Bioscope ‘08

by  Dr. Barbara Price

Outsourcing, drug development and globalization

          It comes as no surprise that China and India are now surpassing the US and Europe for R&D in drug development. A recent comprehensive report by the Ewing Marion Kauffman Foundation "Globalization of Innovation: Pharmaceuticals, Can India and China Cure the Global Pharmaceutical Market?" notes that originally these countries offered cheap, educated labor pools and an emerging market that could offset the costs of manufacturing of pharmaceuticals in the developed countries, including Europe and the US. And large pharmaceuticals companies outsourced parts of their manufacturing and supply to India and China.

          India and China are part of the advanced R&D programs for companies such as Merck, Eli Lilly and Johnson & Johnson. CROs (contract research organizations) are increasingly part of the drug discovery development phase for large multinational companies, especially for mid and low priority drugs. Other agreements include cost and risk sharing in exchange for joint ownership of the intellectual property. Companies in both India and China involved in manufacturing, generics and active pharmaceutical ingredients (APIs) look for opportunities, including those drugs with patents nearing their expiration. They move aggressively to mass produce these drugs using the same or similar syntheses. India has been very successful in this phase to the point that several big pharma industries are moving their API and generic manufacturing from India to China.

          Within the pharma arena, India is regarded as the bigger threat in generic drugs and APIs; they sell more "biosimilars," or "new versions of biopharmaceuticals whose patents have expired". However, outside of pharma, China did have, but this is being recognized and corrected, the reputation of ignoring and overriding intellectual property rights. China has more patents than India, but both are growing. India has had more success in selling generics that meet FDA standards to big pharma but China is now rapidly gaining on the FDA approval front.

          Big pharma's efforts to reduce costs come with calculated risks (IP and patent infringements) and they have sourcing offices in India and China, and increasingly western China where the labor and land costs are cheaper. The Kauffman report does not discuss the quality of the drugs and the manufacturing processes in India and China, a concern in both the US and Europe, especially after previous contamination issues. The FDA wants to open satellite offices in India, China, Central and South America and the Middle East so that they can monitor pharmaceutical quality, manufacturing issues and clinical trial sites, but they do not have the money nor have they figured out how to work with the local country's equivalent of the FDA. Perhaps fees charged to big pharma to pay for these inspections would keep the jobs in developed countries. China is already finding that conforming to the international animal laboratory care (AAALAC) increases the fees laboratories must charge.

For the Professional in Government and Industry with an interest in Nuclear, Biological and Chemical Defense, Disarmament and Verification; Emergency and Disaster Medical Planning; Industrial Health and Safety; and Environmental Protection