The pharmaceutical industry is going through a tough time due to drying R&D pipeline, poor productivity, spiralling cost of research and cash crunch.
Global Pharmaceutical Industry is at the crossroads. On the one side market demand for novel and better medicines is getting redefined and growing due to demographic, economic and epidemiological trends. But at the same time, pharmaceutical companies are finding it difficult to survive since they are unable to innovate and discover new molecules. The pipeline of the new drug molecules is drying fast due to poor R&D productivity, high failure rate and generic competition. Traditionally pharmaceutical companies relied on spending big dollars on discovering possible blockbuster molecules for large patient population through internal research. However, new molecule innovation from in-house research is declining and companies are forced to increase their R&D spending as well as to scout in-licensing opportunities for new molecules.
The importance of biotech companies as an alternative source of innovative potential therapies and to fill the void has been widely noted in recent years. According to a survey published in Nature Review / Drug Discovery, based on the new approvals between January 2006 and December 2007, 65 per cent of the US FDA filing was contributed by biotech industries and mainstream pharma companies were responsible only for 35 per cent of the drugs. However, the disappointing part is that during this period 91 products failed in Phase III and 95 per cent of these failed products originated from biotech companies. Also when it comes to new chemical entity based novel medicines, the mainstream pharma companies were two-fold more successful than biotech companies. High failure rate and less innovative pipeline raise concerns on the robustness of R&D process being followed by biotech industry and is certainly not helping the drug industry to reduce its cost of discovery. The recent economic crisis has further hit the biotech industry very hard. Recently Steven Burrill of Burrill & Company observed that most of the biotech companies have limited cash and are pruning down their operation by reducing work forces and eliminating / limiting research and drug development projects in a desperate effort to extend their runway. This will further erode the global pipeline of the innovative products in coming years.
These factors have forced pharmaceutical companies to think out of the box and look eastward for innovative solutions.
Strong CRO base to support R&D
In recent years India and China have established themselves as strong players in outsourcing of research and manufacturing. Today India has the largest number of FDA-approved manufacturing plants outside the United States and is a force to reckon in custom synthesis and contract manufacturing. The CRO activities in discovery and clinical development space are also growing fast. For the last five years or so, several companies like GVK Biosciences, Aurigene, Syngene, Advinus, Jubilant, Suven lifesciences, Sai Lab, Accunova, iGate etc. have come into prominence both for discovery and development. As a result, several landmark deals were signed between Indian CROs and global pharmaceutical giants. In early 2006, Wyeth Pharmaceuticals struck a multi-year outsourcing deal with GVK Biosciences involving 150 chemists working exclusively on Wyeth projects and providing a range of services in synthetic chemistry research. For this purpose, a dedicated research centre equipped with the latest high-end scientific equipment and instrumentation—GVK BIO Wyeth Hyderabad Chemistry Research Center— was built in Hyderabad. Last year on the same line, Bristol-Myers Squibb (BMS) and Syngene announced a multi-year collaboration to develop integrated capabilities in India in medicinal chemistry, biology, drug metabolism, and pharmaceutical development. This collaboration is intended to advance the discovery and early development projects of BMS. Syngene is on its way to recruit 400 scientists and building dedicated laboratories for this purpose.
India offers several advantages for clinical research like large patient population not exposed to treatment (treatment naïve population), world class health services along with well trained doctors and has emerged as a strong base for clinical trials. The clinical trials market is expected to grow at a CAGR of nearly 36 per cent till 2011 to register revenues more than US$ 600 million. Today there is hardly any major to mid-size global pharmaceutical company that does not engage itself in R&D activities in India. Pharmaceutical companies have started relying on Indian CROs for their chemistry, clinical development and manufacturing requirement.
Vast talent pool to support discovery
Research outsourcing is a matter of trust and since this trust has already been built through chemistry and clinical services, CROs in the country are confident that pharmaceutical companies would be willing to outsource more value-added services. As a result, Indian CROs are fast moving up the value chain from order takers to problem solvers and value co-creators. The initial concerns like intellectual properties and regulatory issues are gradually being addressed through reforms in law as well as through sensitivities shown by CROs to address them upfront. Companies are expanding into other disciplines like pharmacology, cell biology and pharmacokinetics. Though India is considered weak in biology research, the country has an impressive number of biological scientists. According to IMA India’s estimations, every year India produces half a million graduates in biological sciences, biotechnology and bioinformatics and awards more than a quarter million postgraduates and 1,500 PhDs in the biosciences. India has a thriving generic, formulation and bulk drug industry but lagged behind in developing skills to support discovery-oriented innovative research. As a result, the discovery-focussed biology research remained at a nascent stage. However, after upholding the Intellectual properties agreement (TRIPS) and commitment to recognise product patents, for last decade or so Indian companies have invested in innovation-led drug discovery and produced a reasonable talent pool in biological sciences. As the opportunities are increasing, the number of US trained Indian scientists including biologists are returning to India and being recruited by Indian CROs.
Initial success story
Based on these strengths India has staked its claim to become a frontrunner in innovation-led collaboration leading to intellectual property generation through discovery research and are ahead of their Chinese counterparts as reported in the recently published report sponsored by Kauffman Foundation. On the ground Indian CROs have closer collaboration with established pharmaceutical companies for discovering drugs rather than limiting themselves to provide services and are hoping to get a bigger pie in intellectual properties.
The pace at which these discovery collaborations are being established indicate that Western Pharmaceutical Industry is relying more on India for their brain power and source of innovative research rather than for cost cutting measures. Time will tell if Indian CROs and pharmaceutical companies can prove themselves. However, initial milestones awarded to some of these collaborations indicate that Indian scientists have not disappointed their western counterparts.
Challenges of Innovation Based Collaboration
In order to leverage the opportunities for drug discovery, Indian CROs are facing several challenges as well. Investors in India have no culture of investing in risky research leading to drug discovery. The first wave of investment in drug discovery came from large Indian pharmaceutical companies like Ranbaxy, Dr. Reddy’s, Nicholas Piramal, Zydus, Wockhardt etc. when they themselves entered in this arena. The efforts yielded results but limited funding and lack of experience clearly reflected in the outcomes and were short on impacting the global scene. This next wave of focussed efforts to collaborate on drug discovery projects with global pharmaceutical companies has come from CROs having a revenue generating stream through their contract services. Many CROs like GVK Biosciences, Jubilant, Advinus, Aurigene etc. spearhead such efforts. However, these companies have limited financial surplus and hence are restricted in taking risks. An innovative financial model that can attract funding from local and global investors for such activities is yet to emerge.
The Indian Government has initiated several measures to encourage public private partnership or direct investments towards discovery related activities in private sectors. Department of Biotechnology has formulated a comprehensive National Biotech Development Strategy to incentivise public-private partnership, has contributed to the development of regional biotechnology clusters and provided greater financial support to industry-oriented early stage research etc. The Technology Development Board of Department of Science and Technology has invested hundreds of millions of dollars in small molecules, biopharmaceuticals and herbal drug discovery related projects. New Millennium Indian Technology Leadership Initiative of Council of Scientific and Industrial Research has made significant investment in discovery programmes to bring together industries, national research laboratories and academia. However, the outcome of all these initiatives indicates that these initiatives have not been able to win the confidence of the industries so far and the overall impact and effectiveness of such measures may require close monitoring.
Another major challenge is the trained manpower particularly in the areas critical for the success of discovery programmes. India is strong in informatics and chemistry but still needs personnel in medicinal chemistry, in vitro biology and efficacy related animal models. Traditional education system produces brilliant chemists and biologists but they are not employable for industrial research and there is limited leadership available in these disciplines within industries. More recently industry and government have taken concrete steps to bolster the R&D capabilities. Industries are providing more on the job training and recruiting aggressively the key personnel from US and Europe to fill the gaps. Due to increased opportunities in India, increasing number of Indian scientists working in American and European pharmaceutical laboratories are attracted to take up a career in India.
In recent years India has strengthened the patent laws which are more in compliance with the global practices. This has changed the IP scenario in favour of innovative research and global companies have slowly started responding positively by outsourcing their IP-sensitive research to India. However, there is a need to build a strong proactive law-enforcing system so that the confidence building and global perception on IP protection are changed favourably to create a positive environment for discovery-based collaboration.
Efficacy and safety of new chemical entities are based on their evaluation in different animal models. Access to the quality animals is central to any drug discovery endeavour. More flexible system has to be put in place to procure small and large animals through quality animal breeders based out of India or abroad through importation with minimal administrative and regulatory hurdles.