Contract Research And Manufacturing Services
Avinash Kumar Ch.
M.Pharmacy (Dept. of Pharmacology)
March 22, 2014 1CRAMS
• Indian pharmaceutical companies have adapted to the changing industry dynamics and
increasing regulatory and competitive pressures and have evolved distinctive business
models to take advantage of their core competencies in R&D, Manufacturing, Marketing and
the niche opportunities offered by the changing global pharmaceutical environment.
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• Contract Research and Manufacturing services (CRAMS) pertains to
outsourcing services/ products from low-cost providers.
• Pharmaceutical Multinationals have traditionally been outsourcing
intermediates, API’s (Active Pharmaceutical Ingredients) and Formulations
(Finished Dosage forms).
• Since the late 1990’s, CRAMS has gained more importance, as the MNC’s
have come under pressure to maintain their profitability.
• CRAMS basically consists of the following two activities
♮ Contract research.
♮ Contract manufacturing.
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Contract research includes custom chemical synthesis and clinical trials.
Over the last few years, the need to outsource for Big Pharma has increased
considerably, and outsourcing is gradually moving from being just a tactical or opportunistic
option to a more strategic one.
Factors MNC’s would consider while "shopping" for a Clinical Research Outsourcing partner
1. Cost efficiency
2. Timely delivery
3. R&D skills
4. Regulatory Expertise
5. IPR Compliance
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The India Advantage
• 50% lower costs of clinical trials compared to global market.
• Specialty hospitals with state-of the-art facilities (nearly 700,000 hospital beds and 221
• Language - The entire education in modern medicine in India is in English, making
investigators comfortable with usage of English. All source documents, hospitals papers,
laboratory reports, clinical notes are written in English, avoiding need for translation for
• Rich talent pool - Many investigators have already participated in international trials with a
few exposed to international audits for protocol and ICH GCP compliance.
• Diverse population
• Increasing number of chronic diseases and a combination of diseases characteristic of
developing as well as the developed countries
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• Contract manufacturing could involve supply of intermediates, APIs or formulations (for on-
patent or off-patent molecules).
Why must "Big Pharma" Outsource ?
1. Off patent products face competition from generic versions, most of which originate from
low cost destinations such as India, making it important for Big Pharma to look for alternative
low cost sources of manufacturing.
2. Difficulties involved in handling industrial operations as well as keeping pace with changing
FDA norms increase the attractiveness of outsourcing as a strategic option.
3. Economically viable: A sponsor can convert the fixed costs of maintaining the personnel,
expertise and facilities (for e.g. data management) necessary for clinical trial management
into variable costs
• Indian pharmaceutical companies, given their reverse engineering skills have evolved
superior chemistry, regulatory and manufacturing skills at low cost.
• Availability of skilled labor at low cost (Labor costs in India are around 1/7th the levels in
• Capital efficiency: Indian companies are able to reduce the upfront capital cost of setting up a
project by 25-50% due to access to locally fabricated equipment and high quality local
technology/engineering skills. This benefit can be passed on to customers.
• Regulatory expertise: India has around 75 plants approved by the US-FDA (The highest in any
country outside USA)
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1. Cost efficiency
2. Timely deliveryLow
3. labor costs
4. Regulatory Expertise
5. US-FDA approved facilities
6. IPR Compliance
7. MNC relationships
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Factors MNC’s & Big Pharma would consider while "shopping" for a manufacturing partner
Market Expansion Across Geographies through Co-Marketing, Alliances
Geographical expansion is an effective way to increase the life-cycle of a
product. Given the saturation levels in the Indian pharmaceutical space and
increasing competition, it makes sense for an Indian pharmaceutical
company to leverage its learning in the domestic market and expand in the
lesser regulated markets followed by entry in developed markets.
Why partner ?
1. Target country is stringent in regulatory compliance.
2. Language and cultural barriers (eg Japan, France).
3. Get a feel of the market without risking a high investment (Other option is to buy a company
which would involve significant costs)
Growth through Mergers and Acquisitions
Why acquire ?
a) Build critical mass in terms of marketing, manufacturing and research infrastructure.
b) Establish front end presence
c) Tap other geographies / therapeutic segments / customers.
d) Enhance intellectual property portfolio.
e) Barrier to entry.
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• Article by Shivani Shukla on Indian Pharmaceutical Industry - Emerging Business Model
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