Strategies for developing India as a contract research hub

Swaminathan Subramaniam

Chief Operating Officer

Aurigene Discovery Technologies

The drug discovery value chain

TARGETGENERATION

&VALIDATION

LEADGENERAT

LEADOPTIM

CandidateDrug

SelectionPRECLINICAL

AssayDevelopment

Hit Identification

Candidate Lead Ident.

LeadSelection

Disaggregating the Drug discovery value chain

TARGETGENERATION

&VALIDATION

LEADGENERAT

LEADOPTIM

CandidateDrug

Selection

PRECLINICAL

Risk & Value in Discovery

TARGETGENERATION

&VALIDATION

LEADGENERAT

LEADOPTIM

CandidateDrug

SelectionPRECLINICAL

1050 104 103 102 102 101 100

VALUE

RISK

Modes of discovery• The Classical Approach

– Understanding of disease Understanding of mechanism Understanding of biochemical effectors Molecular screens

• The Patent-busting and ICE approach– Look at existing knowledge of disease and drugs to

find improvements that are novel– Analogs, enantiomerically pure versions

• Post-genomic drug discovery

Drug Discovery : the post-genomic version

genomics/ proteomics

domain architecture models

structure determination

bioinformaticscloning/protein expression

mine data for known ligands for similar/related domains

select potential ligand class

synthesize library of similar compounds

assay

hits

leads

automation

computation

Drivers for outsourcing

• Capacity mismatch

• Capability mismatch

• Need to focus resources and use capital efficiently

• Declining R&D productivity

There is a decline in R&D Productivity

30

40

70

60

50

9593918987 9985 97

20

10

30

0

40

50

Annual R&D Expenditure ($ Bn)

NCEs Launched per Year

Source:Source: PricewaterhouseCoopers Study PricewaterhouseCoopers Study

The Research Productivity Equation

RESEARCH PRODUCTIVITY =

IND’s GENERATED

RESOURCES USED

Discover More

Discover for Less

Relationship between resource usage and IND generation

Big Pharma

Smallbiotech

Resources Used

IND’sgenerated

Resistors to outsourcing

• Loss of project control

• Loss of IP

• Loss of inhouse expertise

• Lack of motivation to be fast for CRO

Source: Datamonitor, 2001

Pharmaceutical industry: Blockbusted

• Profitable heritage internal inefficiency, investment decisions not tightly linked to creation of shareholder value

• Facing a leaner, more cost-sensitive environment patents covering 80% of todays blockbusters will expire by 2007 (USD 67 billion value)

Reuters business insight

R&D spend by stage in US

290260250

Drug Discoveryand Pre-Clinical

Clinical Trials Other

US R&D spend/NDA in USD million

TOTAL USD 800 Million

Cost savings by stage in India

70%45%40%

290260250

Drug Discoveryand Pre-Clinical

Clinical Trials Other

R&D spend/NDA in USD million

TOTAL USD 800 Million

SAVING USD 400 Million

Why India can meet the needs of the customer (platitudes!!)

• English speaking Scientific and Technical talent

• Institutions

• Time-zone???

• Costs

Opportunity, Challenge and Danger!

OpportunityThe Emerging Industrialization of Research

Core TA focusedDiscovery Research

Group(Target Validation;Lead Discovery;

Lead Optimization)

HTS Factory

High ThroughputStructure Determination

Chemical Synthesis

Tox; ADME;Counterscreens

PreclinicalCRO

OpportunityRole for niche providers• There are 5 big players in the CRO

business today

• The one stop shop has not emerged…there is still a role for niche providers

ChallengeGlobal collaborationTranscending geographic distance

• Communication tools; internet; eTechnologies (Real-time research)

• On-shoring

• Hiring local talent

Early MaturityGrowth

Time / Effort

Pro

duct

Per

form

ance

Danger!The Biotechnology S-curve

New InventionPeriodIll-definedTechnology

Explosive GrowthPeriodWell-definedTechnology

MaturationPeriodMatureTechnology

Radioligand bindingToxicogenomics SBDD

Danger!

• The easy business models in Drug Development outsourcing may prevent adequate focus on and investment in Drug Discovery outsourcing companies

• Becoming vendors for hire providing undifferentiated and commoditized services

Environment

• Infrastructure and regulatory environment

• Intelligent risk capital; corporate venturing

• Entrepreneurial and scientific talent

Building the ‘India’ brand for Research Services

• Association of Biotechnology Led Enterprises – Nasscom for the biotech/lifescience sector

• A well publicized voluntary code of conduct

Closing observations

• Niche opportunities make it possible for smaller players to find a place

• Integration of engineering, information and lifescience technologies is a unique opportunity for India