The Hindu Business Line : Clinical trial on trial

According to a report, the global outsourcing opportunity in pharmaceuticals, which worked out to about $24 billion in 2002, was expected to climb to $48 billion by 2007.

IN October 2003, Kotak Securities published a report in which it analysed India's potential for tapping the global pharmaceutical outsourcing market. The firm put forward the view that domestic companies are well placed to cater to this market in view of the fact that "India has the key ingredients — technical skills, regulatory compliance, cost advantage and global relationships — to emerge as a powerhouse in this space."

According to the report, the global outsourcing opportunity in pharmaceuticals, which worked out to about $24 billion in 2002, was expected to climb to $48 billion by 2007.

Kotak Securities divided outsourcing in pharmaceuticals into three broad categories: Manufacturing outsourcing, development outsourcing and customised chemistry services.

While manufacturing outsourcing entails the production of active pharmaceutical ingredients and/or intermediaries, development outsourcing involves pre-clinical and clinical trials. Customised chemistry services essentially means contract research in molecules prior to their commercialisation.

As far as manufacturing was concerned, things looked pretty good for India, according to Kotak Securities. The country ranked second only to the US in terms of the annual number of global Drug Master Filings (DMFs).

As for development outsourcing, the report saw it as the next big space with a large number of global pharmaceutical companies showing a strong inclination to conduct clinical trials in India for a variety of reasons: The existence of a heterogeneous gene pool, the easy availability of patients, the speed with which they could be roped into the exercises and the cost of conducting these trials in India which, according to Kotak Securities, was about 40-60 per cent lower than in developed markets "largely due to significant reduction in costs of patient recruitment and medical personnel, which account for about 70 per cent of the total clinical costs."

On July 2, Ernst & Young, "the leading global professional services firm," released Progression, its global pharmaceutical report for 2004, at an event organised in association with the Organisation of Pharmaceutical Producers of India (OPPI) in Mumbai.

The report identified India as an emerging hub for collaborative and outsourced research and development (R&D) and went on to observe that Indian pharma companies had topped drug filings with the US FDA for 2003, with a total of 126 DMFs, accounting for 20 per cent of all drugs coming into the US market, higher than Spain, Italy, Israel, and China.

Of the 108 Abbreviated New Drug Applications (ANDA) pending approval from the US FDA in February 2004, 52 were patent challenges and nearly half of these were for first to file (180-day market exclusivity)."

So far so good. The report went on to add that clinical research outsourcing is, perhaps, seeing the fastest growth. Pfizer had announced a doubling of its R&D spend in India, bringing the cumulative investment on clinical research in India to around $13 million. It had increased the biostatistical and clinical trial logistics services in India twenty-fold. Several others, including Novartis, Astra Zeneca, Eli Lilly and GSK, were also committed to making India a global hub for their clinical research activities, it said.

Shortly thereafter, on July 27, Asia Times carried a story headlined "Fast growing business: Unethical clinical trials in India" in which it said that India was increasingly emerging as a preferred destination for outsourcing clinical trials — testing of new drugs on humans — and that the "country may also be heading toward providing the greatest source of human guinea pigs for the global drug industry."

The story noted that globally, clinical research had been estimated to be a $5-6 billion market in 2002 and quoted the CEO of Biocon, India's premier biotechnology company, as saying that clinical research spending was expected to touch $10 billion by 2005. It further quoted a 2003 study by Connecticut-based Business Communications Co (BCC) according to which US-based spending on clinical trials is growing at 12 per cent per year, and is expected to generate $26.5 billion by 2007.

The Asia Times report said: "The reason that the business of clinical trials has grown so rapidly is that it provides the pharmaceutical industry with the necessary underpinning for obtaining a license to market drugs. But the clinical trial business is dependent upon a large pool of human subjects — or, a stable of human guinea pigs — in whom the drugs are tested. But with increased awareness of the risks involved in testing drugs under development, the pool of human volunteers in industrialised countries has shrunk. The drug industry is increasingly moving to underdeveloped countries where they are enrolling uninformed, non-consenting people who have few choices in life. India is a target drug testing population."

The publication reported that almost all the top pharmacos — Novo Nordisk, Aventis, Novartis, GlaxoSmithKline and so on — had started running clinical drug trials in India lately, while some, such as Eli Lilly and Pfizer, which had started much earlier, were conducting tests on a number of their new drugs. It added that the American public was repelled by the unethical conduct and corrupt practices of the pharmaceutical industry (as documented by a new Harris Poll which found that "No industry has fallen as far or as fast in public esteem in recent years as the pharmaceutical industry") and that the FDA has the legal authority — and the moral obligation — not to accept unethically obtained clinical trial data.

On August 16, Scientific American published a report by Mr Gunjan Sharma which, in part, read as follows: "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 pre-clinical 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 Mr Alok Gupta, head of life sciences and biotechnology at Rabo India Finance, an investment bank. `This is a huge opportunity.'"

The report further quoted Mr Gupta as saying that the intellectual-property law change will also jump-start growth in the market for the clinical trials. "Since 1970," it said, "India's patent laws, which recognised processes only, did not necessitate clinical trials. Knock-off artists would study a drug released in the US 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. Mr Gupta states, `It has been a situation where there was no specific requirement for clinical testing, so the expertise never developed.'"

The report asserted that as foreign companies set up shop in India, expertise would grow, and cited the instance of Mumbai-based SIRO Clinpharm, one of India's first contract research organisations. "It has been performing clinical trial services for the past seven years. Each year, business has grown 60-80 per cent with almost 90 per cent coming from international sponsors, says the General Manager, Mr 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 per cent of their sales on research and development. Indian drug-makers spend a quarter as much or less. And clinical trials in India cost as little as 40 per cent 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 is not 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 Mr David Lepay, senior adviser for clinical science at the US FDA."

The Scientific American report pointed out that India offers a few unique advantages. The doctors can read English, for one. For another, the country has "thousands of chemists nurtured by India's drug copycat industry."

On September 24, the Supreme Court admitted for hearing a public interest litigation filed by a non-governmental organisation (NGO), Aadar Destitute and Old People Home of Hyderabad, alleging that certain pharmaceutical companies are conducting clinical trials of genetically engineered (GE) drugs on human beings without obtaining permission from the Genetic Engineering Approval Committee (GEAC). The NGO further alleged that the tests were being conducted on poor and destitute people.

The Central Government, in its counter-petition, conceded that some patients had died during clinical trials of certain GE drugs — and argued that the mortality rate was well within international norms. The Supreme Court declined to pass an interim order staying all such trials without prior authorisation and said the matter had to be heard before any order could be passed as human lives were involved.

(To be concluded)

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