The new outsourcing pill

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: Indian drug outsourcing industry is showing signs of maturity. Our low-cost research services have been on the radar of global pharma biggies like Pfizer, Astra Zeneca and Eli Lilly for a long time now. But time now seems ripe for them to move up the value chain and offer a full spectrum of services. To begin with, contract research is making way for collaborative research. Contract research and manufacturing services (CRAMS) are billed to be worth $7 billion in six years. But the industry is not satisfied and is already getting ready to churn out new formulas. The latest buzzword seems to be DDDSS (drug discovery and development support services).

And the early trends are encouraging. Big orders are beginning to flow in. Jubilant Organosys, for one, has an order book of $60 million for 2007. Indian companies like Nicholas Piramal, Dishman Pharmaceuticals and Chemicals and Shasun, are also not shy from buying in the West. The reasons are obvious. India and China are hot, with blockbuster drugs worth $70 billion going offpatent in four years and the cost of research continuing to go up. And mid-sized pharma companies such as Suven Life Sciences, Divi’s Laboratories, Shasun Chemicals, Dishman, Elder Pharmaceuticals are cashing in on this boom.

As Venkat Jasti, MD, Suven Life Sciences puts it, “From being a mere contract research player, companies are looking at offering services from discovery to development to manufacturing.” The cycle of activity includes integration of services with seamless offerings from stage to stage through collaboration, he adds. Move from a CRAMS player to a DDDSS could see new formulas evolving in the industry. From a mere player in medicinal chemistry or clinical research, high-end research is coming to the fore and new collaborations are being forged. For instance, Ranbaxy has two ongoing collaborative research programmes—an anti-malarial molecule, Rbx 11160, is being developed in collaboration with the Medicines for Malaria Venture (MMV), Geneva and a collaborative research programme with GlaxoSmithKline (GSK); Cadila Healthcare’s joint venture with Altana Pharmaceuticals, Divi’s Laboratories work with Merck and Abbott Laboratories, Suven’s agreement with Eli Lilly, Biocon with Pfizer or AstraZeneca and Bristol-Meyers Squibb and the recent acquisition by Jubilant Organosys.