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Healthcare in India: Towards an Integrated Approach

June, 2017

CFO Insights in conversation with Swapan Bhattacharya, Co-Founder & Managing Director, TCG Lifesciences, on the evolving paradigms in contract research

What are the current trends in the global drug discovery outsourcing market? What is the influence of these trends on Indian Contract Research Organizations (CRO) and on traditional drug discovery models?

The early drug discovery paradigm has undergone a major change and the activities have become very focused on robust knowledge of disease biology, more attention to translation of laboratory findings to living organisms (preferably humans) and shortening the timeline. In addition, the modalities of drug candidates have shifted from chemistry or “small molecules” to larger molecules like biologics and peptides. The cutting edge CROs therefore have had to develop special skill sets, invest in new technologies and engage more effectively and efficiently with their clients.

What are the current challenges and market opportunities for CRO outsourcing in India in the current global environment? How is the IPR regime influencing R&D innovation and quality of output?

The challenges for CROs are to become more technologically sophisticated, deploy multi-disciplinary talents and induct dynamic and problem-solving operational processes. Juxtaposed with that, there is a lot of focus on cost-cutting due to an intensely competitive marketplace and shrinking profit margins for Indian CROs. With better access to capital and government support, Chinese CROs have established themselves as high technology and premium priced players. The IPR regime plays an insignificant role as Indian CROs’ track record as IPR custodians has been very good across the industry and over the past decades.

The government has recently has made bioequivalence studies compulsory for some generic drugs in a move to ensure better drug safety. How has this development impacted your business?

We are not engaged in marketing of generic drugs and, therefore, have had no impact from this aspect.

How has the ‘Make in India’ initiative impacted the Indian CRO outsourcing business? What additional steps can the Government implement to facilitate ease of doing business in the CRO sector in India?

The CRO outsourcing business, by definition, does not make its own products and therefore not really impacted by the “Make in India” initiative. However, the Government of India does provide some funding for early stage research from programs supported by DST, DBT, CSIR, ICMR and the like. However, the corpora of such funding are relatively low for serious scientific programs.

The clinical CRO business has been hampered by the inefficient regulatory procedures for obtaining clinical trial approvals in India. Thus, the Government needs to streamline this process further. Certain initiatives that the Chinese government provided to their CRO sector over the years have helped propel them to a leading outsourcing destination. Our Government should consider extending such benefits to the Indian CROs as well.

The Drug Controller General of India (DCGI) has issued January 1, 2018 as the deadline for upgrading the skill sets of the Indian Pharmaceutical workforce. What is the scope of India achieving skilled workforce at par with global standards?

That’s easier said than done. Skill sets cannot be upgraded overnight, as the January 2018 deadline suggests. The pharmaceutical industry, particularly the early discovery part of its value chain, is extremely complex and technology driven. In order to develop the local talent pool to global standards, many years of hands-on training needs to be imparted and such candidates need to develop attributes such as risk-taking, problem solving, engaging in multi-disciplinary teamwork and leadership, to name a few.

When one looks at the biologics industry (other than vaccines), there is a severe shortage of Indian talent in biological research. Therefore, this segment is unlikely to mature in the near future for Indian CROs.

Is CRO outsourcing in India losing its sheen compared to emerging markets in Indonesia and Philippines? What specific interventions are required to recoup and position India as the preferred destination for CRO outsourcing?

I don't think Indonesia and Philippines are ahead of Indian CROs at this stage. The principal competition to Indian CROs continues to be China and to a lesser extent Taiwan, Korea and Eastern Europe. However in the early discovery space, China has outcompeted India and is threatening to challenge India’s supremacy in the chemistry-based manufacturing or CRAMs space as well.

What are the strategic initiatives being adopted by TCG Lifesciences to stay ahead of the innovation curve?

TCG has been innovation-driven since its inception and the first Indian CRO to develop a world-class biology expertise. We have invested in internationally trained scientists, set up and continuously upgraded cutting edge infrastructure and technology platforms, allowed ready access to scientific databases and IT support, provided continuing education and training to our employees, and inculcated a culture of empowerment and responsibility. We have authored more than 60 publications and patents and delivered five preclinical candidates in a variety of therapeutic areas.

We are also using our process R&D expertise to innovate new APIs and intermediates for the global new drug development organizations and generic companies.

We are continuing to enter new domains and also diversify into adjacent areas utilizing the organizational synergies, such as diagnostics, nutraceuticals, cosmeceuticals, agricultural sciences and polymers and advanced materials.