A low down on CRAMS
Contract manufacturing Contract manufacturing comprises manufacturing intermediates and active pharmaceutical ingredients (API) for NCEs (new chemical entities) and the generic segment (drugs sold without patent protection).
Estimated to be a $15-billion industry in 2001, the market is expected to touch $30 billion by 2010, led by increased outsourcing and a large number of drugs going off-patent. Analysts expect this segment to a growth of 10-12 per cent going forward.
India, with its cost advantages, large number of US Food & Drugs Administration (USFDA)-approved manufacturing facilities and chemical skills, is likely to hugely benefit from the growth in this segment.
Contract research outsourcing Contract research outsourcing can be broadly classified as clinical research outsourcing and drug discovery research outsourcing.
The high costs of R&D abroad coupled with the fact that many drugs are going off patent are forcing MNCs to increase their product pipelines and reduce the overall 'time to market'. The R&D outsourcing segment has been on the rise in the past decade. According to estimates, the contract research market is estimated to be $6-10 billion and has been growing at 16-18 per cent annually.
Of the overall contract research outsourcing segment, the clinical research outsourcing segment (CRO) is expected to reach $14.40 billion by 2007, while the drug discovery segment is expected to touch $6 billion.
Patent drugs Though growth in the patent drugs segment is slow, it is expected to pick up after the change in the Indian patent regime. During the initial phase, analysts expect contract manufacturing activities to remain restricted to the later stages of patent drugs development or segments with high dosage requirements and competitive pressures.
Intermediates for NCEs The rise of generics and declining R&D productivity are forcing drug manufacturing companies to outsource a part (intermediates) of their manufacturing activities. This will allow them to concentrate on drug discovery, development and marketing and distribution.
The opportunity for Indian companies lies in working with innovator companies in the custom synthesis segment (for manufacturing intermediates and bulk drugs that are at various stages of research).
The long lead time in this segment and high exit barriers for innovator companies (it is difficult to change suppliers quickly in view of the high costs and lengthy FDA approval processes) work in favour of Indian companies.
