Girish Virkar doesn't sleep much these days. "I've got a lot to do," he laments, as he settles into a 6 A.M. flight from Frankfurt to Milan. His mission: to drum up business for his company and cash in on the latest trend in outsourcing to India--drug research and clinical trials.
Virkar is CEO of the Mumbai-based D&O Clinical Research Organization--a firm that has been manufacturing precursor drug compounds for foreign pharmaceutical companies for more than a decade. Just this year, however, D&O expanded its services to include support for clinical trials, specifically, coordinating the studies and managing data. The expansion is intended to corral more clients as India's business climate heats up. As part of a World Trade Organization agreement that India signed in 1995, starting next year the country will honor product patents. Pharmaceutical corporations, once fearful of drug pirates, can hardly wait to move in.
Although pharmaceutical giants such as Novartis, Pfizer and Eli Lilly have commissioned Indian firms to manufacture compounds for years, all R&D work--drug design and preclinical testing--has been done elsewhere. But during the past year, all three have publicly stated that they are actively looking at the Indian market to perform R&D services, asserts Alok Gupta, head of life sciences and biotechnology at Rabo India Finance, an investment bank. "This is a huge opportunity."
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The intellectual-property law change will also jump-start growth in the market for the clinical trials, Gupta says. Since 1970 India's patent laws, which recognized processes only, did not necessitate clinical trials. Knock-off artists would study a drug released in the U.S. or Europe, manufacture it through a different process, and then sell the generic for a pittance. Today most of the 20,000 pharmaceutical companies in India make generics, Gupta states: "It has been a situation where there was no specific requirement for clinical testing, so the expertise never developed."
But as foreign companies set up shop in India, expertise will grow. Take Mumbai-based SIRO Clinpharm, one of India's first contract research organizations. It has been performing clinical trial services for the past seven years. Each year business has grown 60 to 80 percent with almost 90 percent coming from international sponsors, says general manager Chetan Tamhankar. With the change in intellectual-property laws, SIRO Clinpharm expects business to "skyrocket," he adds.
Drug outsourcing's biggest plus is cost savings. Pharmaceutical companies spend as much as 20 percent of their sales on research and development. Indian drugmakers spend a quarter as much or less. And clinical trials in India cost as little as 40 percent of those conducted in Western countries, Rabo India Finance reports.
Outsourcing is also more efficient. The German manufacturer Mucos Pharma approached SIRO Clinpharm to find 750 patients to test a drug for head and neck cancer. Within 18 months the company had recruited enough volunteers across five hospitals. In Europe, it took double the time across 22 hospitals to find just 100 volunteers.
Certainly India isn't the only country to which pharmaceutical companies can take their business. "Over the years, we've seen a large amount of data coming in from South America, eastern Europe and China," says David Lepay, senior adviser for clinical science at the U.S. Food and Drug Administration. India does, however, offer a few unique advantages. "You can speak English," notes Enzo Bombardelli, CEO of Milan-based Indena, which develops plant-derived pharmaceuticals. "In Russia and China, you need interpreters. The doctors can read English, but they have difficulties." Indian science and medical students are taught in English.
Another plus is the country's thousands of chemists, nurtured by India's drug copycat industry. "If we give the Chinese a recipe for a compound, they can manufacture it cheaper and faster because they can put more people on it," explains Neil Sawant, associate director of purchasing at Novartis. "But we're not looking for someone to just crank the process." Novartis wants to streamline procedures and develop faster manufacturing methods, too. "Indians are very good in this area," he adds.
Gunjan Sinha is based in Frankfurt.