Drug discovery (DD) is a systematic process that utilizes biology, chemistry and information technology to discover a new drug. The outcome of the drug discovery process is the identification of a promising molecule called 'drug candidate', which is evaluated for its safety and efficacy in preclinical and clinical phase of drug development. It starts with identification of disease target and discovering the suitable drug to treat the disease.
The broad functions within drug discovery are:
■ Target identification: A target is generally a gene or a protein that is involved in a particular disease. The target should potentially interact with and be affected by the drug
■ Target validation and prioritization: This stage of drug discovery is to test and confirm the involvement of a target in the disease. Target validation is crucial in identifying the correct research path that does not lead to dead ends
■ Lead identification and optimization: The drug molecule that may alter the disease course is called the 'lead compound'. Scientists test hundreds of thousands of molecules against a disease target to identify the lead compound
Ways to Find the Lead Compound:
■ Nature: Nature (bacteria & plants) offers many useful substances
■ De novo: Sophisticated computer modeling (combinatorial chemistry) is used to construct the molecule from scratch
■ High Throughput Screening (HTS): This is the most common way of lead identification. Robotics and computational techniques are used to test the molecules against disease target. The molecules are extracted from libraries of chemicals that are already been established
■ Biotechnology: Scientists can genetically engineer the living systems to produce the disease-fighting biological molecules
The lead compounds that pass through the initial screening are then optimized or altered to make them more effective. Hundreds of analogues (variations) of lead compounds are created and tested. The analogue that is found to be more effective and safer is called 'drug candidate' and is further evaluated in clinical phase of development.
Global drug discovery potential
In 2006, global R&D spending by pharma and biotech companies was estimated to be around $90 billion. Out of it, around $23-25 billion or more than 30 per cent of total global R&D spending was utilized for drug discovery. Drug discovery spending is projected to reach $50-53 billion by 2015, which is a growth of 9 per cent (CAGR, 2006-15).
R&D costs are increasing by nearly 50 per cent in every five to seven years. The spiraling R&D costs often lead to exploring strategic options in drug discovery. The first option was outsourcing. Outsourcing was followed by offshoring to Asian countries like India and China, where the talent pool is abundant and offer significant cost advantage.
To optimize the offshoring advantages, many big pharma companies are starting their captive operations in offshoring locations. In 2006, offshoring of drug discovery services was at $4-5 billion from US and Europe. The demand for offshoring from this countries is projected to reach $11-12 billion by 2015, a growth of more than 10 per cent CAGR. According to 'Contract Pharma 2007 Outsourcing Survey', 21 per cent of pharma companies expressed that outsourcing spend for R&D is expected to increase by more than 10 per cent.
Outsourcing/offshoring is driven by other factors besides cost advantage. The important factors are decreasing availability of skilled human resource in the West and need for pharma companies to concentrate on their core competencies. During 2004 and 2005, total R&D staff declined from 77,180 to 74,657, among Pharmaceutical Research and Manufacturers of America (PhRMA) member companies. According to 'Contract Pharma 2007 Outsourcing Survey', 42 per cent of companies outsource their R&D activities to focus on their core competencies.
Emerging India
With the increasing cost and time spend to develop a new molecular entity (NME), outsourcing opportunities have increased in the R&D sector, which has traditionally been an in-house activity. It costs more than $800 million and 10-15 years to bring a NME to the market.
India's established presence in contract manufacturing space and increasing acceptance as clinical research hub is extending to drug discovery as well. India has started to leave its marks across the drug development value chain. Drug discovery industry in India was estimated to be around $600 million in 2006, accounting for almost 13 per cent of global offshore discovery research market. The sector is poised to achieve $6 billion by 2015. This phenomenal growth is predominantly driven by availability of skilled scientific manpower, government of India's initiatives to IP protection and entrepreneurship besides cost advantage.
Big pharma companies like GlaxoSmithKline, AstraZeneca, BMS, Pfizer and Eli Lilly have expressed interest in discovery activities in India either in the form of captive centers or joint ventures.
More than 20 companies are actively involved in offering drug discovery services to global pharma and biotech companies. India has a few contract research outfits of global repute viz., Aurigene Discovery Technologies, Syngene, Advinus Therapeutics and GVK Biosciences.
Comparative advantage
There is a die-hard competition between India and China to emerge as a leading country that offers R&D offshoring. They have specific competencies in drug discovery space. China is relatively stronger in the area of biology services, while India is stronger in offering chemistry services. India's strengths are in the fields of analogue preparation, assay development, drug design and cell based model for efficacy, while China is strong at bioinformatics, proteomics, analytical chemistry and compound synthesis.
Road ahead
■ Strategic partnerships: Strategic partnerships with big pharma and biotech companies would boost the sector since it helps align better with the client.
■ Changing business models: Understand the business environment and visualize the customer needs to adopt effective business models. For example, Aurigene moved to pure outsource model and now 'discover and share' model from up-front payment model.
(The authors are consultants with PharmARC Analytic Solutions Pvt Ltd, Bangalore)