Magazine
A Fervor for Foreign Lands
CROs work to meld low costs with high-end services
By S. Harachand
At a time when drugmakers around the world come in hordes to Indian shores to conduct human trials for their prospective therapies, clinical research firms (CROs) from the country are increasingly moving overseas. At least half a dozen Indian CROs have either acquired a facility or set up shop in a capital abroad in recent months. And many more are reportedly in the look-out.
Obviously, it works in both ways when industries globalize. But beyond the obvious, it looks like there are other compelling reasons that make this wanderlust too irresistible for Indian CROs.
Even though the origins of Indian CRO industry can be traced back nearly a decade, it actually started to grow in double-digit figures only in the last few years. The number of CROs engaged in late phase studies almost doubled a year ago. CROs engaged only in bioequivalence studies also number as much. Figure show that more than 660 studies are being run in India, involving more than 1,700 sites, largely comprising Phases II and III. Despite the industry's touted rapid growth rally -- CAGR of about 36% -- CROs from India grab only a very small percentage of $18 billion global CRO market.
Buying Firms, Acquiring Experience
As per best estimates, India's current share in global clinical trials is around 2%. But it is expected to grow to 4-5% in the three years or so, said Mr. Chetan Tamhankar, chief operating officer, Siro Clinpharm. That implies remaining only in India as a provider means focusing on 4% of the market and ignoring the rest. "This is the reason why any CRO from India will have to do both -- focus on strengthening India to tackle the doubling of business here while looking at other geographies for a piece of the pie from ‘the remaining 96%,'" argued Mr. Tamhankar.
His "full-service" CRO, having experience in conducting more than 150 clinical studies for various MNCs, took a 100% stake in Omega Mediation, a German CRO, in April this year. The acquisition is expected to give the Mumbai-based player operational capabilities in five key EU markets and Israel. Siro acquired U.S.-based Global Client Partners in July last year.
Expansion to major markets will also help build competencies that are lacking among India's fledgling CROs. Most of these firms are good at BA/BE services. And they are in need of frontline scientific capabilities to provide high-end services, points out Dr. Shivprakash, managing director, Synchron Research Services.
Synchron's acquisition of the bioanalytical and biomarker facility of Parexel in France in March this year serves primarily to fill this vacuum through integrating the French CRO's high-end technologies to Synchron's low-end costs. "Now we offer our European clients high-cost clinical studies in India and provide EU standard analytical services in France. Our clients are happy about this," said Dr. Shivprakash.
For the "very young" Indian CROs, buying companies abroad is essentially acquiring experience in drug development, concurred Mr. Binoy Gardi, director, Veeda Clinical Research, another leading CRO with facilities in western India. A specialist in Phase I studies, Veeda has bought out five companies -- including the latest in France -- in the last three years. The company is currently in the final stages of negotiations with a CRO from the U.S. "Having physical locations in the U.S. or EU gives global pharmaceutical companies confidence in placing studies in India as these offices can carry out the project management of these studies," averred Mr. Gardi.
A Wait-N-Watch Game?
Jubilant Organosys's acquisition of Target Research Associates Inc. in the U.S., and Suven Life Sciences alliance with the Chinese VPSCRO are among other recent instances of Indian CROs' outgoing fervor.
Local CROs with global reach makes good business sense, agree experts in the field. If the acquired CRO has a good image it will help the Indian CRO to build overseas business. However, one has to wait till the integration process is complete to judge how the buyout pays off. "Setting up shops, doing M&As, etc. in foreign lands are a costly proposition affecting bottom lines; hence it is interesting to wait and watch how this business model is shaping up," suggested Dr. Umakanta Sahoo, who heads the Indian arm of Chiltern.
Besides Chiltern, several of the global CROs -- including Quintiles, Covance, PPD, Parexel, Icon, Omnicare and Clintec -- have operations in India. Almost all the world's major drug makers also conduct a number of clinical trials in the country. Mid-size multinationals and even some small biotech are now starting to arrive, thanks to India's vast reserve of genetically diverse, treatment-naïve patient populations, ability to cut short trial times through faster recruitments, far lower costs and improving regulatory climate.
Nevertheless, concerns on quality of generated data, fears on IP protection, inadequacy of trained investigators etc continue to remain thorns in the sides of India's CROs.
