Emerging markets push has CRO at ready

December 2, 2009 – 5:53 pm by Michael Christel

A common theme echoed by big pharma these days, particularly during the recent blitz of third-quarter earnings releases, is a renewed focus on emerging markets. (Sanofi-Aventis and GlaxoSmithKline are two notable examples). Of course, the importance of tapping emerging markets – both for drug research and commercial medicines – has been discussed and dissected for years. You get the feeling, however, that companies today are exploring ways to pursue such opportunities with considerably more urgency. And given the financial climate and other factors, they really have no other choice.

Drugmakers realize turning to alternatives such as emerging markets and generics is important as they face tougher safety and cost hurdles for new drugs in the U.S. and Western Europe, and patent expirations on established top sellers. Takeda Pharmaceutical Co. is the latest to take such an approach. Yesterday, Japan’s largest drug company said that it plans to enter the Indian pharmaceutical market.

On the drug development side, despite certain disadvantages associated with conducting trials in emerging markets, whether it’s dealing with multiple time zones, variable infrastructures, or language and cultural barriers, pharmaceutical and biotech companies understand the distinct upside, namely large and varied patient populations.   

As a result, global-minded CROs, many dealing with R&D slowdowns in developed markets, have had to respond to soaring demand for outsourcing services in underdeveloped areas in Asia Pacific, Latin America, and parts of Europe.

For instance, Pennsylvania-based ReSearch Pharmaceutical Services Inc. (RPS), announced this week that the company has completed its global platform for outsourced clinical trials across four continents. RPS provides integrated services for eight of the world’s top 12 pharmaceutical companies, including Pfizer, J&J, AstraZeneca, and Sanofi-Aventis’ vaccine arm Sanofi Pasteur. RPS also supplies full-service clinical development solutions for small and medium-sized pharma clients. 

Chairman and CEO Dan Perlman told me the company completed the “third phase” in its transformation to a global business, a process which began with earnest only about a year ago with a series of acquisitions in Europe (see previous blog entry for more.) Since then, RPS has built its platform in Latin America, with operations in Buenos Aires and San Paulo, and now in Asia, spurred by the recently completed acquisition of Beijing-based CRO Paramax International Inc.

RPS has incorporated the company’s subsidiaries in more than 30 countries, including Japan, Korea, Malaysia, Philippines, Singapore, Taiwan, and Thailand.

“There’s other phases coming, but this was the last phase of what I call our global platform, giving us the ability to do about 98% of almost all the needs for pharma in these integrated solutions,” Mr. Perlman told R&D Directions.

RPS’ core focus is setting up comprehensive integrated programs for large pharma companies who already have significant clinical development infrastructure in place. RPS provides high level resourcing search engines, with the ability to not only bring in experienced clinical development professionals, but “re-resource” them to other projects, a capability most CROs don’t have, according to Mr. Perlman.  

“If you’re a pharmaceutical company, if there’s a slowdown, there’s nothing you can do with your people,” Mr. Perlman says. “The good news is we deal with pipelines of pharma. So we can tell that in six months from now things are going to wind down, and then reallocate our people, which is a skill set that RPS has. We have a tremendous name in the U.S. for that; we’re building that abroad.”

Mr. Perlman notes that RPS, while championing the integrated model for the past decade, continues to expand its clinical outsourcing capabilities, including offerings in study startup, site management and monitoring, drug safety, and regulatory submissions.

Both approaches should bode well for CROs as drug developers look abroad. Mr. Perlman singles out China in particular – a place he’s visited some 40 times – as an important destination for RPS clients. With a huge patient population and an increased burden of disease that now includes more chronic diseases, the Chinese drug market is growing rapidly. Also, as this report notes, compared to the West, the cost of carrying out clinical trials in China is 15% less for Phase I and 20% cheaper for Phase II/III.

According to the report, China has the advantage of a cheap and educated R&D workforce as well. Estimates find that 100,000 undergraduate/graduate students are enrolled for chemistry, 120,000 for medical sciences, and 60,000 for biological sciences.

“If we went back 10 years, there are a lot of people from China who came over here, trained over here, and stayed here,” says Mr. Perlman, whose father is a surgeon. “That’s not happening anymore. They are going back. The skill set at the modern hospitals there is very, very high. … With the changing educational values and everything else, China is very strong. The work ethic is very strong. Just as important – and I think this is one problem that you do you have a little bit in India right now – from an infrastructure point of view and logistics, China is as far along as the U.S. There’s enough people in the major cities and enough infrastructure to not only run trials but look at the market. They’ve got everything to draw the pharma companies there.”

We’ll have much more on the drug research buzz in China and Asia Pacific overall in the February R&D Directions. The issue will include the first of three special “Hotspots” supplements we have slated for 2010.

Tags: China, emerging markets, outsourcing, RPS