After business process outsourcing put India on the global map, is clinical research outsourcing

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the next big happening on the horizon? It would appear so, if the interest in India is anything to go by. From a few million dollars worth of work dealt out to Indian companies, mainly start-ups in 2002-03, the segment has grown to touch an estimated $300 million in revenues. And this may reach $1.5 billion in the next three to four years as global pharma and biotech firms try to leverage India’s low cost of trials and a large pool of talent.

The industry had now come to a level of maturity with international standards in place, says Mahesh Malneedi, CEO of Makrocare, a Hyderabad-based clinical research organisation. “In India the clinical trials for standard drugs could be done for a tenth of the cost in the US and Europe and even for oncology trials it is 50 per cent lesser,” he said, adding that almost 75 per cent of the costs incurred on a drug discovery is spent on clinical trials.

Cost is not the only factor driving this growth, according to Sabita Rebecca, associate director of Leader Prospects, a HR firm dealing with lifesciences and biotech segment. Just like in IT services, where India took advantage of the huge English speaking and educated talent pool, clinical research is also using this lever. “It’s more of a capability oriented growth that we are witnessing,’’ Rebecca says. In addition, infrastructure, doctors and patient pool for conducting trials are readily available, says Archana Chavan, assistant manager, business development at Mumbai-based Nexus Clinical Research Institute.

According to a McKinsey report, global pharma majors would spend around $1-1.5 billion (Rs 5,100 –7,650 crore) for clinical trials in the country in the next three to four years. The demand for trained clinical research professionals in India will go up to 50,000 by 2013 from 10,000 at present. Since India became a part of the WTO’s intellectual property regime in 2005, the growth has tripled.

Selvi Ramesh, director of Chennai-based Mithas Labs says, that with a huge population and a plethora of diseases ranging from tropical to nutrition-related and lifestyle diseases, India had always been a prospective place for clinical trials. “But the regulations passed by the government in 2005, committing itself to uphold and enforce intellectual property protection as per international standards, has made the US and Europe to look at the country as a preferred destination for the outsourcing,’’ Ramesh said.

The Indian Council of Medical Research has been authorised to oversee the trials and there is a Central Ethical Committee as well as local ethical committees to keep a tab on the researches. India has set up a clinical trial registry as well as formulated clinical good practices rules. Global companies and market research analysts seem to have understood the advantages India offers. Under pressure to develop and sell drugs at low costs, the pharma firms and research organisations are pushing more work here, apart from having their own captive trials.

According to a report from market research and information analysis company Rncos, India promises to be one of the hottest destinations for conducting global clinical research, owing to a huge patient pool representing both chronic and infectious diseases, easy recruitment of patients, and high cost savings. At present, India takes a very small pie of the global opportunity. The total number of clinical trials in India stood at 221 in 2007, which equates to less than 2 per cent of the global clinical trials. But with all major pharma/biotech firms and clinical research organisations establishing their presence in India, the number of such trials is expected to grow several folds in the next five years. The country is projected to conduct nearly 5 per cent of the global clinical trials by 2012, the report adds.

At present, there are between 40 and 50 clinical research organisations in the country, including international firms such as Quintiles, Chiltern and ICON Clinical Research. Most of these are actively involved in doing bioavailability/bioequivalence studies with a handful of them into all the four phases of clinical trials.

There are two basic areas that Indian clinical research organisations are working on – clinical process management and monitoring and data management (done mostly by IT firms such as TCS and Infosys). According to Arun Bhatt, CEO of Mumbai-based Clininvent Research, these are important processes and revenue churners but are not of high value. Some new services being outsourced to India include preparation of protocol and statistics but that too is small. An area which is of interest to Indian firms, but for which they still don’t have the infrastructure, is early development.

“Most global pharma and biotech firms are shifting focus to early development and Phase I trials. so that they can save costs and time if they can get results earlier,” says Bhatt.

However, the lack of infrastructure does not seem to matter to the clinical research industry which has shown a gung ho attitude. The only thing bothering them is – the recession effect. With most of the large and mid-sized pharma and small biotech firms (which largely outsource clinical research work) having funding and capital issues, Indian organistions have seen revenues dip to growth rates of 20 per cent from the high 70s till FY08, claims Bhatt. Analysts tracking the lifesciences industry, however, said while there is no way anyone can predict when recovery in the US would happen, the clinical research segment is not likely to be impacted much.

With inputs from Sangeetha G in Chennai