Clinical trial segment poised to touch $1.5 bn by 2010: McKinsey report

India’s large population of patients suffering from a multitude of ailments seems to have become a blessing in disguise for the clinical trials sector...

India’s large population of patients suffering from a multitude of ailments seems to have become a blessing in disguise for the clinical trials sector, which is emerging as a a global hub, attracting several international pharma companies.

With majors like Eli Lilly, Roche, PRA International and SIRO Clinpharm having firmed up their presence in this upcoming market, the industry is poised to garner $1-1.5 billion in revenues by 2010, says a McKinsey report.

“Though the concept of outsourcing clinical trials evolved over 10 years ago, it is only recently that developed countries began to take notice of India’s potential. Back then, India was viewed primarily as a manufacturer of cheap bio-equivalent drugs, besieged by a large number of regulatory issues and archaic drug laws. But once majors like Pfizer entered the scene, the industry had to transform and adopt new systems to stay competitive,” explains Nermeen Varawalla, vice-president, corporate development at PRA International, a global pharma player.

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From a negligible share in the late nineties, the market grew to $70 million in 2002 and is now valued at $100-150 million, according to a CII report.

Ironically, it’s a combination of the best and worst the country has to offer, that is driving growth in the sector. “For one, the Indian population is diverse, with a high incidence of lifestyle related diseases in urban areas and infectious diseases and malnutrition plaguing rural locales. This, coupled with a skilled and educated physician workforce, is proving to be a big driver of the industry,” feels Vinod Mattoo, medical director of Eli Lilly India.

Warawalla adds, “India’s value proposition lies in the access it provides to high quality data delivered by physicians working at leading medical centres. Since they treat several patients, clinical sites in India are able to provide data in a timely manner.”

And time is of the essence in clinical trials. With costs ranging between $800 million and $1.2 billion from patenting to approval, reducing the length of costly research means more time to sell the drug before the patent expires. “The cost arbitrage stems from the shorter time-to-market. A blockbuster drug on which you may have saved three months of time, can translate to $50-100 million in sales,” explains Warawalla.

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According to a study conducted by Rabo India Finance, drugs can be tested here for 60 per cent of the cost that would be incurred in US — approximately $150 million. The study also points out other factors, such as the existence of nearly 700,000 specialty hospital beds and 221 medical colleges as reasons for the boom.

Given such advantages, companies like PRA International have invested over $8-10 million to conduct third party trials at over 15 centres nationwide. While SIRO Clinpharm has been conducting trials for patients from across Europe, Japan and the US at over 30 hospitals in India, others like Eli Lilly have earmarked 20 per cent of their R&D spend for clinical research.

“While the global clinical trial market is estimated at $10 billion currently, India commands just 1-2 per cent of that share. But we estimate the Indian market would grow at 10-15 per cent and touch the $1 billion figure by 2010. This will be possible as global pharma companies are now moving away from an integrated model into a virtual one — where everything other than the core strategy is outsourced,” feels Nimita Limaye of SIRO Clinpharm.