to manage product-development efforts more efficiently and cost-effectively. The global CRO market has reached US$ 11.4 billion in size and growing at an annual rate of 15%. However, the Indian CRO is still at a nascent stage and forms hardly 1% of the global market. Indian CRO revenues are primarily earned from bioequivalence studies, data management & clinical trail services.
Pharmaceutical companies are increasing its spending in research and development every year. Global R&D outsourced market is increasing every year in turn flushing more revenues in the CRO market.
Table.1 Global R&D Outsourced Market & CRO Market (2001-07)
| US$ Billion | 2001 | 2002 | 2003 | 2004 | 2005* | 2006* | 2007* |
| Global R&D Outsourcing Market | 11.4 | 12.7 | 14.1 | 16.3 | 18.7 | 21.7 | 24.9 |
| CRO Market | 8 | 8.8 | 9.9 | 11.4 | 13.1 | 15.1 | 17.5 |
*= estimated figures, Source: Frost & Sullivan
Pfizer, Eli Lilly, Bristol Myers Squibb, Novartis and Merck are the biggest pharmaceutical outsourcers contributing to 25% of the outsourced market revenues. For now, much of drug discovery outsourcing work goes to specialty drug discovery companies or biotech firms in the U.S.
Bringing a new drug or medical device to market can take 20 years and cost as much as $800 million. Research, product development, and clinical trials involve not only the sponsor's staff but regulators, physicians, academic researchers, and patients.
Time-savings benefit drug developers since each day of delay to market for a blockbuster drug can cost more than $1 million in sales.
Various benefits to outsource the drug development process are:
· Can reduce drug development cost
· Tackle the huge backlog of molecules for development
· Faster and cheaper to have discovery work outside of the company
· CROs have an in-depth experience and resources with regulatory processes around the world
· CRO have scientific, regulatory and information management expertise along with ready made infrastructure of global research personnel, services and facilities for efficient completion of drug development process
· Drug companies do not need to bear the huge cost of clinical infrastructure to meet the needs of an oscillating pipeline
Realizing these benefits of outsourcing clinical efforts, pharma firms have increased the budgets for CRO contracts. For a successful drug discovery contract research provider, availability of top of the line infrastructure and trained manpower is a key asset.
The growth in outsourcing of the drug discovery process is being fueled primarily by two factors:
· Most drugs marketed were not actually discovered by the company doing the marketing.
· Relatively new fields of genomics and proteomics have produced a host of new drug targets to work on.
CROs have global scale, broad expertise, technological skill and a strong track record. While all of these factors lead to the growth of the industry, the real key would be building partnerships with sponsors. The next decade will realize the enormous opportunity for different forms of partnering due to increase in development cost to biopharmaceutical companies for being more productive.
Benefits of partnering with a CRO:
· Save time
· Increase Efficiency
· Increase productivity
· Reduce financial risk
· Create better medicines due to usage of latest technology
Indian CROs have developed the capacity and expertise to take on an even larger portion of the drug development and commercialization processes enabling sponsor companies (pharma or biotech) to cash on the benefits.
Smaller pharma and biotech companies will benefit in risk sharing with such partnerships and large pharma companies with portfolios of new products will move to late phase development and launch.
Disadvantages:
When sponsors share risks with CROs, they must realize that not all projects will meet their financial targets and with regulatory scrutiny increasing, the cost for developing a drug is likely to rise. To control cost, CROs will have to take full advantage of the latest technology and serve the industry and regulatory agencies to the fullest by delivering high quality safety and efficacy information in a timely manner.
Advantages for India
As MNCs from USA & Europe are turning to India and China to outsource research and clinical trial activities, India should gain proficiency and expertise to set a stage for increased global competition by assisting its move from generic and specialty contract manufacturing to innovative drug discovery and development.
The advent of the new patent regime poses a new challenge to the Indian pharmaceutical and biotech sectors and Indian companies are now attempting to re-invent themselves as innovators by building patenting capabilities and pursuing discovery led research strategies through in-house research programmes as well as partnerships with global players.
India has a wide pool of 3-4 million English speaking scientists with excellent facilities willing to work with one fifth of the salary offered in the US & Europe. There is access to vast amounts of clinical and biological material for conducting research. India's globally recognized software skills provide a natural advantage in bioinformatics. There are only a few CROs and pharmaceutical companies specifically working in contract drug discovery such as Rubicon, Syngene, Origene, Shantha Biotech, Strand Genomics, Avestha Gengrame and TCG- The Chatterjee Group. Public institutions like CSIR are also actively participating in drug discovery contract services and have recently been awarded for their excellent performance in drug discovery services.
India needs to evolve alternate paths of drug discovery and innovation that aim to deliver affordable drugs by leveraging its competitive advantages and offering opportunities to access India's capabilities and scientific resources in drug discovery and clinical trials. India is expected to climb up the value chain to innovative drug discovery on a confluence of circumstances, including India's agreement to honor international patent laws and intellectual property rights. This would lead other companies to enter into collaborative R&D arrangements with the Indian CRO companies. India's credibility in basic research and drug discovery is not a far-fetched dream if they comply with the international norms for intellectual property protection and adapt strategic steps towards replicating the success of their capabilities in generics into the drug discovery process.
(The author is senior research analyst-Healthcare Practice, Frost & Sullivan, India. She can be reached through: sdedhia@frost.com)