By Dr. R. Ananth
As the current storm in global finance continues to test our defenses, it is a safer-than-usual bet that the long-range forecast for most industries will remain uncertain. Once skies begin to clear and more economic stability enters into play, how will things be different? Having led the original westward consolidation in healthcare globalization, what will India’s role become in global pharma’s new economic business model?
I believe the current poor economic climate will continue to favor the acceleration of outsourcing, and perhaps even in greater scope. As large pharma bears the pressures to meet increasingly challenging shareholder expectations amid difficult conditions and also seeks to prioritize their early pipelines, companies are outsourcing more drug development and manufacturing.
India is likely to sustain its growth in the CRAMS (Contract Research and Manufacturing Services) space. Frost and Sullivan estimated this space grossed $895 million (U.S) in 2006, and it is rapidly accelerating toward double or even triple that figure by 2013.
India carries vast credibility in having one of the largest number of FDA-approved production facilities outside of the United States. Unsurpassed drug manufacturing experience and a science-skilled workforce will continue to power this country to the forefront of the contract manufacturing community. This is remarkably difficult to challenge, particularly with the arrival of India into the product patent regime and global pharma’s increasing confidence in India’s outsourcing industry. As pharma players continue to move away from the traditional fully integrated manufacturing model, those with established imperatives will develop deeper partnerships with preferred and fully integrated CMOs.
New drugs are becoming more difficult to develop as pharmaceutical companies cannot nourish large innovative/R&D spending in the current climate unless new blockbusters are developed at a lower cost. This puts more pressure on creation of a more efficient pipeline building mechanism, and outsourcing of drug discovery services to India is also bound to increase substantially.
Although the economic storm has temporarily washed away some of its funding vehicles, biotech continues to offer an exciting vision of the future. It has already done much to restock pharma’s innovation shelves, and biotech drug sales are growing at twice the drug industry’s overall average. India’s response? Even under the difficult economic circumstances, India continues to invest in the biotech model. At present, there are 4 biotech parks, with another 20 in the pipeline.
Returning to the critical pharma/CMO relationship, it is logical that as pharma’s in-house teams are increasingly constrained by budgetary pressures, trusted CROs and CMOs will take up greater roles in safety, quality, and regulatory compliance issues. These circumstances surely favor companies with global manufacturing footprints and proven capabilities that span the gamut from innovation services to commercial scale production and product life cycle extension. This truly “integrated service package” will become even more important in the CRAMS business model.
As large pharma continues to evaluate its manufacturing strategy, the CRAMS community will need more efficient and highly flexible production plants. Indian companies will certainly have their role in satisfying the demand driven by increased outsourcing from pharma.
These challenges and opportunities will be broadly shared across the whole healthcare industry. However, world markets continue to expand. India went into the storm as a global force in the CRAMS space — and there’s every reason for optimism that when the economic storm subsides, the country’s science skills and proven delivery will have kept its place secure.
About the Author
Dr. R. Ananth is president of NPIL Pharma Inc., a wholly owned subsidiary of Nicholas Piramal India Limited. He is responsible for the global business of the custom manufacturing division of NPIL. He holds a Ph.D. in pharmaceutical technology from the University of Mumbai, India and has over 16 years of experience in the pharmaceutical industry.