Drug Discovery in India and China Gaining Momentum with Increasing Pressure on Cost Cutting by GBIResearch

VIEWS: 134 PAGES: 107

More Info
									  Drug Discovery in India and China - Gaining Momentum with
             Increasing Pressure on Cost Cutting
 Reference Code: GBIHC022MR                                                                               Publication Date: February 2010

  Indian and Chinese drug            Drug Discovery In India and China – Executive Summary
  discovery market are well
  positioned to experience           The drug discovery market in India and China has grown strongly over the past five years to reach
  double digit growth over           $2.3 billion in 2009 due to increasing cost cutting pressures on the Western pharmaceutical
  the next seven years at            industry coupled with the growing research capabilities of Indian and Chinese drug discovery
  least due to rising cost           companies. With favorable government support, improved IP protection regimes and increasing
  pressures on the western           number of deals from mid-size as well as big pharma, the market is expected to grow at a double
  pharmaceuticals and                digit rate to reach $8.2 billion in 2016. Major challenges such as funding issues, talent shortage and
  increasing capabilities of         increasing competition from Europe are expected to impede market growth in both countries.
  Indian and Chinese                 Rising Financial and Regulatory Pressures on Western Pharma will Continue to Drive the
  companies in                       Drug Discovery Research Market Growth in India and China
  pharmaceutical discovery
  research.                          The pharmaceutical industries in the US and Europe are facing severe financial constraints which
                                     are expected to worsen in the years ahead. The pharma companies are under increasing pressure
                                     to reduce expenditure due to, the increasing cost of introducing a NME (New Molecular Entities)
                                     (more than $3 billion in 2008), tightening FDA regulatory issues, blockbuster drugs worth more than
                                     $100 billion set to expire by 2014 and drying pipelines These pressures are expected to drive the
                                     companies towards low-cost countries such as India and China to perform their R&D activities, one
                                     of their major expenses.
                                     Over the last decade, India and China have developed significant capabilities in drug discovery
                                     research along with considerable capabilities in phase I & II clinical trials. Both countries are able to
                                     provide significant cost savings in the range of 60–70% for discovery research and clinical trials.
                                     With discovery research occupying close to one-third of the R&D expenditure for the Western
                                     pharmaceutical industry, outsourcing to low-cost countries is logical.
                                     Inflammatory Diseases, Metabolic Disorders and Oncology are the Three Major Therapeutic
                                     Areas of Drug Discovery Research in India and China
                                     While the Indian and Chinese drug discovery companies have developed major service
                                     capabilities, many of the companies have also defined their therapeutic research focus. Analysis of
                                     12 Indian and 10 Chinese companies research portfolios reveal that inflammatory diseases (18
                                     companies), metabolic disorders (18) and cancer (16) are the top three therapeutic areas Other
                                     major therapy areas include anti-infectives and CNS (Central Nervous System). Major inflammatory
                                     disease research includes; COPD (Chronic Obstructive Pulmonary Disease), RA (Rheumatoid
                                     Arthritis), psoriasis, osteoarthritis, ulcerative colitis and atherosclerosis.




Drug Discovery in India and China - Gaining Momentum with                                                   GBIHC022MR /Published FEB 2010
Increasing Pressure on Cost Cutting
                                                                                                                                        Page 1
                                                                         © GBI Research. This is a licensed product and is not to be photocopied
                                      Top Five Therapeutic Areas of Focus For Indian and Chinese Drug Discovery Research
                                                Companies

                                                                                                       90%




                                               % Companies Providing Service in the Therapeutic Area
                                                                                                                82%            82%
                                                                                                       80%

                                                                                                       70%                                        68%


                                                                                                       60%
                                                                                                                                                                 55%

                                                                                                       50%

                                                                                                       40%                                                                       36%

                                                                                                       30%

                                                                                                       20%

                                                                                                       10%

                                                                                                       0%
                                                                                                             Inflammation    Metabolic         Oncology     Anti-infectives      CNS
                                                                                                                             disorders
                                                                                                                                         Therapeutic Area

                                      Source: GBI Research



                                     However, at the country level the therapeutic focus is found to be different. Indian companies have
                                     concentrated their efforts on metabolic disorders; primarily diabetes, obesity and dyslipidemia.
                                     Chinese companies have focused on oncology; primarily leukemia, cervical cancer, breast cancer
                                     and prostrate cancer.
                                     Deals Landscape is Equally Driven by Mid-Size Pharma and Big Pharma with Oncology and
                                     Metabolic Disorders as Key Therapy Area of Focus
                                     With improvements in the capabilities of Indian and Chinese companies, the intensity of discovery
                                     research collaborations with Western pharmaceutical companies has increased.. The deals market
                                     has been equally driven by big pharma as well as mid-size pharma. Over the past year, 41 major
                                     deals have taken place in India and China, of which 20 deals involved mid-size companies while 19
                                     involved big pharma; mainly Merck, AstraZeneca, Johnson & Johnson and Pfizer. Two of the deals
                                     were with universities. However, the increasing interest of the mid-size pharmaceutical companies
                                     suggests the rising interest of such companies to exploit the cost and quality capabilities of India
                                     and China.




Drug Discovery in India and China - Gaining Momentum with                                                                                                      GBIHC022MR /Published FEB 2010
Increasing Pressure on Cost Cutting
                                                                                                                                                                                           Page 2
                                                                                                                            © GBI Research. This is a licensed product and is not to be photocopied
                                      Number of Major Discovery Research Deals in India and China by Client Company Type,
Talent shortage and                   2006–2009
funding problems are
expected to be the two
                                                             12
major obstacles resisting
the drug discovery
research market growth in
India and China in future.                                   10



                                                              8

                                           Number of Deals
                                                              6



                                                              4



                                                              2



                                                              0
                                                                          2006               2007                  2008                     2009

                                                                  Big Pharma     Mid-size Pharma/Biotech/CROs        Universities/Educational Institute

                                      Source: GBI Research



                                     Many of these deals were focused on services rather than a therapeutic area. However, among
                                     those that had a therapeutic focus; oncology, metabolic disorders, infectious diseases and
                                     inflammatory diseases were the major therapies targeted.
                                     Funding Problems and Talent Shortage Will Be the Two Biggest Challenges in Future for the
                                     Drug Discovery Players in India and China
                                     While the drug discovery market in India and China is growing rapidly, its future growth faces two
                                     major challenges; funding problems, especially for the private companies, and significant talent
                                     shortages in biology and chemistry services. While China has considerable government support, a
                                     large part of the money goes to government funded research institutions and universities. In India,
                                     the government has adopted PPP model as a tool to encourage pharmaceutical innovation but the
                                     major beneficiaries include CSIR (Council of Scientific and Industrial Research) affiliated institutes
                                     and small pharmaceutical companies. Venture capitalists, in both the countries, are largely risk-
                                     averse to invest in early stage R&D activities.
                                     Besides funding problems, the lack of a sufficient talent pool with the specialized skills, experience
                                     and employability will create further problems for the drug discovery companies in both the
                                     countries.




Drug Discovery in India and China - Gaining Momentum with                                                                 GBIHC022MR /Published FEB 2010
Increasing Pressure on Cost Cutting
                                                                                                                                                          Page 3
                                                                                      © GBI Research. This is a licensed product and is not to be photocopied
                                     1 Table of contents
                                     1      Table of contents ..................................................................................................................... 4
                                         1.1     List of Tables ..................................................................................................................... 7
                                         1.2     List of Figures.................................................................................................................... 8
                                     2      Introduction .............................................................................................................................. 9
                                         2.1     GBI Research Report Guidance........................................................................................ 9
                                     3      Drug Discovery Process – Overview...................................................................................... 11
                                         3.1     Process of Early Preclinical Drug Discovery.................................................................... 11
                                            3.1.1      Pre-discovery .......................................................................................................... 11
                                            3.1.2      Target Identification ................................................................................................. 11
                                            3.1.3      Target Validation ..................................................................................................... 11
                                            3.1.4      Lead Identification ................................................................................................... 12
                                            3.1.5      Early Safety Tests ................................................................................................... 12
                                            3.1.6      Lead Optimization ................................................................................................... 12
                                            3.1.7      Preclinical Testing ................................................................................................... 12
                                         3.2     Major Services under Drug Discovery Stage................................................................... 13
                                            3.2.1      Medicinal Chemistry ................................................................................................ 13
                                            3.2.2      Pharmacology ......................................................................................................... 13
                                            3.2.3      HTS (High-throughput Screening) ........................................................................... 13
                                            3.2.4      Analytical Chemistry ................................................................................................ 13
                                            3.2.5      CADD (Computer Aided Drug Design) .................................................................... 14
                                         3.3     Conclusion....................................................................................................................... 14
                                     4      Drug Discovery in India and China – Market Characteristics ................................................. 15
                                         4.1     Drug Discovery Market Characterization ......................................................................... 15
                                            4.1.1      Market Share & Market Size.................................................................................... 15
                                            4.1.2      Top 5 Services Offered by Indian and Chinese Players .......................................... 16
                                            4.1.3      Major Therapeutic Areas under Research............................................................... 24
                                         4.2     Forces that Drive Drug Discovery in India and China...................................................... 28
                                            4.2.1      Declining R&D Productivity, Especially For the Big Pharma.................................... 28
                                            4.2.2      Generics Competition – Pricing Pressures on Branded Prescription Products........ 30
                                            4.2.3      Stringent Regulatory Conditions and Increasing Patent Challenges Lead to Shorter
                                                       Product Lifecycles ................................................................................................... 32
                                            4.2.4      Removing Redundancies - Focusing on Core Competencies ................................. 34
                                         4.3     Why India and China? ..................................................................................................... 34
                                            4.3.1      Availability of Skilled Manpower .............................................................................. 34
                                            4.3.2      Scale of Available Resources for Clinical Development .......................................... 36
                                            4.3.3      Improved IP Protection in India and China .............................................................. 37
                                            4.3.4      Government Support for the Drug Discovery Development..................................... 37
                                            4.3.5      Risk Sharing Agreements: A Step Forward by Indian and Chinese Companies ..... 39
                                         4.4     SWOT Analysis ............................................................................................................... 40
                                         4.5     Conclusion....................................................................................................................... 41
                                     5      IP Protection in India and China – Improved IP Protection to Encourage Innovation ............ 43
                                         5.1     India ................................................................................................................................ 44
                                            5.1.1      Patent Act 2005 – First Step towards Improving IP Protection ................................ 44
                                            5.1.2      IPR Enforcement Rules, 2007 ................................................................................. 45
                                            5.1.3      Trademarks Bill 2007............................................................................................... 45
                                            5.1.4      Drugs and Cosmetics Act (Amendment) 2008 ........................................................ 46
                                            5.1.5      EIPR (Enforcers of Intellectual Property Rights) – Ensuring IPR Laws
                                                       Implementation in India ........................................................................................... 46
                                            5.1.6      Case 1: BMS (Bristol-Myers Squibb) versus Hetero Drugs on Dasatinib ................ 47
                                            5.1.7      Case 2: Bayer versus Cipla on Nexavar.................................................................. 47
                                            5.1.8      Case 3: Roche versus Cipla on Tarceva ................................................................. 47
                                            5.1.9      Key Takeaways ....................................................................................................... 48
                                         5.2     China ............................................................................................................................... 49


Drug Discovery in India and China - Gaining Momentum with                                                                                GBIHC022MR /Published FEB 2010
Increasing Pressure on Cost Cutting
                                                                                                                                                                                Page 4
                                                                                        © GBI Research. This is a licensed product and is not to be photocopied
                                             5.2.1  Trademark Law ....................................................................................................... 49
                                             5.2.2  Patent Law .............................................................................................................. 50
                                             5.2.3  Anti-Unfair Competition Law.................................................................................... 51
                                             5.2.4  Regulations on Customs Protection of Intellectual Property Rights......................... 51
                                             5.2.5  Case 1: Pfizer versus PRB on Viagra...................................................................... 52
                                             5.2.6  Case 2: Aida Pharmaceuticals versus Four Counterfeit Suppliers .......................... 52
                                             5.2.7  Case 3: Pfizer versus Guangzhou Welman on Viagra Trademark: Lethargy Proves
                                                    Costly to Pfizer ........................................................................................................ 52
                                          5.2.8     Key Takeaways ....................................................................................................... 53
                                     6    Government and Regulatory Support in India and China – Strong Support to Research
                                          Institutes and Small Companies ............................................................................................ 54
                                       6.1     Government/Regulatory Support for Drug Discovery in India.......................................... 54
                                          6.1.1     Open Source Drug Discovery.................................................................................. 54
                                          6.1.2     Drug Development Promotion Board: Encouraging PPP Model for Drug Discovery
                                                    and Development .................................................................................................... 55
                                          6.1.3     Technology Development Board: Supporting Technology Oriented Projects .......... 56
                                          6.1.4     NMITLI (New Millennium Indian Technology Leadership Initiative) Scheme ........... 57
                                       6.2     Government/Regulatory Support for Drug Discovery in China ........................................ 57
                                          6.2.1     Setting Up of Biotech Parks in Shanghai and Beijing –Zhangjiang High-Tech Park 57
                                          6.2.2     Research Institutes – Shanghai Institute of Materia Medica.................................... 58
                                          6.2.3     National Center for Drug Screening ........................................................................ 59
                                          6.2.4     International TCM Program for Cooperation in Science & Technology ................... 59
                                       6.3     Conclusion....................................................................................................................... 60
                                     7    Major Indian and Chinese Drug Discovery Companies – Different Business Models to Provide
                                          Similar Services ..................................................................................................................... 61
                                       7.1     Indian and Chinese Drug Discovery Companies – Business Models .............................. 61
                                          7.1.1     Indian Drug Discovery Business Model – R&D Hive-off for Better Services and Risk
                                                    Reduction ................................................................................................................ 61
                                          7.1.2     Chinese Drug Discovery Business Model – Drug Discovery and Development as
                                                    Core Business ......................................................................................................... 62
                                       7.2     Jubilant Organosys’ Jubilant Biosys ................................................................................ 62
                                          7.2.1     About Jubilant Organosys ....................................................................................... 62
                                          7.2.2     Jubilant Biosys ........................................................................................................ 62
                                          7.2.3     Major Drug Discovery Deals.................................................................................... 64
                                       7.3     Dr. Reddy’s Aurigene ...................................................................................................... 65
                                          7.3.1     About Dr. Reddy’s ................................................................................................... 65
                                          7.3.2     Aurigene .................................................................................................................. 66
                                          7.3.3     Major Drug Discovery Deals.................................................................................... 67
                                       7.4     Biocon’s Syngene............................................................................................................ 68
                                          7.4.1     About Biocon ........................................................................................................... 68
                                          7.4.2     Syngene .................................................................................................................. 68
                                          7.4.3     Major Drug Discovery Deals.................................................................................... 70
                                       7.5     GVK BIO.......................................................................................................................... 71
                                          7.5.1     Business Description ............................................................................................... 71
                                          7.5.2     Major Drug Discovery Deals.................................................................................... 73
                                       7.6     Advinus Therapeutics ...................................................................................................... 73
                                          7.6.1     Business Description ............................................................................................... 73
                                          7.6.2     Major Drug Discovery Deals.................................................................................... 75
                                       7.7     WuXi AppTec .................................................................................................................. 77
                                          7.7.1     Business Description ............................................................................................... 77
                                          7.7.2     Major Drug Discovery Deals.................................................................................... 78
                                       7.8     Chi-Med’s Hutchison MediPharma .................................................................................. 79
                                          7.8.1     About Chi-Med ........................................................................................................ 79
                                          7.8.2     Hutchison MediPharma ........................................................................................... 80
                                          7.8.3     Major Drug Discovery Deals.................................................................................... 81


Drug Discovery in India and China - Gaining Momentum with                                                                           GBIHC022MR /Published FEB 2010
Increasing Pressure on Cost Cutting
                                                                                                                                                                         Page 5
                                                                                      © GBI Research. This is a licensed product and is not to be photocopied
                                        7.9    Shanghai ChemPartner ................................................................................................... 82
                                           7.9.1       Business Description ............................................................................................... 82
                                           7.9.2       Major Drug Discovery Deals.................................................................................... 83
                                        7.10       HD BioSciences .......................................................................................................... 84
                                           7.10.1          Business Description ........................................................................................... 84
                                           7.10.2          Major Drug Discovery Deals................................................................................ 86
                                        7.11       Sundia MediTech ........................................................................................................ 87
                                           7.11.1          Business Description ........................................................................................... 87
                                           7.11.2          Major Drug Discovery Deals................................................................................ 88
                                     8     Deals Analysis – Equal Thrust From Big Pharma and Mid-Size Pharma............................... 89
                                        8.1    Number of Discovery Research Deals – Increased Activity by Big and Mid-size Pharma...
                                                ........................................................................................................................................ 89
                                        8.2    Deals by Major Therapeutic Area – Oncology and Metabolic Disorders ......................... 89
                                        8.3    Deals by Client Type – Mid-size Pharma Deals Rising in India and China...................... 90
                                        8.4    Major Drug Discovery Deals............................................................................................ 93
                                           8.4.1       Amgen with Jubilant Biosys: Supporting Early Stage Preclinical Development Effort
                                                       to Provide Cost-Effective Drugs............................................................................... 93
                                           8.4.2       Bristol-Myers Squibb with Syngene: Dedicated Research Facility for Discovery and
                                                       Early Drug Development ......................................................................................... 93
                                           8.4.3       AstraZeneca with WuXi: Delivering Value beyond Just Cost-Savings..................... 94
                                           8.4.4       Genzyme Corporation and MMV (Medicines for Malaria Venture) with Advinus
                                                       Therapeutics: To Address the Unmet Needs of Neglected Diseases in Developing
                                                       Countries ................................................................................................................. 94
                                           8.4.5       Xcovery with Sundia MediTech: Exemplifies 100% Outsourcing as the Most Efficient
                                                       and Economical Model for New Drug Discovery...................................................... 95
                                           8.4.6       Novartis with Aurigene: Generating Pre-clinical Candidates for Oncology-focused
                                                       Program................................................................................................................... 95
                                           8.4.7       Merck & Co with Advinus Therapeutics: To Develop Clinically Validated Drug
                                                       Candidates for Metabolic Disorders......................................................................... 96
                                           8.4.8       Eli Lilly with Hutchison MediPharma: Developing Innovative Medicine for Global
                                                       Market ..................................................................................................................... 96
                                           8.4.9       Pfizer with HD BioSciences: To Provide Quality Biology Discovery Services.......... 96
                                           8.4.10          LEAD Therapeutics with Shanghai ChemPartner: Accelerating Drug Discovery
                                                           Efforts to Generate Novel and Differentiated pre-IND Candidates ...................... 96
                                        8.5    Conclusion....................................................................................................................... 97
                                     9     Future Challenges– Financial and Intellectual Obstacles to Impede the Future Growth........ 98
                                        9.1    Financial Problems will Make It Difficult to Sustain the Growth ....................................... 98
                                        9.2    Talent Shortage in Early Stage Chemistry and Biology................................................... 98
                                        9.3    Competition from Europe as an Alternative Discovery Research Destination ................. 99
                                        9.4    Conclusion..................................................................................................................... 100
                                     10    Key Takeaway ..................................................................................................................... 101
                                     11    Appendix.............................................................................................................................. 102
                                        11.1       Market Definitions...................................................................................................... 102
                                        11.2       Abbreviations............................................................................................................. 102
                                        11.3       Research Methodology.............................................................................................. 104
                                           11.3.1          Coverage........................................................................................................... 105
                                           11.3.2          Secondary Research ......................................................................................... 105
                                           11.3.3          Primary Research.............................................................................................. 106
                                           11.3.4          Expert Panel Validation ..................................................................................... 106
                                        11.4       Contact Us................................................................................................................. 106
                                        11.5       Disclaimer.................................................................................................................. 106
                                        11.6       Sources ..................................................................................................................... 107




Drug Discovery in India and China - Gaining Momentum with                                                                                GBIHC022MR /Published FEB 2010
Increasing Pressure on Cost Cutting
                                                                                                                                                                                 Page 6
                                                                                         © GBI Research. This is a licensed product and is not to be photocopied
                                     1.1    List of Tables
                                     Table 1:     Drug Discovery Market, India and China, Historic Market Size, $bn, 2004–2009 ....... 15
                                     Table 2:     Drug Discovery Market, India and China, Market Size Forecast, $bn, 2009–2016 ..... 15
                                     Table 3:     Major Services Offered by Indian and Chinese Drug Discovery Companies............... 17
                                     Table 4:     Key Service Offerings of Indian and Chinese Companies in Medicinal Chemistry ...... 19
                                     Table 5:     Key Service Offerings of Indian and Chinese Companies in Drug Metabolism and
                                                  Pharmacokinetics ........................................................................................................ 21
                                     Table 6:     Key Service Offerings of Indian and Chinese Companies in Toxicology ..................... 22
                                     Table 7:     Key Service Offerings of Indian and Chinese Companies in Pharmacology ............... 23
                                     Table 8:     Key Service Offerings of Indian and Chinese Companies in Molecular Biology .......... 24
                                     Table 9:     Major Therapeutic Areas of Drug Discovery Research in India and China.................. 25
                                     Table 10:    Major Activities of Indian and Chinese Drug Discovery Companies in Inflammatory
                                                  Diseases...................................................................................................................... 26
                                     Table 11:    Major Activities of Indian and Chinese Drug Discovery Companies in Metabolic
                                                  Disorders ..................................................................................................................... 27
                                     Table 12:    Major Activities of Indian and Chinese Drug Discovery Companies in Oncology ........ 28
                                     Table 13:    Price Difference Between Brand Name Drugs (Average Wholesale Price) and Generic
                                                  Drugs, $, August 2008................................................................................................. 32
                                     Table 14:    SWOT Analysis – Drug Discovery Market in India and China ..................................... 40
                                     Table 15:    Jubilant Biosys – Major Capabilities ............................................................................ 64
                                     Table 16:    Major Drug Discovery Deals – Jubilant Biosys ............................................................ 65
                                     Table 17:    Aurigene – Major Capabilities...................................................................................... 67
                                     Table 18:    Major Drug Discovery Deals – Aurigene...................................................................... 68
                                     Table 19:    Syngene – Major Capabilities...................................................................................... 70
                                     Table 20:    Major Drug Discovery Deals – Syngene...................................................................... 71
                                     Table 21:    GVK BIO – Major Capabilities ..................................................................................... 72
                                     Table 22:    Major Drug Discovery Deals – GVK BIO ..................................................................... 73
                                     Table 23:    Advinus Therapeutics – Major Capabilities.................................................................. 75
                                     Table 24:    Major Drug Discovery Deals – Advinus Therapeutics ................................................. 76
                                     Table 25:    WuXi AppTec – Major Capabilities .............................................................................. 78
                                     Table 26:    Major Drug Discovery Deals – WuXi AppTec .............................................................. 79
                                     Table 27:    Hutchison MediPharma – Major Capabilities............................................................... 81
                                     Table 28:    Major Drug Discovery Deals – Hutchison MediPharma............................................... 81
                                     Table 29:    Shanghai ChemPartner – Major Capabilities............................................................... 83
                                     Table 30:    Major Drug Discovery Deals – Shanghai ChemPartner............................................... 84
                                     Table 31:    HD BioSciences – Major Capabilities .......................................................................... 85
                                     Table 32:    Ma
								
To top