The emergence of Asia in the global clinical trials market
By Angus Cameron
Director and Senior Vice President
With a growing number of clinical trials underway worldwide and an increasing demand for comparator products used for these trials, the pressure is on to not only find the drug of choice, but to find it at the right time, in the right amounts and from a single batch, often in multiple foreign territories.
This task takes on a particular urgency when approaching two of the potentially largest developing clinical trials markets, China and India, both projected to be in the top 10 largest pharmaceutical markets by 2015. Conducting trials in these countries carries the benefit of reducing the time for a drug to reach their fast-growing local markets, and also presents a sponsor with a large available patient pool at a time when patient recruitment is becoming increasingly difficult globally.
There are, however, a number of serious issues unique to these developing countries that can pose challenges for clinical trial development. In addition to often-Byzantine regulatory and bureaucratic mandates, there are the inevitable logistical issues and language barriers, as well as complexities in pedigree documentation, supply chain management and maintaining quality control in an area thousands of miles away from company headquarters.
Each one of these issues can, in and of themselves, provide a serious challenge to a research organization - even in a developed market. Take together, in environments that have traditionally been difficult for Western organizations, the challenges can seem insurmountable. However, the potential of these two burgeoning markets is too great for multinational companies to ignore.
China and India's Appeal as Locations for Clinical Trials
China, with a fourth of the world's population and an exploding pharmaceutical industry, is poised to take its place among the world's top five markets for pharmaceutical products by 2010, along with the United Kingdom and behind the United States, Japan, France and Germany.
China is also becoming one of the world's major settings for drug research and development, including clinical trials. Indeed, recent reports indicate the China has passed India in the number of registered clinical trials currently underway, an important measure of drug research activity.
Correspondingly, the Indian economy has entered a period of sustained growth that has positively affected all key sectors, including pharmaceuticals. According to a Deloitte study, India is second only to China in terms of real Gross Domestic Product (GDP) growth and is expected to be the fifth-largest economy in GDP by 2017.
Since 2003, the Indian economy has seen robust growth driven by liberal government policies, investment in IT, increased volume of international trade, and the creation of special economic zones. In addition, there has been a definite surge in productivity driven by the movement of capital and surplus labor away from low-productivity agriculture to high-productivity industry and services.
The Demographic Forces Driving Asian Pharmaceutical Growth
Even a cursory look at the developing Asian pharmaceutical market indicates that rising disposable incomes are leading to an emerging middle class, and this is one of the primary growth drivers for both China and India.
Demand for pharmaceutical products in China and India is beginning to mirror demand in the global market, as a result of a shift in disease patterns from acute to chronic disorders due to increasing urbanization and more unhealthy lifestyles. This is driving growth beyond anti-infectives, which is typical of developing nations, to more sophisticated treatments and healthcare demands in line with "first world" nations.
The numbers represented by these "modern" medical conditions in Asia is staggering. For instance, clinical levels of depression in China are expected to affect 50 to70 million people by 2015. In India, the diabetic population is some 37 million and growing rapidly. That country also has an enormous population of HIV/AIDS sufferers and cancer is prevalent throughout Asia as a result of increasing tobacco consumption. Significantly, Asia's population is also an aging one - some 40 percent of the population in China, for example, will be over the age of 50 by 2020.
The demographic forces driving Asia's growth as a market for pharmaceuticals also are increasing its importance as a center for pharmaceutical research. China and India's enormous populations provide a diverse and readily tapped patient pool, with compelling economics for conducting clinical research. In China - with an estimated 200,000 to 300,000 highly educated research scientists and an extremely competitive market for laboratory jobs - costs are just a fraction of those in the West. According to a major U.S. consulting firm, conducting a clinical trial in China can cost half of what the same trial would cost in the U.S. or European Union. Similar economies exist in India as well.
The Global Pharmaceutical Industry Takes Notice
As a result, a number of large pharmaceutical companies are taking advantage of these economics by setting up large-scale research facilities in China. Novartis is constructing an R&D facility expected to grow to 500 scientists while AstraZeneca recently announced $100 million for R&D in the near future in China. This is in addition to a number of world-class research institutions established in major population centers in Beijing, Shanghai and Guangzhou.
In India, there are currently more than 70 companies (including healthcare, information technology and pharma companies) offering services and solutions in clinical research and trials to multinational corporations. India is considered a highly promising outsourcing destination because of its rich talent pool, technological innovation, creditable quality and rapid time-to-market advantage.
According to a McKinsey & Company report, the global clinical trial outsourcing market in India for the pharmaceutical industry will be approximately $2 billion by the year 2010, and reports indicate that India-based researchers have registered some 467 clinical trials to date with the U.S. clinical trial registry.
Continuing Intellectual Property Concerns Hinder Investment
While the positive macro trends for pharmaceutical research and development are undeniable, a nagging issue facing Western companies conducting business in China and India has been intellectual property rights and patent protection.
As part of its entry into the World Trade Organization in December 2001, China is now obligated to enforce foreign international patents in accord with the TRIPS Agreement on Intellectual Property Rights of 1995, the most comprehensive multilateral agreement on intellectual property rights. This agreement mandates that drugs receive at least 20 years of patent protection.
Despite these protections, IP rights remain a major concern for overseas companies participating in the Chinese pharmaceutical market. Patent infringement is a relatively new concept in China, particularly with regard to drugs, which have traditionally been considered a special commodity to save lives that did not warrant patents. Enforcement of regulations is often difficult and sometimes politically influenced. In addition, intellectual theft in China appears in numerous forms, including reverse engineering and copying and counterfeiting.
This specter of tainted and counterfeited products grew to be a significant issue and embarrassment to the Chinese government in 2007 with numerous quality control and safety concerns surrounding Chinese products.
Major scandals surrounded export toys, pet foods and consumer products. Even with the heightened controls and regulations enacted over the past several years by China's State Food and Drug Administration (SFDA), a number of pharmaceuticals also were affected, such as the highly publicized recall of a leukemia drug contaminated with another cancer-fighting chemical, affecting hundreds of patients, and the recent concerns over tainted supplies of Heparin.
India's IP Protection Enters the Modern Era
India, despite its progress on a number of other fronts, has lagged behind China in intellectual property rights. It has only been within the last decade that India has adopted Western standards of IP protection.
The historical framework of patent protection in India dates back to the Indian Patents and Designs Act, passed in 1911. This law remained in effect with minor modifications until the Patent Act of 1970 was enacted. The 1970 Act gave the holder exclusive rights to manufacture, sell and distribute the product in India. However, for foods, medicines, drugs and substances produced by chemical processes, only process patents were granted, and this created enormous problems for overseas firms in the Indian market
This provision gave Indian manufacturers the legal ability to reverse engineer drugs and discouraged multinationals from playing a greater role in India. Any local manufacturer could produce a molecule that was under patent protection in other countries simply by using a different process and sell it in the Indian market without any legal challenge by the patent holder.
This situation ended in March 2005 when India became a signatory to the TRIPS agreement as part of the World Trade Organisation regulations. However, the 2005 Act excludes patentability for derivatives of known substances, unless it is proved that the efficacy is significantly greater than the original substance. This lack of guaranteed data exclusivity allows generic companies to continue to introduce competing products without doing their own safety and efficacy tests.
Asia's Current Landscape for Clinical Trials and Comparator Sourcing
As international clinical trials in China and India gain in frequency and importance, procuring the right comparator drugs has become increasingly critical. Successfully using comparator products in China and India requires a thorough understanding of each country's labyrinth of administrative procedures relating to clinical trials and drug regulation.
Several issues make sourcing drugs in China challenging, as there are distinctly different regulatory processes for international trials and those taking place in that country exclusively.
For international multi-center trials, drugs can be brought from overseas and used in any hospital the trial initiator deems qualified without having to go through the complicated, time consuming and costly SFDA registration procedures. These can include drugs that have been licensed in Europe but not yet in China.
However, when it comes to using overseas comparator drugs in Chinese domestic clinical trials, the situation is much more complicated. Comparator drugs used either for clinical trials that are part of a process of new drug registration (including drugs to be imported into China), or that are being employed under a domestic multi-centre programme, must be registered with the SFDA.
European-licensed pharmaceuticals used as comparator drugs in such a trial must be licensed in China as well, even if they are never intended for eventual sale into the Chinese market. Absent this license, the SFDA would treat these drugs as imports and would require that the applicant follow the registration procedures for imported drugs, a very time consuming and costly process.
In India, the Drugs Controller General is responsible for regulatory approvals of clinical trials in India. It is responsible for approvals of new drugs, laying down the standards for drugs, control over the quality of imported drugs, co-ordination of the activities of State Drug Control organisations and providing expert advice to promote enforcement of the Drugs and Cosmetics Act.
India's approval process categorizes clinical trials into two types: If the study protocol already has been approved by the regulatory authority in one or more developed countries (such as the U.S., Canada, U.K., Switzerland, Germany, Australia, Japan and South Africa), the study is classified as a Type A trial and can be approved using a fast-track process within two to six weeks of required documentation being submitted. All other studies are classified as Type B, and for these, the approval process is generally eight to 12 weeks.
Recently, the Indian Clinical Trials Registry was established by the Indian Council for Medical Research, the government's top research body. This registry documents all clinical trials in the country and is a result of the increasing awareness of best practices in clinical research and reporting of violations of GCP guidelines in clinical trials currently underway in India.
Best Practices for Sourcing Comparators in Asia
An important consideration in sourcing comparators into China and India is maintaining a comprehensive, documentable paper trail or pedigree for the drugs involved. It is imperative that any company carrying out research and development work in these two markets secure their supply chain and maintain tracking documents from source to site to ensure consistency and safety, as well as the ultimate success of the trial.
Proper documentation is also vital if the drugs that a pharmaceutical manufacturer intends to introduce into China and India have undergone a similar registration process in Europe or have been used in an international multi-centre programme elsewhere. Detailed records of these proceedings could facilitate the registration process and could help cut short certain procedures that would otherwise be required.
These exciting markets are on the cusp of enormous growth. The Chinese and Indian pharmaceutical markets are large and growing, driven by increased prosperity and a shift in disease patterns. In addition, significant new IP and regulatory reforms have unlocked opportunities for multinational companies in both markets. But significant challenges remain.
Each country's pharmaceutical industry has been in a state of almost continuous flux over much of its contemporary history. Both China and India have at times presented foreign firms with seemingly insurmountable hurdles.
However, there appears an inexorable movement toward progress and openness that should have a positive impact on transparency and yield opportunities for companies willing to take the risk in the hope of achieving the rewards.
Boston Consulting Group. China's Growing Drug Market: Will You Be a Contender
Deloitte. India: Linking into the global services economy 2007
Asia Demographics: McKinsey Analysis
About the author: Angus G. Cameron is a Director and Senior Vice President of Pharmarama, the U.S. affiliate of BR Pharma Ltd. He also serves as Head of Business Development at BR Pharma Limited, where his focus is on growth strategies for the firm. He has been a featured speaker at industry conferences worldwide. Prior to his tenure at Pharmarama and BR Pharma he was Senior Partner of Aeomica Ltd, a life sciences business consultancy, which he co founded in 2002. Prior to Aeomica, he served as Senior Vice President (Europe) of Intergen Company, a New York based high-tech producer of pharmaceutical and academic research components. Mr. Cameron also held senior management positions at Healthcare Technologies Ltd, Celltech Limited and Becton Dickinson Immunodiagnostics. He was a former Board member of the U.K. BioIndustry Association.