The Clinical Research Organizations (CRO) industry in Asia Pacific is expanding rapidly, parallel to growth in the pharmaceutical sector. Frost & Sullivan estimated that Asia Pacific’s CRO market for clinical services (excluding drug discovery) generated revenues of approximately USD 1billion in 2009, and is estimated to grow at a CAGR of 20% to reach close to USD 2.5billion by 2015. This growth is expected to be driven by powerhouses like China, India and Korea, as well as smaller markets like Malaysia and Singapore.
The Asia Pacific pharmaceutical market continues to grow at an estimated 12% growth rate in 2010, primarily driven by improved healthcare access and a growing middle class segment in Asia. These factors, combined with Government price controls create a competitive environment for market players, and local companies look beyond their home shores to expand revenues. These activities are driving the CRO markets both from global multinational companies as sponsors, as well as local Asian companies looking to expand. The end result is an increasing volume of clinical trials being conducted in Asia - for example, China and India are strong focus countries for Korean companies, and they have started to use CROs based in these countries to penetrate these markets faster.
Rhenu Bhuller, Global Vice President, Pharmaceutical & Biotechnology, Frost & Sullivan commented that many MNC pharmaceuticals focus on Asia heavily as part of their growth strategy. While small molecules and enhanced generics continue to be cornerstones of growth in Asia; biologics will drive growth in the medium term as access and affordability to these products increase.
As Asia is a developing market for pharmaceuticals, regulations are also changing and developing towards a more mature market structure. Using a CRO to provide clinical services is time and cost effective from a drug development perspective and provides pharmaceutical and biopharma companies with an on the ground dedicated team that is up-to-date with regulatory changes.
Another attraction in Asia is its patient pool. Sustainability of clinical trial activities is a frequent concern of most pharmaceutical manufacturers when there is a limited patient source. Most emerging drugs under development are focused towards targeted therapy which requires stratification-based studies. Studies that require patient stratification are difficult to execute in the US and hence are expected to be moved to emerging countries such as India and China which are ideal locations due to the large availability of suitable, receptive patients.
While in the short term, the billions residing in Asia are an attractive pool, not all of these patients are accessible. Approximately half of these are patients can be tapped, and while it is a relatively easy source now, as trial designs become more stringent, and as Asia’s population gains access to more treatment, it will make the process of finding suitable, receptive and willing patients increasingly difficult in the medium to long term.
Whilst the lower cost is an attraction for multinational companies, and a strong driver for conducting trials in Asia, the rapid industry growth and heavy focus within the region, has led to a reduction in the cost differential between a trial in the US and in China (the cost of trial sites, patient recruitment, human resources as well as principal investigators continuously increase). The fast growth of the industry in Asia has also created a resource gap, where demand for experienced Clinical Research Associates (CRA) has outstripped supply, as training needs have not been able to keep up with resource needs.
As at 2010, India is the top leader in the area of clinical trials and more CROs are looking at increasing their footprint in the existing USD485 million revenue market. Part of the attraction in this market is the availability of well developed clinical trial centers and expertise from a human resource perspective, as well as strong high quality providers that meet FDA standards. The accessible mega population size and large number of service providers across the value chain from regulatory to data and patient recruitment, helps make India a cost effective, although competitive, clinical research hub.
“India’s CRO market promises big opportunities for both short and long term investment and is expected to be a billion dollar market by 2015. However, with the fragmentation in the industry in terms of the large number of service providers across the value chain, some consolidation is expected. Companies also need to ensure that the providers they use are reputable and meet international standards” says Bhuller.
Other factors driving the increase of CRO investment in India includes an improvement in clinical trial regulations, strong emphasis on research and development and the attractive cost of arbitrage; which is 30% – 50% over the United States in clinical trials activities.
China on the other hand offers an entirely different incentive. Recent pharmaceutical mergers & acquisitions by foreign companies have increased the number of pharmaceutical manufacturers in China. The demand for clinical trials required by pharmaceutical manufacturers is driving growth of the CRO market from a USD 320million market in 2010 to an estimated USD 786million by 2015.
In China, there is an increasing number of MNC CROs partnering/acquiring the leading local CROs to enter the Chinese market. This provides complementary skills: MNC CROs are equipped with international expe