India! India! Everybody's jumping on the bandwagon. PricewaterhouseCoopers declared recently that “the center of gravity of the global pharmaceutical industry is shifting,” with Asia set to be the world’s largest pharmaceutical market, and India one of the powerhouses of the industry.

Then there's KPMG, which estimates that India has the potential to emerge as the foremost destination for R&D outsourcing. Not to be left out, Ernst & Young predicts the outsourced clinical research market in India will generate $2 billion in annual revenues by 2010. And market research firm Rncos says India will have a 15 percent share of the clinical research sector in two years.

But what is the actual level of activity there now? Still relatively low. “Lots of talk would lead you to believe it's 50 to 60 percent of all trials. In reality, it's much, much smaller than that. It's just getting started,” says Michael Martorelli, director at investment banking firm Fairmount Partners. He's a consultant to the CRO industry and a long-time watcher of the space.

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Indeed, as of early June, 2009, there were 413 ongoing, recruiting trials in India registered through ClinicalTrials.gov. That amounts to 1.5 percent of the 28,500 live studies that are currently listed on the federal registry. (For context, Israel has 1,094 studies under way; Taiwan has 790; and Brazil has 433). But movement in India is spiking upward.

Some estimate there are already 125 to 150 CROs operating in India. Many have just gotten up and running after 1999, when the country strengthened its laws protecting intellectual property. But more sprung up after January 2005, when regulations changed to open up late-phase trials. That blossoming of companies in a few years is fairly remarkable, considering the U.S. has needed three decades to create some 500 CROs.

Even though the numbers are small, the urgency to get there is big. “Any CRO that wants to call themselves global has to have a presence in India,” says Simon Britton, vice president of the Asia Pacific region for PPD, which has 115 clinical staff among its offices in New Delhi and Mumbai. “You'll see all the mid-sized CROs try, even if it's just an affiliation with a local CRO. It's somewhere you have to be.”

Here's a very recent example of just such an affiliation.

Quintiles First

Industry leader Quintiles had a vision about India's potential even before the country's landmark IP and regulatory changes. Quintiles has been in India longer than any of its global-CRO competitors, having set up an office in Ahmedabad in 1997. Back then, the landscape was filled with tiny local CROs doing only bioavailability work for India's then-robust generics industry. But generics and bioavailability were not what Quintiles had in mind.

“We said India and Asia generally are going to be very important in terms of claiming their rightful share of global drug development by virtue of the patients being here, and the hospital infrastructure getting upgraded,” recalls Ferzaan Engineer, Quintiles' first employee in India and now CEO of Quintiles India. “We started early and aggressively, and our predictions seem to have been borne out.”

Phase I Jump

Quintiles now has 1,258 employees across five locations in India, with a large data management and cardiac safety lab in Bangalore. It also has a central lab in Mumbai, and is in the midst of a partnership to open a Phase I unit in Hyderabad—despite the fact that regulations in India still prohibit Phase I research on molecules developed outside the country. “We just wanted to be ready if things change,” says Engineer, adding that the aim is to be a full-service shop in India. Quintiles is working on 143 trials in India currently.

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Ferzaan Engineer, CEO, Quintiles India

Another CRO that has a huge presence there is Icon Clinical, which entered the market in 2002, and now has 10 percent of its global trials taking place across 425 employees in four locations in India. Icon opened a new 15,000-square-foot central lab in Bangalore last fall and is planning to open a fifth location this year.

Also big is PPD. It has 115 clinical staff there in two offices and plans to open a third location later in 2009. Most of the other big players are there, too—Kendle (came to the market in 2004, has two offices, won't say how many employees are there, but the biotech magazine BioSpectrum said last year that the company had 41); Parexel (won't release employee numbers but has been in India since 2004, and has two offices there); PRA (25 employees, there since 2006); Chiltern (40 employees, two offices, in India since 2005). India's large homegrown CROs include ClinInvent (100 employees), Siro ClinPharm and Manipal Acunova (205 employees). Ranbaxy has a huge central lab there.

Though there are up to 150 CROs in India now, it's currently the same 20 or so that compete for the same jobs, says Arun Bhatt, president of five-year-old Clininvent. "We have a number of people putting up offices in India, but most are small, and don't yet have the people."

Maturing Market

What's driving trials to India? Besides better recruitment, lower costs, and well-educated investigators? The fact that the market is becoming less exotic in sponsors' minds.

“I think it's a maturity issue for the client base,” says Alan Morgan, Icon's chief operating officer. “One can talk about all the advantages to doing business here. But in order to feel comfortable coming here, and to accept this market, sponsors need to see high-quality results, high adherence to protocols, top-quality investigators. As some of India's idiosyncrasies are getting harmonized with how business is done in other places, acceptance among sponsors is coming along.”

Poaching Employees

The cost, too, is a huge factor. Take investigator fees. According to Morgan, for a recent Icon trial, investigator fees per patient averaged $5,300 in the U.S; $3,400 in the UK; $2,400 in Brazil; $2,200 in China; $2,000 in Russia; and (drum roll, please) $1,300 in India. And start-up times are good there, which provides big cost savings. On average, the time from final protocol to first patient in is 25 weeks in India; it's about 34 weeks in Russia, 33 in Spain, and 32 in the UK, according to Morgan.

Offsetting the overall cost and time environment, though, is fierce competition among CROs for a tightly constrained supply of experienced staff in India. The market is crowded, and competitors are not shy about poaching talented employees. To keep good staff and avoid the cost of turnover, CROs are having to offer higher salaries and better benefits packages.

High Rent

Plus, as India gets more developed, office space is getting expensive. Believe it or not, office space in Mumbai is priced comparably to New York or San Francisco, some CRO executives told us.

Still, the patient recruiting bonanza makes India worth the trouble. With 1.17 billion people, India is the world's second-most populous country, and the most populous democracy. About 30 percent of the population is clustered around urban areas. Mumbai, the largest city, has almost 14 million people, while Delhi has more than 12 million. Migration toward the cities is ongoing. Much of health care takes place at large urban hospitals, allowing drug makers or CROs to use fewer sites per trial than is necessary in other countries.

Huge Recruitment

“Patient recruitment is probably the number one issue confronting people doing clinical research, and you can't keep going back to the same places with the same people. These trial-naive patients in India are very valuable,” says Martorelli.

And, as with many emerging countries, the health care system in India is lacking—huge crowds, waits that can go on for days—which results in a large sector of the population desiring to participate in trials just to get care.

But therein lies one of India's dilemmas. India remains one of the poorest countries in the world. About 85 percent of the population lives on less than $2.50 a day, and half of children are underweight. English is spoken among most of the workforce, but among the poor—those most likely to be recruited for trials—it generally isn't and translators are necessary. As part of the culture, Indians tend to obey their doctor's suggestions. Does that present significant issues around informed consent?

Ethics Spotlight

Lately, yes. Last year, a four-part series in the St. Petersburg Times identified some of the holes in trials taking place in India. Beyond that, 49 infants died at a large hospital over the course of two and a half years during various global trials in India. Investigations showed that none of the deaths were due to the study drugs, but rather to generally poor health to begin with. But that begs a question about why the infants were allowed to participate in the first place. Because their parents saw a trial as the only avenue to care?

In February, the New England Journal of Medicine (NEJM) featured an editorial warning of the ethical dilemmas around trials in underdeveloped countries. (We tried to reach its lead author for comment in our series, but he did not respond.) Could coverage like this eventually dampen sponsor enthusiasm for India? Could people in India eventually have the same view of the pharmaceutical industry as consumers in the U.S.? It's not clear.

Still Evolving

“This just reminds people that it's still a developing place for trials,” says Martorelli. “It's still evolving, growing from a small base.” All of the CROs we spoke with for our series say they bend over backwards to make sure that informed consent is handled as rigorously in India as it is anywhere else they conduct trials; they ensure that potential subjects know exactly what they're getting into before they sign on for a trial.

Dan McDonald, VP of business development for Excel Life Sciences, a U.S.-based company that does site development exclusively in India, pointed out that in India, people are far more likely to bring a family member with them to the doctor, and to discuss the pros and cons of trial participation with family than are potential trial subjects in the U.S. This, he says, makes him feel very comfortable about informed consent in India.

Roads, Hospitals

Infrastructure, too, is a chronic issue. Most health care in India is administered through very large government-run multi-specialty hospitals that are ancient and overcrowded. Dirt roads are still used in many places. And electrical outages are routine, causing those involved in trials to have to have generators and back-up generators.

But growth and improvements continue daily, and the trials just keep mounting. And none of that momentum is likely to slow any time soon. "No company can afford not to get a piece of what's happening in India," says PPD's Britton.

by Suz Redfearn

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