They are minuscule entities in comparison to global biggies like Covance, Kendle and Quintiles in the $20 billion clinical trials market. Drug majors like Biocon, Pfizer, Eli Lilly, GlaxoSmithKline, Ranbaxy, Reliance Life Sciences and Wockhardt too dwarf them in all aspects of the drug discovery research arena. But you can?t simply write them off.

The home-grown contract research players?Advinus, BA Research India, Catalyst Clinical Services, Divi?s Lab, Fermish, Manipal Acunova, Matrix, THINQ Pharma, Suven Life Sciences, Vimta and Veeda Group?are emerging as players to reckon with in the $250 million Indian clinical trials market, projected to go up to $1 billion by 2010. While three-fourth of the market is currently dominated by established players, analysts expect these smaller companies to eat into biggies? marketshare and easily garner 25-30% of the market in the next couple of years.

Three years into India accepting a product patent regime, clinical research? the business of testing new medications for safety and efficacy in human patients to gain required government approvals ?is in the midst of a major upheaval with the entry of these new players that are all out to rewrite the rules in drug development area in the country. Will they give the seasoned players a run for their money?

The recent announcement by the US Food and Drug Administration (FDA) that end-to-end clinical trials from the country would soon be approved opens up a new platform of opportunity for the contract research industry. And, these new players have everything in their arsenal? capability to offer services seldom offered by bigwigs like biomarkers bioanalytics and biometrics. Typically, they employ 50-80 professionals and have revenue of Rs 8-10 crore compared to seasoned players that employ 350-400 professionals and have revenue in excess of Rs 400 crore.

If market trends are an indication, these new players are in the process of developing a full-service offering for their clients, that include discovery, preclinical, clinical, data management, process development and custom synthesis capabilities.

Contract research players such as Veeda and Advinus realise that it is science that sells and not price. This is the reason why Veeda claims to be the only contract research organisation (CRO) in India, which has conducted over 200 phase 1 studies in new chemical entities (NCE). ?We are capable of taking up full early drug development programmes from preclinical to proof-of-concept,? claims Apurva Shah, managing director, Veeda Clinical Research India. He adds: In order to give the maximum benefit of speed and cost to our clients, we plan the studies at our clinical units in three countries based on their specific strengths. This makes us truly unique.?

That?s not all. Players like BA Research India, Catalyst Clinical Services, Divi?s Lab, Fermish, Manipal Acunova, Matrix, THINQ Pharma and Suven Life Sciences are expanding their operations in all parameters like headcount, services and infrastructure. These wide-ranging initiatives are not only making India a hub for contract research projects, but also capabilities are being developed for therapeutic applications in a variety of clinical indications. Some of these indications are: allergy/asthma; arthritis; cancer; diabetes; growth impairment; cardiovascular diseases; inflammation; vaccines; ophthal-mology; epilepsy; gynaecology; CNS diseases; and obesity.

So is Matrix Bio Sciences, which is in the process of becoming a complete service provider in the CRO business. Explains Krishna Sagar Rao, strategy director, Matrix Bio Sciences, ?There are a host of activities which have to be conducted for FDA and there is lot of work in the market.? Interestingly, the US has increased its outsourcing activities from 15% in 2003 to over 40% in 2007. This speaks about the volume of work that has increased?from being mere pilot trial projects to include an entire gamut of seamless integration activities.

Says Samir Nair, chief operating officer of Clinworld, an arm of Sami Labs, ?Three basic factors are fuelling the growth of the industry?speed, talent and infrastructure. ?While accepting cheaper costs to an extent of 30-50%, trials in the country are being completed 75% faster than any other country. Besides, there is a learned patient pool and the number of doctors on the panel of FDA for audit, are also increasing.? Proponents of the industry feel that clinical trials conducted by CROs in India see significantly faster timelines?30% faster compared to when conducted by a drug major in-house. This move results in an average time saving of four to five months, translating to $120-$150 million in increased revenue potential.

Without any doubt, India?s interest in global clinical trials is ushering in the era of a new industry?contract research. The CRO segment has been growing in terms of number of companies. Though the Indian CRO industry started with the arrival of Quintiles in 1997, around 60 new entrants from local players to global CRO giants have emerged in a gap of three years.

?The segment will get a boost because of more outsourcing activities and there will be a corresponding increase in the number of new players,? says Shiv Raman Dugal, chairman, Institute for Clinical Research India (ICRI). The industry is almost doubling each year, reflecting the shifting focus of the pharmaceutical outsourcing industry to India.

The market is evolving towards a full-service model, where CROs offer services from earlier stages of development through clinical trials and post-approval research. Typically, new players score over bigger established ones because of their experience of handling trials in diverse therapeutic areas; ability to deliver committed number of patients; cost advantage; expertise in handling technology and ability to handle projects in varied geographies

Says Utkarsh Palnitkar, head of health sciences, Ernst & Young India, India?s value proposition in clinical research is compelling for many reasons, including its large patient population, large pool of English-speaking scientific and healthcare personnel, abundance of healthcare facilities and significantly lower costs of conducting trials.

Another added attraction is that since the adoption of the new patent regime in 2005, India has significantly improved its previously sub-standard international property laws and research standards to meet global levels. A previous barrier to outsourcing to India had been that companies used to be worried about probable loss of control in processes and proprietary knowledge and delays due to regulatory hold-ups.

Not anymore as global drug majors too are getting comfortable that their IP is not compromised by doing clinical research in India and they have been pleased with the quality of data and service they have got from India so far. Thus, the quantum and the quality of work they place here are improving. ?One needs to know that price is not the driving force in our business. In research, the most expensive study is the one that needs to be repeated again because that much time is lost. If India continues to deliver quality and speed, we will keep rising in the value chain. I just hope none of the Indian CROs take a shortcut to success because there is none,? insists Shah.

The main impetus to the growth of home-grown CROs have come from three inter-related trends. Firstly, many small/mid tier large molecule/small molecule producers have been dramatically contributing towards late stage clinical candidates. These companies are actively involved in the early inception discovery and development phases, but require collaborative efforts to pursue the expensive clinical trials and access to required biomanufacturing facilities.

Secondly, a new driving force is the looming expiry of several patents of blockbuster drugs. During 2006, branded drugs with total sales exceeding $18 billion lost patent protection, and an additional $21 billion of branded drugs lost patent protection during 2007. A niche of generics or biosimilars is anticipated to expand the market production of the ?off patent? existing drugs and will be heralding the requirement of appropriate bio manufacturing capabilities supported by CROs.

Thirdly, pipelines are shrinking resulting in a shortfall in earning estimates. This has resulted in companies taking a critical look at outsourcing as an integral component of strategy resulting in a plethora of opportunities for these new generation players.

With current estimates of bringing one new molecule into the market amounting to at least $800 million, drug major are turning to outsourcing to low-cost destinations like India rather than persisting with expensive R&D efforts. It is evident that sky is the limit for these players that have ventured into this lucrative field.