Indian biotechnology has clearly gained global recognition and is being tracked for emerging investment opportunities. Human capital is perceived to be the key driver for global competitiveness. The rapidly disappearing appetite for risk capital in the USA and Europe has led to a sharp decline in the biotechnology sector in these regions where survival life lines are being provided by the lower cost research environs of the developing world in countries such as India.
The Indian government had identified biotechnology as a thrust area for development way back in 1986 when it set up a dedicated Department of Biotechnology (DBT). The DBT had well-defined objectives of establishing several centres of excellence by way of research and academic institutions focused on biotechnology based programs. In addition, universities were also encouraged to introduce both graduate and post-graduate programmes specializing in biotechnology.
These initiatives have provided a strong foundation and the skilled resource pool vital to creating a sustainable biotechnology business. Various studies show that the scientific talent pool of four million Indians is the second largest English-speaking group worldwide after the USA. The availability of a large resource of English speaking scientists gives India an edge over other countries to reach the forefront of R&D services in biosciences. According to some estimates, 15 percent of the scientific population of pharma and biotech companies in the USA is of Indian origin. Currently three million graduates, 700,000 post-graduates and 1500 Ph Ds qualify in the scientific stream each year in India. Presently 15,000 bio-scientists are engaged in the biotech sector. A recent BioSpectrum Survey has indicated that the contract research services segment has the potential to generate 50,000 jobs in the next five years with a revenue realization to the tune of $5 billion per annum. These resources are gradually being effectively marshaled, championed and synergized to create a productive biotechnology enterprise in the country.
Global pharmaceutical and biotechnology companies seriously began to explore India's potential as a research destination more than a decade ago. These early efforts at R&D were prompted by the need to 'localize' products. Many multi-national companies have manufacturing operations in India - driven partly by India's economic policies, which require local manufacture, and also by the fact that the Indian market is large enough to warrant local operations. On-site R&D to tweak products to local needs was the next step. The next logical question was, if you can insource, why not outsource? Research outsourcing, in principle, is not very different from any other business process outsourcing.
Custom research is a services model that most Indian biotech companies opted for at their start-up stage in order to earn early revenues with which to fund infrastructure and scientist salaries. These companies harboured ambitions of original R&D once they reached a certain profit level. Syngene International Private Limited, a company promoted by Biocon Limited, was set up in 1994 as the first such custom research company in India and today there are as many as 25 CROs in the country. GVK Bioscience, Prociteus, Chembiotek, Sai Life, Chemgenpharm are good examples of such service-based biotech companies. These companies have tapped into the global opportunity for outsourced research by offering to develop compound libraries, cGMP synthesis of drug molecules for clinical evaluation, process development, process optimization and contract research projects.
Recently, a German biotech firm, MWG has established operations in Bangalore to develop oligonucleotides for its Asia Pacific clients and later the firm plans to offer its sequencing products and its hybridization services the world over. This model is expected to see other overseas biotech companies follow suit.
There are various models of contract research -- joint research, collaborative research and complete outsourcing. Joint research is when more than one entity works together; collaborative research is when a group of scientists work together representing diverse disciplines; complete outsourcing is when one entity undertakes research on behalf of another. Big CROs allow their Indian counterparts to use their global server, software and other infrastructure with addition of user licenses to extend their data management business. Hence, they can have cost-saving on hardware and software to start the data management business. These CROs also offer stand-alone data management services.
Another model that is becoming popular amongst companies in India is the retained Full Time Equivalent (FTE) model. This model is essentially an extension to the contract staffing model as the service-provider offers both the office and manpower. It promises the vendor to act as a Functional Service Provider (FSP) on project/protocol basis after certain pre-decided years. The model demands a lot of initial investment and provides an opportunity for the local service provider to learn tricks of the research business besides promising a lot of future core business as an outsourcing partner.
Research outsourcing to India for drug discovery and development is more obvious than predicted. The Indian industry, which earlier relied on its cost effectiveness to attract customers, is now moving towards an entirely different direction. Quality and fast response are the new buzzwords to dominate the business processes which ensure accurate, reliable services to the customers. While several models of businesses are emerging, only results will tell how many of them are lucrative after meeting stringent global regulatory standards. Time will test the success of experimentations of each contract research organisation and the models set in place by them. It is clear that the players meeting industry expectations of increased adoption of global standards, regulatory compliances and the pressures of cost and cycle time reductions in drug development, with an efficient and effective data management system will survive. u
-- The author is Chief Operating Officer, Syngene International Pvt Limited, Bangalore.