Formulation CROs face challenges
In addition to the manufacturers, we also visited dedicated contract services companies offering discovery, API process development,
and formulation-development services, along with clinical-scale manufacturing. These companies are largely targeting Western
bio/pharmaceutical companies as their key clients, although they are finding clients within India as well. The impression
left by these companies was decidedly mixed. Some reflected a high level of sophistication and understanding of what Western
companies are looking for and expect, and others offered barebones facilities that generally wouldn't pass muster with prospective
clients from major bio/pharmaceutical companies.
The performance of these services-only companies varied by service offering. Those offering discovery and process development
services appear to be doing quite well while those offering formulation development and early-stage clinical trial material
(CTM) services are not as robust. The global bio/pharmaceutical companies began turning to Indian and Chinese CROs for discovery
and process chemistry services almost 10 years ago, and several of these companies have emerged as world-class service providers.
We visited the Hyderabad campuses of two of industry leaders in chemistry outsourcing, GVK Bio and Aptuit, and came away impressed
with the sophistication of their leadership and quality of their facilities and operations.
The challenge for the formulation development companies seems to be two-fold: the local market for CTM is somewhat limited
by the fact that bio/pharmaceutical companies cannot conduct first-in-man studies in India, and expenditures for early formulation-development
services are so low at most Western companies these days that the expected cost savings from going to India are minimal. Near
term, we think those companies are going to have to establish a laboratory presence in the Western markets to capture that
early-phase business, with the intention that the products can be transitioned to Indian facilities as the products approach
commercialization. Longer term, the formulation-development CROs will benefit as global bio/pharmaceutical companies establish
more R&D operations in India and source more of their needs locally.
My overall conclusion is that India is building a base for a strong local contract services industry in the coming years.
The threat for Western contract development and manufacturing organizations (CDMOs) and CMOs is small in the near-term, but
as global bio/pharmaceutical companies target this fast-growing market, Indian firms will be well-positioned to seize the
Jim Miller is president of PharmSource Information Services, Inc., and publisher of Bio/Pharmaceutical Outsourcing Report, tel. 703.383.4903, fax 703.383.4905, firstname.lastname@example.org