HCL understands the potential of the opportunity but is following a partnership approach. “We realized early on in our life-sciences foray that, to offer our customers and prospects a full basket of services covering the breadth of drug and device value chain, we will need to acquire or develop a lot of life-sciences specific competencies like understanding of clinical trials etc.,” says Pradeep Nair, VP, Life Sciences Practice, HCL. “The organic route takes a lot of time and investment, while win-win partnerships with best-in-class players allow you to offer niche services to your customers right away.” HCL has a strategic tie-up with Synchron, an Indian CRO, where both the companies have a joint GTM (go-to-market) initiative. Clinical-data management and bioinformatics are the areas where IT companies are likely to make their major mark, initially.
“The organic route takes a lot of time and
investment, while win-win partnerships withbest-in-class
players allow you to offer nicheservices to your customers right away.”
— Pradeep Nair, VP, Life Sciences Practice, HCL
Signs of Maturity
Thanks to the slow development cycle, the size of the industry is still small, pegged at around $100 million in 2004–05 (April–March, of the Indian financial year), according to BioSpectrum, an India-based publication. Yet, the industry has started showing signs of maturity, represented by the early trends. Some of these trends include:
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Major offshore contracts. A few major contracts have come calling to offshore service providers. Wyeth’s contract with Accenture that the IT-services company is delivering out of Bangalore drew attention, but equally significant are the two contracts awarded by Pfizer to Siro Clinpharm and Cognizant for clinical-data management. Both the contracts are in the area of clinical-data management. GVK also won a major deal from Wyeth to establish an FTE-based R&D center for the pharma major, whereas Jubilant won a major deal from Eli Lilly to perform a lead-optimization program deploying 100 scientists.
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Companies building end-to-end capabilities. Companies such as Biocon, TCG Group and Jubilant Group are some of the Indian players building end-to-end capabilities to compete with companies like Quintiles. Biocon has Syngene (R&D) and Clingene (clinical research); TCG Group has ChemBiotek (R&D) and ClinInvent (clinical research); whereas Jubilant has Jubliant Clinsys (clinical research), Jubliant Biosys (biology services) and Jubliant Chemsys (chemistry services), not to speak of Jubilant Organosys, the promoter company focused on contract manufacturing.
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Emerging hub. While the offshore IT industry has its hub in Bangalore, its neighboring Hyderabad has emerged as a clear favorite for most of the R&D companies in drug discovery, but only in the preclinical development area. Like BPO, the clinical-research industry is spread across all major cities, starting at Ahmedabad, thanks to the presence of a lot of pharma companies in the city.
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Mergers, acquisitions and partnerships. When growth and opportunity are there, can Mergers and Acquisitions (M&A) be far behind? The industry has had its share. Some of the significant M&As are iGATE’s acquisition of DiagnoSearch; European generics company, Actavis’ acquisition of Indian CRO, Lotus Labs; Jubilant’s acquisition of U.S-based CRO Target; and the merger of Phase I Clinical Trials Unit of U.K. with Indian CRO ClinSearch to form Vedda Clinical Research. Major partnerships include U.S.-based CRO Covance’s partnership with Siro Clinpharm; a tripartite partnership between Indian CRO, Suven Life Sciences and chemistry and manufacturing service providers, Innovasynth and Shashun; and HCL’s partnership with Indian CRO, Synchron.
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Rise in knowledge-based preclinical development. Many global R&D companies have started their R&D activities in India. While some pharma majors such as Sandoz, AstraZeneca and Altana have set up their captive R&D facilities in India, global R&D companies like U.S.-based AMRI and Nektar; Switzerland-based Evolva; and Germany-based Taros have opened their research facilities. Hosts of Indian companies such as GVK BioSciences, Syngene and Sai Life Sciences have also joined the fray.
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Beyond India: Both China and Russia are emerging as major offshore destinations in addition to India. Not only are companies like Quintiles, PPD and Covance working in these countries, homegrown companies such as WuXi in China and ChemBridge in Russia are making their mark.
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So Far, So Good
The nascent pharma R&D industry is doing well. But it still needs a few catalysts that the IT industry has developed in India. Private equity is on the sidelines watching to see what happens. Serious private-equity investment could change the story drastically.
“Cost pressure will come. You cannot live in a fool’s paradise that costs do not matter in this industry,” says an industry executive. With more competition and better standards and quality, services like clinical trials will tend to come under cost pressures.
If we may add, do not forget the manpower issues that the IT and BPO industry is going through — attrition, sharp rise in wages…. All that will have to be tackled, when pharma goes mainstream.
