A new healing touch

Clincal testing set to become multi-billion dollar industry in India.

When Quintiles India opened shop in 1997, it was taking a calculated risk. As the world's top clinical research organisation it had tested new pharmaceutical products in scores of countries around the world but India was virgin territory.

It has taken time but today Quintiles' faith in this country has turned out to be amply justified. The company, which started with two employees, now has 543 in three locations. And business is flowing in.

"Fifteen of the top 20 global pharma companies have worked with us in India and we have so far undertaken 90 international studies in India," says Ferzaan Engineer, CEO, Quintiles India.

It has been a swift-moving year for the Wellquest chief, Swati Piramal. The three-year-old company is getting ready for big strides forward. The company is currently handling 40 new product tests and it's opening facilities in five cities this year to handle the rapidly burgeoning work.

In the last one year it has doubled capacity and now has 75 beds for patients on whom pharmaceutical trials are being carried out. That will be upped to 125 beds by year end. Also, Piramal's team of 40 people is being expanded and she's hiring another 20 people by August.

"In recent months we've had had visitors from nine countries coming to assess our facilities," says Piramal, a director in the Nicholas Piramal Group.

It has been hailed as the next big thing for the Indian pharmaceutical industry "" the outsourcing of clinical trials to countries like India before a new drug is launched. Figures are tough to come by but in 2002 it was reckoned to be a $70 million industry in India "" growth estimates in the last two years vary wildly between 20 per cent and 60 per cent.

More importantly, everyone is bullish about the future and industry estimates are that clinical testing in India will be an industry worth anywhere between $500 million to a billion by 2010.

At the forefront of the new outsourcing movement are pharma giants like Pfizer and Eli Lilly that have been carrying out trials in India for years. Now Lilly is about to turn India into an R&D hub and a similar move is likely from Pfizer which was the first company to start clinical trials in India back in 1995.

Similarly, others like Glaxo SmithKline and Novo Nordisk have upped their R&D budgets for India and are boosting the amount of clinical testing being done in this country. Says Ramananda S Nadig, medical director, Eli Lilly: "The advantages in India are significant."

Also, in the last year a string of multinational clinical research organisations like Quintiles that focus on drug testing have opened shop in India.

The newcomers include global names that are building facilities around the world like Omnicare, PharmaNet and Pharm-Olam. Most are still small organisations in India, with less than 10 employees but big plans for the future.

But the international research organisations don't have the field to themselves. A handful of ambitious Indian companies are also writing themselves a prescription for growth in the field of drug testing.

In Mumbai there's Siro Clinipharm that signed up with global testing giant Covance one year ago and there's Reliance Life Sciences which hopes to make a big splash in the field.

And in Hyderabad there are a clutch of companies like Vimta Labs, GVK Healthcare and Asian Clinical Trials. Similarly in Ahmedabad there's Lambda which is making big strides forward and in Bangalore, the hi-tech capital of India there are testing companies like Lotus Labs and also Clinigene started by Biocon's Kiran Mazumdar Shaw.

Mind you, this is still a fledgling industry with many small players which are just starting out in India. So, figures can be elusive and even wildly varying. OPPI (the Organisation of Pharmaceutical Producers of India) reckons that about 40 or fifty major clinical studies were undertaken in 2002.

There are also many more bio-equivalence tests taking place all the time. Bio-equivalance tests are for generic drugs. Most of the earlier clinical trials in India were in bio-equivalence tests.

Certainly, the Indian companies have started posting impressive growth rates. Siro started in 1995 with only two or three projects and 10 people. Growth was slow till 2001 when it landed new contracts and had to hire 35 more people. Today, the company has about 16 or 17 projects and 100 people on its rolls. There are plans to hire another 60 this year.

"About 85 per cent of the work we do at Siro's comes from companies in countries like North America, Europe and Japan and 15 per cent out of India," says Chetan Tamhankar, general manager, Siro Clinpharm.

What is clinical testing? The answer in brief is that new drugs need to be tested on human beings at various stages of their development (see box for a more detailed explanation). And, as the world shrinks the giant pharmaceutical companies are looking at whether they can cut costs by testing new drugs in countries like India and China.

Globally, clinical research was estimated to be a $5 billion to $6 billion market in 2002 and is expected to touch $10 billion by 2005.

Cutting costs has become of paramount importance for Big Pharma. According to industry statistics getting a new drug on the market costs roughly about $800 million. And the clinical tests "" both on animals and humans "" add up to about 40 per cent of development costs.

Before a new drug comes to market, testing takes place at several levels. First the new formulation is tried on animals, then it moves to what are called Phase I trials which are usually on a handful of subjects. India, which has always had tough rules on testing, does not allow Phase I trials.

In Phase II the drugs are tried out on a slightly larger scale. And Phase III trials "" which are the last stage before a drug applies for approval "" could involve anywhere between 20 to 500 volunteers. The big jump in the last two years has been in Phase II and Phase III testing.

It's obvious enough why pharma companies and research organisations are suddenly beating a path to India. They can cut testing costs by anywhere between 40 per cent and 60 per cent. For a start, manpower costs are, of course, lower here. Then, it's easier to recruit patients for clinical studies, partly because Indian patients have a godlike reverence for physicians and agree to anything they are asked to do.

Also, quite simply, there are large numbers of patients suffering from illnesses like tuberculosis or diabetes. So the sheer numbers makes it easier to recruits patients for trials.

Since it's easier to recruit patients, trials can often be done in half the time that it takes in Europe or North America "" and time in the pharmaceutical industry adds up to money saved.

"India offers considerable competitive advantage in execution. It is possible to compress the development cycle through execution advantage," says Dr C N Potkar, director, clinical research, Pfizer.

How does this work in practice? Take a look at a drug related to head and neck cancer that was tested in India and in Europe. In India Siro CliniPharm recruited 650 patients from five centres in around 18 months. By comparison in Europe it took 36 months to recruit 85 subjects from 22 centres.

Throw in a few more reasons like the widespread use of English and the availability of a large pool of doctors trained in western clinical methods.

In addition, there's also the large population. "We have all the ingredients to conduct clinical trials like the institutes with adequate manpower, cost effectiveness, patient base and heterogeneity of population," says K I Varaprasad Reddy, managing director, Shantha Biotechnics.

The big question is whether India will become the big clinical trials destination of the future "" will it build up a dominant position as it has in software services or BPO?

Some like Lilly's Nadig believe that India and China are the two countries that will become big trial centres of the future, partly because they will also be the growing market of the future for many pharma products.

However, he believes that Indian physicians who have often trained abroad are more familiar with western systems than the Chinese.

But India hasn't established a leadership position yet. "Essentially we compete with Eastern European countries, the Far East to some extent and other Third World developing countries." says Alok Gupta, Director, Life Sciences and Bio-Technology, Rabo India Finance.

Clinical testing is, of course, a controversial business and there are scores of NGOs which say that it's just a way to turn poor Third World patients into guinea pigs.

One of the advantages of coming here is that many poorer Indians are what is called in the pharma industry 'drug naive' which means that they aren't exposed to too many drugs unlike the pill-poppers of the western world.

Legislation in India has always been fairly tough on drug testing. Phase I trials still aren't allowed even though there are indications that the Government may ease up on this rule in the near future. Also, the Government has circulated proposed changes in the testing regulations for comments from industry.

Working in India can also be tough for the drug companies. Doctors frequently aren't used to the large volumes of paperwork that are needed for pharma trials and hospital records can be extremely sketchy.

So, the companies conducting the trials frequently have to hold workshops explaining how essential it is to do all the paperwork. "We often need to train investigators about our requirements," says Gopalkrishna Pai, operations manager, Omnicare.

India does, however, have other advantages. Many of the clinical research organisations like Quintiles and Siro are also looking at harnessing India's software and other skills to offer a range of other services likes data management.

Siro, for instance, is hiring another 60 people this year and will be looking seriously at data management. And Quintiles also has about 90 cardiology experts reading ECGs that have been sent from abroad.

What will happen next? "Indian clinical research organisations would in time need to provide end-to-end solutions to clients through a wide spectrum of services covering the entire value chain of drug development," says Utkarsh Palnitkar, industry leader, Health Sciences at Ernst & Young.

Certainly, the clinical trials business is poised to grow swiftly in India. But the question is whether India will grab a leadership position in the clinical trials business as it has in software? And, indeed, is this an industry where it should attempt to grab a leadership role?

Clinical research reckoner

Getting a new drug to market is a complicated and highly expensive game. Here's a quick glossary of the trials that new products must go through before they reach the market.

Inevitably, the initial tests are performed on animals. Animal testing hasn't taken off in this country, partly because of a strong activist movement with people like Maneka Gandhi in the forefront.

The next stage are Phase I trials which involve controlled tests on a handful of patients. India doesn't allow Phase I trials though there is a likelihood that this may change in the near future.

After that comes Phase II and Phase III trials where new products have to be tried out on larger numbers of patients "" anywhere from 20 to 500. The big change in the last two years has been the outsourcing of Phase II and Phase III trials to India.

Also, there are Phase IV trials which frequently involve thousands of patients and which are performed after a new drug has been introduced in the market.

Most of the Indian companies started out by doing what are called bio-equivalence tests which are for generic drugs being introduced in the market.

Also, as drug research has become more expensive the giant pharma companies have started farming out work to companies like Quintiles and Omnicare which are called clinical research organisations.

Additional reporting: K Balaram Reddy and Subir Roy