The pharmaceutical industry is research and development driven, given that company growth and viability are dependent on the discovery of new drug molecules. Pharmaceutical company survival depends on recovering costs and attaining the profit target necessary to meet investors' expectations.
Unlike their global counterparts, the Indian pharmaceutical market--estimated at 400 billion Indian rupees (US $8 billion) in 2001--is in a business climate of token R&D investment. India was, until recently, protected from global product patent laws. The upside in Indian pharmaceutical history is its self-reliant, independent, international-standard manufacturing base.
The Pharmaceutical Industry Scene
There are over 20,000 registered pharmaceutical manufacturers in India. The fragmented but highly entrepreneurial Indian pharmaceutical industry has grown independently due to friendly process-patenting regulations and low-cost manufacturing structure. Exports have been rising at about 30% cumulative annual growth rate over the last 5 years. There is a shift in export profile from low-value bulk drugs toward value-added formulations.
Intense competition, high volumes, and low prices characterize this highly regulated industry. The Drug Pricing Control Order (DPCO) has severely affected the profitability of the industry, and innovation has suffered due to lack of reinvestment of cash surpluses into R&D. However, the government has been relaxing controls slowly but progressively. The span of control of DPCO has come down from 90% in the 1980s to 50% in 1995 and is likely to be further reduced as per the latest proposed changes.
The domestic pharmaceuticals industry output is expected to exceed 260 billion Indian rupees (US $5.2 billion) in fiscal year 2002, which accounts for 1.3% of the global pharmaceutical sector. Of this, bulk drugs will account for 21% and formulations the remaining 79%. In FY 2001, imports were 20 billion Indian rupees and exports were 87 billion Indian rupees. The leading 250 pharmaceutical companies control 70% of the market, with market leader Ranbaxy Laboratories Ltd. having nearly 7% of the market share
Trends in Clinical Trials
The stage is set for Indian clinical trials to begin receiving global clinical research revenue after 2005. The outsourcing of clinical trials from developed countries is expected to double after 2005. The pull factors are cost-effective trials, with data transfer to developed countries being legitimized by the World Trade Organization ( WTO), patient numbers, disease profile, and availability of highly adaptable internationally trained investigators who have no language barriers.
The downside includes cultural resistance to Good Clinical Practice (GCP), clinical research process real-time compliance, inadequate information systems leading to unpredictable project milestones, a "no clock" application process in the regulatory machinery, and inconsistent time frames for export/import of clinical trial materials at the border.
In November 2001, the Drug Controller of India met with representatives from pharmaceutical companies, study sites, and clinical research organizations to discuss the issues. Pertinent clinical trial problems were identified and solutions sought. Investment in information technology and human resource training that would raise the country's clinical research standards to an international level within a short time frame were proposed.
The Government's Role and the Impact of Globalization
The government of India plays a significant role in fuelling R&D growth in the country. In May 2000, it announced an increase in R&D expenditure from 2% of the budget to 5% by 2005. It also targeted the development of an R&D plan with an annual outlay of 15 billion Indian rupees from the industry by year 2005. The outlay in FY 2000 was 3.2 billion Indian rupees.
Presently, India recognizes only process patents. However, with the imposition of WTO rules by 2005, product patenting will be implemented. This will lead to a widening of the market for indigenous drugs, as they will have the authenticity of internationally recognized product patents. Product patent protection will encourage multinational companies to import technology into India to develop new products. These developments will bring about increased opportunities for clinical trials of biotech and medicinal products.
The product patent regime is expected to open India's door to global multinational corporations (MNCs). The game plan for Indian companies will be to partner with MNCs on R&D. The external pharmaceutical companies will then have access to the Indian patient population, market, and clinical trial subjects with an unmatched volume, disease profile, and therapy-naïve status. Such is the impact of globalization on clinical research in India.
New Career Opportunities and Workforce Development
The WTO-imposed patent law will bring about new employment opportunities in clinical research. These opportunities encompass job designations such as clinical research coordinator/monitor, clinical research physician, and clinical research associate.
Joint venture partnerships will set the trend for the medical/R&D departments of Indian registered pharmaceutical companies to be spearheaded by global R&D directed from developed countries. Hence, employment opportunities will be wide open for European and American clinical research physicians and clinical research associates willing to relocate to India, as well as Indian citizens with overseas experience.
The central referral research laboratory concept will flourish, providing yet another area of new employment prospects. There will be additional needs for scientists (Ph.D. and medical) with bench experience to maintain the anticipated mushrooming of central clinical trial laboratories.
Clinical research education in India will require some adaptation to groom top-notch clinical research physicians and clinical research associates for the industry. It is almost certain that Indian registered MNCs will be introducing plans for clinical research courses in partnership with domestic educational institutions.
Spectra Clinical Research Centre (SCRC), the clinical research unit of the Apollo Hospitals Group --the single largest health care corporate hospital network in the country--will accelerate the implementation of its clinical research courses. SCRC focuses its education resources at the study site to increase GCP awareness, compliance, and career development. Its leverage is its association with health care facilities of the Apollo Hospitals Group, which is poised to have the widest catchments (urban and rural) for clinical trial recruitments.
Prospects and Challenges
The Indian pharmaceutical industry's strengths are being seen as standing in good stead in the post-2005 era. Analysts aver that with India's strengths in research and development and lower manufacturing costs, there is a huge potential that global companies can tap.
The obvious catalyst to clinical research in India is the implementation of the WTO-enforced product patent. India's established leadership in information technology and industry data management will help deliver clinical trial research data at lower cost and makes it a preferred destination for outsourced clinical trials.
The third millennium will see pharmaceutical-driven clinical drug trials in India as a "sunrise industry." However, concerted efforts of the clinical trial sponsor, regulators, and health care facilities from a global perspective will be needed to harmonize clinical research in India.
Note: The authors acknowledge Narayanan Anand for providing them the financial data.