Flight of majors hits India’s image as
fast-growing hub for medical research
Red
tape, idiosyncratic laws and frustrating regulatory architecture are propelling
Indian clinical trials and pharmaceutical companies to relocate to more
conducive business environments in Southeast Asia.
The
beneficiaries, according to the Associated Chambers of Commerce and Industry of
India, are Cambodia, the Philippines, Singapore, Thailand, Vietnam and others
that are wooing India’s trial research companies and R&D industry with
transparent regulations and other benefits.
The
efforts of Southeast Asian governments to lure Indian trial companies to their
shores are already bearing fruit. Last month, Ahmedabad-based Lambda Research
Labs opened its first center in Thailand following welcome from the Thai
government. Lambda has tied up with Government Pharmaceutical Organization, a
state-run pharma company, to set up a clinical trial unit and train its
workforce there.
The
Philippines too – which has played a major role in stealing India’s
once-dominant business office processing industry to become the world’s leader
in offshoring – has invited the Indian pharma and biotechnology companies to
invest in the country’s special economic zones (SEZs) and has even proposed to
offer full incentives for the investing firms.
At a
joint meeting between India and Philippines Joint Working Group on Trade and
Investment (JWGTI) in 2013, the Philippine authorities presented a proposal to
encourage Indian pharmaceutical companies to start operations in the
Philippines.
The
major suggested business areas for investment include research and development
and production of oncology drugs, intravenous (IV) and oral antibiotics,
topical and eye medicines, vaccines and other high-priced pharmaceuticals.
According
to the proposal by Filipino authorities, the investing firms are allowed to
export 70 percent of their production from their units to Southeast Asian and
Asia-Pacific markets, while the remaining 30 percent would cater to the needs
of the domestic markets.
"The
pharma market in Southeast Asia is experiencing a very dynamic period with
growth of both domestic manufacturing and international trade. A crucial
element of the ASEAN region's development, which is predicted to reach a market
value of US$80 billion by 2017, will be the establishing of close regional
partnerships and cross-sharing of information between companies,” says a
newsletter by CPhI Worldwide, a global pharma sourcing event.
While
this dynamic growth is spreading across Southeast Asia, India is facing
dramatic contraction. British drug maker AstraZeneca’s decision this January to
shutter its R&D center in the southern Indian city of Bangalore resulted in
the departure of 170 employees and a halt to early-stage research into a raft
of neglected tropical diseases including tuberculosis and malaria. The company
cited an abysmal rate of drug approvals as one of the key reasons for its
departure from a country once considered the hub for pharma companies, given to
its high-caliber doctors and cheaper research facilities.
The
global contract research organization, Quintiles also stalled its phase-I
clinical trial unit in southern Hyderabad last year, quoting a “challenging external
business environment.”
The US
National Institutes of Health has shut down more than 35 clinical trials
underway in India over the past two years.
Domestic
companies are similarly moving trials abroad despite an increase in drug
development costs up to 20 times. Piramal Enterprises, Biocon and Lupin have
moved trials to countries like Taiwan, Germany, the US, Canada, the Netherlands
and Australia. Other clinical research organizations have set up operations in
Malaysia, Thailand and Philippines. Analysts say India may lose all of its
investments in this crucial sector to its Southeast Asian rivals.
Ironically,
the Indian pharma industry – currently pegged at Rs1 trillion (US$16.67
billion) with more than Rs400 billion in exports – had captured over 20 percent
of the world's generic market in the past decade, becoming the world's single
largest supplier of vaccines. In fact, over the past two decades Indian
generics have been tested for bio-equivalence studies in humans and cleared the
toughest regulatory standards of bodies across the globe, underscoring the high
caliber of Indian scientists. This led to booming business and India emerging
as the first choice for drug companies to conduct their clinical trials.
The
problem began last year with the Central Drug Standard Control Organization
(CDCO) – the country’s top drug and clinical trial approval body, which amended
the guidelines for clinical trials, making enrollment for patients far more
stringent. That resulted in an alarming fall in the number of trials – from 500
in 2011 to just 20 in 2013.
The
regulations have also affected new drug discoveries and registrations, which
plunged from 260 new drugs in 2008 to fewer than 25 in 2013. Worse, the
approval process for global drugs sold in India has been increased from six
months to more than three years.
Three
new committees were set up by the CDCO to clear clinical trials. However, they
approved clinical trials for only five drugs over the September-December 2013
period. In late October, the Supreme Court suspended 157 trials that had been
previously approved until the new committees could review the cases further,
compounding the crises. These new regulations require organizations conducting
clinical trials in India to obtain trial protocol approval from pre-accredited
ethics committees, register trials with regulators, and procure good clinical
practice certification.
In
early February 2014, the Minister of Health and Family Welfare acknowledged
publicly that clinical trial regulations were hurting innovation and that the
new norms might be relaxed.
“There
is complete paralysis of regulation, and we cannot have policy that takes us
backwards, a good industry needs a good regulation," an angry Swati
Piramal, director of Piramal Healthcare Ltd, one of the frontrunners in the
Indian pharma sector, told the media last year.
According
to Assocham national secretary general D S Rawat, "The flight of
operations by India's pharma majors will surely hit India's image as a
fast-growing, low-cost hub for medical research." Permissions and
approvals for trials have slowed to such an extent that unlike the US Food and
Drug Administration, the European Union or Singapore which may grant such
clearances in a month’s time, India takes 12-15 months. Such predictions
clearly don’t augur well for India’s once thriving pharma sector.
Neeta
Lal
Neeta Lal is a Delhi-based senior journalist
& Editor.
Business & Investment Opportunities
Saigon Business Corporation Pte Ltd (SBC) is incorporated
in Singapore since 1994.
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