CRAMS in India

Savithri Shivakumar
Associate Vice President GVK Biosciences Private Limited Hyderabad

ontract Research and Manufacturing Service (CRAMS) in pharma and biotech industries has been one growing steadily in India. CRAMS market is dominated by contract manufacturing which includes manufacturing of intermediates for new chemical entities or for API and contract research consists of drug discovery, preclinical and clinical research. The global pharmaceutical industry is at the cross roads. With drugs worth USD 90 Billion expected to go off patent during 2011-15 and with increasing research and discovery costs, it is hard for the companies to maintain their bottom line and remain unaffected. This has led to outsourcing some of their research and manufacturing activities and saving cost in the process, leading to growth of CRAMS in India, which has come as boon to the mid-size pharma companies CMOs and CROs in India. Global CRAMS market is around USD 60-70 Billion (estimated to reach USD 90 Billion by 2015) of which contract manufacturing constitutes around 65% and contract research about 35%. Indian CRAMS business is around USD 3.8 Billion (estimated to reach USD 8 Billion by 2015). Global CRAMS market has grown (2005 2010) at the rate of 16% CAGR, while Indian CRAMS market has grown at 45% CAGR during same period. The leading CRAMS players are closely looking at fullservice providers operating on a global scale. They act as 'one-stop shop' for all services, from preclinical through contract manufacturing and marketing.

Global companies reasons of outsourcing/segments/ geographic preferences Several reasons like patent expiries, failing of R&D productivity, focus on generics/branded generics and cost pressures are responsible for forcing pharma companies to outsource their activities. Initially, non-core activities like manufacturing of Active Pharma Ingredients (API), dosage development and packaging were mainly considered for outsourcing. Outsourcing activities in chemistry can be categorized as: Chemical synthesis of milligram scale for screening of SAR support. Process research activities like modification of the synthetic route, or reagents, process, catalysts by adopting Safety, Health and Environment (SHE) compliant and non-infringing process, for quick supply of few kilos of product for toxicity studies and Phase I clinical trials. Custom synthesis for a small quantities of advanced intermediates. Contract manufacturing activities either with or without technology transfer; starting with process development/ optimization and approval of lab sample, followed by commercial validation, regulatory filing and approval and long term commercial supply. Drug manufacturing companies in India are aligned with their supply chain, assurance of supply, project management, technical skills, capacity, quality, update on project status to meet demand and needs of the global pharma companies. 5

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However, Indian pharma companies should focus on providing innovative, state-of-the-art process and production technologies to support the rapid technical transfer of products from R&D to commercial manufacturing. Outsourcing production to emerging global markets like Japan, China, India, Russia, Latin America namely Brazil are increasingly popular in the biotechnology and pharmaceutical industries. Asia Pacific region -India and China play a major role in the future development of global pharmaceutical contract manufacturing. The industry is now looking at mergers and acquisitions, to bring down costs and get drugs to market. and process innovations capabilities, respectful towards IP, compliance with QA and SHE requirements, strong project management and communication along with lowest possible cost are met by Indian CMOs. India should henceforth be ready to meet the overall commercial aspect of the CRAMS outsourcing market potential.

Integrated research from mg to tonne scale

CRAMS is the key future business model engaging in both contract research and manufacturing. This will enable to synthesize molecule from the milligram to the multi-hundred-tonne scale. Effective technology transfer is a India has a high number of US FDA approved key component in the success of plants, skilled manpower, cost advantages, a contract manufacturing project. India should focus on technologigreat talent pool which enables India to capture cal transfer skills which are majorly a significant portion of current ~$60 billion affecting the scale up activities and henceforth the timeline of global pharma outsourcing market. the completion of the task for the sponsor. Major players like AstraZeneca, Roche, Pfizer and Pharma companies have dedicated outsourcing Schering have undertaken outsourcing their manumanagers to manage the relationship with CMO. facturing to enhance profitability but focus internally Therefore outsourcing model includes partnership, on core competencies. collaboration, alliance or integrated type to improve operation flexibility, access to latest technologies and Indian companies have also acquired overseas assets to enhance their scope of their value added services talents around the world. by adding new technologies such as lyophilisation, India Advantage sterile drugs and cytotoxics. India has a high number of US FDA approved plants, Key drivers for contract manufacturing in pharskilled manpower, cost advantages, great talent pool, maceuticals and biopharmaceuticals: which enables India to capture a significant portion of current ~$60 billion global pharma outsourcing Key factors driving for pharma companies to market. Jubilant, Biocon, Shasun, Strides Arcolab, outsource manufacturing segment are: Cadila, Dishman Pharma and Divis Labs have profited Demand for new drugs & Patent Cliff by establishing global deals. Drugs worth US$ 97 billion expected to go off patent from 2011-15. India has the advantage of offering low operating and capital cost which is 40% less to that of the western New approvals not enough to justify loss of CROs, proven expertise in chemistry and process existing block-buster going off patent. development skills and english speaking talent pool, Increasing need for R&D productivity and US FDA plant and cost arbitrage. India CMO working efficiency closely with pharma companies should ensure to new Declining trend in sales generated by new technology to serve with maximum efficiency with approvals. minimal risk. Apart from this, India has to focus and Increase R&D cost per NCE. develop strategic CMO alliance to increase product revenue and entry into emerging markets. Pharma Side effects of new drugs reduces research companies requirements such as synthetic chemistry productivity. 6

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Cost pressure Margin shrink due to increased spending in R& D. Increase in raw material and wage inflation. Focus on generics Increased demand of Generics competition. Foray into branded generics segment of emerging markets. Lack of internal manufacturing capabilities. Besides costs, market protection is an additional driver in contract manufacturing. Countries are putting up their fences to support their national economy by increasing import taxes or creating regulatory hurdles for imported products. Hence, products need to be manufactured locally leads to complex supply networks and higher cost. CMOs must closely work with pharma companies on a long term basis with mutual trust and openness so that they complement each other rather than focus on short term to develop true strategic partnerships. Openness and trust on both CMOs and pharma companies and an honest willingness to cooperate is the key to overcome cost pressure, increasing GMP and quality standards. It is very essential to manage life cycle projects in this present scenario. CMO business model is presently not designed to absorb high levels of risk. Therefore it is critical for the companies to implement a wide array of risk-mitigation tactics.

Business models of collaboration

Pharma companies outsource their discovery work based on four defined models: Payment/royalty-milestone. Co-development model. In-license where overseas company in-license the compound from Indian company. Out license wherein global companies out-license research programs to an Indian company with a buyback at a defined stages of program.

Challenges

India is facing increasing competition from other geographies like China, Russia, Brazil and Taiwan. There is global consolidation due to major M&A like Pfizer-Wyeth, Merck-Schering-Plough, SanofiGenzyme, Bayer AG-Schering AG, Roche-Genetech, Teva-Barr, Teva-Ratiopharm, resulting in excess For example, Merck established discovery sourcing capacity with the big pharma, capital intensive with Advinus Therapeutics for metabolic disorders, approach. Big pharma MNCs are setting up their Nicholas Piramal for oncology drugs and Orchid facilities in India. Though, India has enforced patent Pharma in antibacterial compounds. Eli Lily set up laws, there is still lingering discomfort among few their relationship with Nicholas Piramal, Suven, companies, particularly small biotechs, with working Zydus Cadila and Jubiliant as a collaborative approach in India. Relative to western countries, there is still a lot of governmental control via license that leads to additional timelines, Demand for CRAMS in the areas of discovery relative to those countries. SHE is an essential part of CMOs, even though pipeline for Biologics, Cytotoxic compounds for it has relatively emerged; still needs oncology, preclinical studies, clinical studies and much greater and strict adherence.

Future needs

Globalisation of standards and skills development and transfer will lead to greater acceptance of India and China as the first choice options for outsourcing contract manufacturing. Even though, India has excess capacity, talented pool of scientist, technology transfer skills, and regulatory compliance facility, India must ensure that it can deliver consistent high quality to capitalise on this potential. In spite of higher FDA approved facilities in India, many CMOs are still failing to demonstrate the levels of regulatory compliance adhering to entire facility operations involved in manufacturing/testing of drug product expected by sponsors.

biocatalysts to make optically pure and stereo specific processes is showing the bright prospect.
across several therapeutic areas. AstraZeneca initiated their research collaboration with Jubilant in the area of neurological and psychiatric diseases. In many cases, Indian CROs established Built-Operate-Transfer model (e.g., Syngene with BMS) and Built-Operate model (e.g., GVKBIO with Wyeth/ Pfizer). Indian CRO like Biocon and GVK BIO working with global Pharma companies provides integrated services from discovery to development stage. Biocon

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partnered with Bristol Myers Squibb, Mylan (for biosimilars in oncology), Amylin (for novel peptides for diabetes treatment) and with Vaccinex (for mABs and oncology products) and GVK Bio sciences partnered with Wyeth for their chemistry services. CRAMS players would like to position themselves as a one stop, full service provider. In this, they position as a Solution CRO as well as Process CRO. The work may be well-defined and easily repeated, making it amenable to a Process CRO, or it may be hypothesis driven, requiring experimentation and suited for a Solution CRO. However, pharma companies are showing interest in this integrated approach instead of multiple CRO organisations for each of their outsourcing needs. A Solution CRO must be used in the candidate nomination and early development timeframe to develop the methods and processes that will become routine. At that point, it is logical that a Process CRO is used to manufacture API and drug product and perform the non-clinical and early clinical evaluation. By this one stop full service provider model, the operational teams will benefit

Future trends in global pharma companies

The global pharmaceutical industry has been witnessing unprecedented waves of dramatic change. Most significant have been the increased competition in generic markets, declining R&D productivity, shrinking average patent life and mounting government pressure to reduce drug prices. Alliance/ JVs for leveraging mutual strengths and ensuring long term sustenance are looked as possible way forward.

The pharmaceutical industry operates on closed model, developing and Companies which provide integrated patenting new drugs, while retaining IP exclusivity. There is a need of open drug development, research, clinical innovation which means sourcing ideas trial and manufacturing outsourcing from internal and external sources, sharing IP. This will however have services will prove to be one stop an impact on the cost and risk of drug shop for all the needs for innovator development. Hence, companies are focusing on strategic alliances and pharma companies. partnerships with other companies and CROs to enhance product pipelines. Pharmaceutical and biopharmaceutical companies are joining in partnerships by licensing from understanding the different types of business models that will facilitate these interactions. products to maintain revenue. Demand for CRAMS in the areas of discovery pipeline Companies which provide integrated drug for Biologics, Cytotoxic compounds for oncology, development, research, clinical trial and manufacpreclinical studies, clinical studies and biocatalysts to turing outsourcing services will prove to be 'onemake optically pure and stereo specific processes is stop shop' for all the needs for innovator pharma companies. Indian companies needs to build showing the bright prospect. entrenched relationship with Innovator companies Global pharma companies are putting increasing over a period of time gradually move on to high effort on the development of innovative biologic end value add services. In the present scenario, products by allocating R&D funds to strengthen the contract research organizations are looking for pipeline as well as in-licensing early stage novel co-development opportunities rather than simple biologic drugs from biopharma companies around outsourcing agreements. Government initiatives are the world. They are shifting their focus from small providing generous support for CRAMS activities molecule drugs to macro-compounds. Therefore in India. CMO and pharmaceutical companies there is raising need of outsourcing R&D and manu- should look into more strategic partnerships to facturing needs for biopharmaceutical products such gain a competitive edge in the global business as bio-similars, vaccines etc. Indian CRAMS should environment. focus to establish the technological and specific skill requirements for manufacturing of biologics quickly Finally, in conclusion, companies which prove to be 'one-stop shop' by offering integrated services like to meet their outsourcing demands. drug development, research, clinical trials and manuPharmaceutical outsourcing has now moved up the value facturing will be sought after for strategic partnerchain from non-core functions to even core functions. ships by major MNCs. 8

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