1. Navin Fluorine International Limited
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Emerging Opportunities and challenges for Integrated Contract
Research and Manufacturing Services (CRAMS) companies in India
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It is estimated that drugs worth USD 85 billion are going off patent by 2020
globally. This represents a two way opportunity for Indian pharmaceutical
and CRAMS industry. The first is the generics business which will be
primarily driven by cost and speed of launch by the established Indian
generic players. At the same time, the patent cliff puts enormous pressure
on innovator companies to accelerate new drug development to protect their
turf. However, drug development is a costly and long term affair. With the
global regulatory rules getting more stringent this becomes an even more
challenging task. This offers a window of opportunity for India CRAMS
industry. How? Let us try to understand!
The Indian players in the CRAMS sector are usually divided into Contract
Research Organizations (CROs), the FTE (full time employee) research
providers, focusing on lab scale research, and Contract Manufacturing
Organizations (CMOs), the manufacturing players, focusing on pure play
manufacturing in bulk scale. The primary advantage these business models
have is the cost differential compared to the western countries, both in
infrastructure and resources. However, these benefits will shrink with time,
thereby business growth rates of such activities may decline. Hence the
industry should actively look for alternate models to remain relevant in
future. With reference to the same, we would like to focus on a new business
model “Integrated Chemical Synthesis Suppliers”.
For an “Integrated Chemical Synthesis Supplier” (also called CRAMS player)
– the business model is not only to focus in supporting the innovator
company, in their journey of target drug discovery, in parts (either only
research or manufacturing) but to be a partner in the entire process right
from conceptualization to commercialization at the client site. The aim
should be to support them in all phases of development while surpassing
customer expectation of quality and time. For example: design regulatory
compliant and cost effective routes of synthesis & manufacturing processes,
solve impurity & stability issues, provide analytical solutions, etc. In a nut-
shell, it should be a “One Stop Shop”.
As with all models there are several opportunities and risk associated with
this one too. Let us try to asses and analyse them:
Strengths: The Indian industry is blessed with a large talent pool of highly
qualified & competent scientists, process engineers and regulatory
professionals. The combination can work wonders in delivering quality and
cost effective solutions in quick time to innovator companies. This can be a

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unique offering where the innovator focuses on its core competency of drug
development while the chemical synthesis is taken care of independently by
the associate CRAMS, reducing both time and cost.
Another, unique feature emerging in Indian CRAMS industry is its pockets
of excellence with specific chemistries beingtheir core competency. For
example, there are individual vertically integrated companies with expertise
in fluorine, pyridine, ketone and other chemistries. These companies can
deliver innovative solutions to specific challenges and NCE development
programs. Collaborations, tie-up and acquisition of global companies have
enabled these Indian companies to access latest high end manufacturing
technologies. They are developing necessary knowledge bank in their core
competencies and an ability of quick technology transfer and process
improvement upon the said technology.
Indian players have a deep understating global pharma industry needs
thanks to its long term association with foreign counter parts. In-fact, India
boasts of largest number of USFDA approved plants outside of USA. This
can be of great advantage to the innovator companies as these plants can be
used without incurring significant cost for regulatory compliances.
Weakness: The low success rate of target drug candidates at various level of
development stage is a key challenge to this model. It is estimated that less
than 0.1% of new drug candidates reach the launch stage. Therefore, the
product pipeline for a CRAMS player needs to be really large to sustain
business in long term. Lack of long term supply agreements along with
performance pressure and intent of short term commercial gain by the
customers adds to this issue even more.
Circumventing the regulatory requirements to get better margins by
reducing costs is another challenge with the Indian cGMP. The rules are
becoming more stringent resulting in increase in regulatory cost and cGMP
complaint manufacturing plants are becoming the requirements for supply
even for early stage intermediates.
The biggest risk to the model is lack of superior quality and/or on time
delivery of the desired product. As said in drug development –“Time is
Money”, hence delay in developing or delivering products at any stage of
development can cause severe concern including financial losses at
innovator end. Therefore, these outsourcing company needs to be on its toes
always looking for innovative solutions to address these needs, wherever
possible.
Though there is a large talent pool of highly qualified & talented scientist
and engineers, however in reality, there is a limited supply of suitable
workforce available, who can qualify for key requirements expected to serve
customer expectations of this kind of Industry such as effective

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communication skills, flexibility to adopt changes, timely reports,
transparent mode of conducts etc.
Opportunities: The market for chemical synthesis outsourcing, already, a
multi-billion dollar industry is still growth in double digits. The innovator
companies are increasingly looking to outsource non-core activity of in-
house development & synthesis of advanced chemical intermediates or even
complete API, though dominated by western outsourcing players. The
industry represents a huge opportunity in terms of sheer size.
Another opportunity is the possibility of long term association for
outsourcing though-out the life cycle of the product. With the increase in
demand of quality and impurity profiling of new drugs, the outsourcing
company should be a preferred choice of supplier due to their specific
knowledge gained during development stage. By involving early and being a
partner in research, effective utilization of knowledge and timely solution of
validated product at commercialization should address several associated
needs for the customer.
An “Integrated” outsourcing partner would reduce the number of vendors for
the innovator companies along with improvement in quality, coordination
and cost optimization. This would fit well with the innovator company’s
strategy of downsizing vendor base for screening strategic partners.
Threats: As we lose the cost advantage over time, plain vanilla outsourcing
is moving to other low cost locations like Cambodia, Thailand, Indonesia,
etc. The Indian industry now needs to compete more on quality, technology,
regulatory support, etc as against just cost. Therefore, there is an urgent
need to improve efficiency and adopt newer process development techniques
such as QBD (Quality by design), cooperate with the increasing demands of
ethics, audits especially in area of ESH, effective communication with
partners to combat these challenges.
While India is complaint to global IPR laws, there is still a very high
perception in the western world based on many reported incidences that the
intellectual regime is not implemented to its fullest. The Indian government
and industry are working constantly to improve this perception. However,
more concrete steps to increase trust may be the need of the hour.
The recent cases of Indian plants being not found complaint by USFDA has
also painted a gloomy picture of product safety and quality amongst the
outsourcing world. There are several plants, which are now being
investigated for data integrity and customer audits have strengthened.
Technology is changing at a pace faster than ever before. Therefore, the
industry needs to continue innovating to be a niche supplier and find
technology partner to expand offerings. A failure to do so may increase risks
to their long term existence.

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The pharmaceutical industry is also going through a phase of consolidation
with global mergers and acquisitions and also with set of emerging newer
players including virtual companies getting increasing attentions from
investors. Though the need of outsourcing is not seems to be reducing but
consolidation of both suppliers and buyers in this industry is resulting in
making many non-performing companies going out of business.
What can global pharmaceutical companies can look forward to?
The Indian chemical/pharmaceutical CRAMS suppliers not only present a
formidable, experienced and trusted support to solve drug development
challenges effectively but also its expertise in technology, specific chemistry
platforms, effective communication and practices. There is a growing
realization among many reliable CRAMS players, wanting to be preferred
vendors to excel in serving the customer needs throughout the life cycle of
the product. They are eager to enhance their relationship from being
transitional to being strategic partners. These companies are increasingly
being managed by professionals who are ready to take risk and develop
innovative solutions, provide support and participate with the customers to
address all issues and needs in a transparent and collaborative manner. The
managements of these companies do not shy to upgrade their systems,
processes and assets to match the best global practices. For example, more
and more Indian companies are upgrading their EHS systems to achieve
“Responsible Care” standards considered best in class globally.
The Indian government is putting its weight behind manufacturing and skill
development through programs like “Make in India”. This would increase the
ease doing business for western companies, favourable currency regulations
for export, rationalization of laws along with strengthening the IPR and laws
pertaining to contractual obligations, this is perhaps a good time for both
customers and suppliers in this sector to consolidate and reorganize
themselves.
What do Indian organizations need to do?
The first priority of an Indian organization active in the CRAMS space is to
think “Global”. The management should develop and build the organization
with global mind-set, to serve global customers with best in class global
standards and be globally competitive in all respects of business.
The industry needs to move up the value chain from basic chemicals to
more complex and advanced intermediates, where cGMP and other
regulatory practices become critical. Individual organization needs to define,
focus, augment and market their core competencies: Differentiation may
well be the key! This would require significant expedite in R&D with a clear
vision to develop expertise in breakthrough technologies. The management
should not shy away from foreign acquisitions or forging tie-up or JV’s not
only to develop new capabilities but also remain closer to customer. This

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would also help in developing human capital with better customer
understanding and service. Efficiency should be another area of focus to
achieve cost leadership.
Simultaneously, the industry needs to develop professionals with expertise
in project planning and execution aiming to achieve flawless delivery.
Excellence in “Project Management” would hold key in differentiating the
long term winners from the losers.
Going Forward:
What perhaps started some twenty years ago in India, as a pure cost based
outsourcing of routine services by global big pharmaceutical companies, is
now maturing into a bunch of proven strategic outsourcing partnerships of
global nature, practicing ethical and acceptable business delivery processes.
This industry is gearing up slowly but steadily to support increasing supply
chain demands such as practicing global EHS and Quality guidelines with
efficient teams along with specific expertise and novel technology platforms.
Though cost still being considered a critical parameter for any outsourcing
activity yet increasingly, it is becoming just one of many key parameters.
It is certainly viewed by many that the Indian CRAMS industry shall play a
larger and critical role in global Pharmaceutical markets by becoming key
solution providers to its predominantly pharmaceutical customers.
About the Authors:
1) Dr. Ashis Mukherjee: The author is currently the Chief Technology
Officer and President- CRAMS Navin Fluorine International Limited.
He has done his doctoral and post-doctoral research in the USA and
has been working as research scientist & business head in various
pharmaceutical and contract research organization since 1994 and
closely participating, associating and monitoring the growth in this
sector in India since then.
2) Mr. Ankit Gupta: Member of the Project Management team, CRAMS at
Navin Fluorine International Limited is a Chemical Engineer and is
pursuing management studies at NMIMS, Mumbai with over 7 years
of experience in Project Management. The author can be reached at
ankit.gupta@nfil.in.