Frost & Sullivan - Singapore CRO Market Positioning For Specialized Therapeutics

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Frost & Sullivan - Singapore CRO Market Positioning For Specialized Therapeutics

  1. 1. Singapore Shifting into a Specialized CRO MarketClinical Outsourcing: The New Status QuoIn 2010, the global pharmaceutical Research & Development (R&D) expenditure (whichincludes drug discovery, preclinical investments, and clinical phases I through to IV) isestimated to be at USD 100billion, driven by what is the core of the pharmaceutical industry– new drug innovation. Examples of technologies that will continue to support research overthe next five to seven years and drive expanded research funding are personalized medicineand nanotechnology.However, new drug discovery is an expensive and lengthy process. Additionally, thecombination of patent expiration of main revenue generating drugs, competition from thegeneric versions of branded drugs, and increasing research and development costs areforcing pharmaceuticals manufacturers to look for strategies to cut costs and speed up theR&D processes. Industry struggles to replenish pipelines while facing the challenges ofefficient drug discovery has provided a strong impetus for growth in the contract researchoutsourcing industry.While the US continues to be the largest source of pharmaceutical R&D, emerging locationssuch as Eastern Europe, Latin America, and Asia Pacific are providing companies withopportunities to conduct quality R&D at lower costs of the developed markets.The size of the global CRO market is estimated to reach USD 27billion by 2011, with aCompound Annual Growth Rate (CAGR) of 15%, driven mainly by strong growth in Asia andEastern Europe. The key drivers for this are: • cost efficiencies in lower cost countries, leading to the ability to generate three times the number of targets as compared to the US. • flexibility and scalability of operations that allow companies to be more nimble and respond quickly to change. • a growing global biotechnology sector.In addition to saving time and cost, outsourcing allows for access to the therapeuticexpertise of an outside party, which may increase the chance of hit-to-conversion ratio andallow for early identification of an unsuccessful compound. Thus, the research capacity andexpertise provided by CROs can complement a pharmaceutical company’s R&D efforts byenabling it to scale up operations and streamline internal R&D functions across all areas ofR&D, from drug discovery to pre-clinical and clinical phases.A high level of investment in R&D is a defining characteristic of the pharmaceutical sectorsince the industry relies on innovation to replenish drug pipelines, and the search fortargeted therapy and innovative biologics will continue to drive pharmaceutical R&D. As aresult, the global pharmaceutical outsourcing market was valued at approximately USD67billion in 2009, is expected to reach USD 83billion by 2011 and USD 108billion by 2014.Within the outsourcing industry, drug manufacturers are also increasing their focus oncontract research. The share of the CRO market of all outsourcing services is forecasted toincrease from 31% in 2009 to an estimated 37% by 2014. 1
  2. 2. A Pathway into Asia PacificCurrently, Singapore serves as a hub to many multinational pharmaceutical companies,which have set up their Asia Pacific headquarters there. Singapore is creating a researchenvironment, through advanced infrastructure, conducive to attracting early stage clinicaltrials.Figure 1-1 gives the CRO market size by phase and in total for Singapore from 2009 to2010. While total market size is projected to increase, the phase I and II portions areincreasing faster than phase III, while phase IV will decline.Figure 1-1: Singapore CRO Market Size in Total and By Phase, 2009 Phase I Phase II Phase III Phase IV Total market Singapore (USD Mn) (USD Mn) (USD Mn) (USD Mn) size (USD Mn) 2009 20.3 33.8 47.3 27.0 128.4 2010 22.3 36.6 48.4 25.3 132.6 Source: Primary research with CROs and sponsors; Frost & SullivanAdditionally, based on the number of clinical trial certificates issued by the Singapore HealthScience Authority (HSA), which are reflective of the total number of trials started each year,the CAGR of phase I and II trials combined from 2000 to 2009 was 6.5 percent, while thatof phases III and IV combined was 5.4 percent.Prime Location for Early Phase OutsourcingWhile the Asia Pacific CRO market leans towards phase III and phase IV trials as a whole, acombination of factors have resulted in Singapore having greater increases in phase I and II.Two major drivers are the strategic governmental focus on the early phase trials andinvestments made by major pharmaceutical companies, such as Pfizer, GlaxoSmithKline,and Eli Lilly. Coupled with advanced infrastructure, especially necessary for the early phases,and stringent Good Clinical Practice (GCP) guidelines, which establish credibility in qualitycontrol, have made Singapore an attractive location for early clinical stage outsourcing.On the other hand, the small population size limits the later stage trials due to need of largesample size or patient pool. Countries such as India and China dominate the market mainlydue to their revenues from phase III and IV trials, making population a factor that willcontinue to restrain the Singapore CRO total market size.Focus on Specialized TherapeuticsIn order to create a strategic advantage in the CRO market space, the Singaporegovernment is promoting growth in specific therapeutic areas. Considering that oncology isestimated to constitute 40 percent of all pharmaceutical R&D projects in 2010, focusing oncertain therapeutic areas will prove beneficial to both CROs and trial locations.The government has committed USD 1.1billion on Translational and Applied Research (TCR),which includes expanding the base of clinician scientists and clinical research publications,as well as focus on biomarker research. It has also committed USD 90million to TCR 2
  3. 3. programs that center on diseases in key therapeutic areas, such as oncology,ophthalmology, and metabolic disorders, all of which are of significant pharmaceutical drugdevelopment interest.Additionally, multiple multinational pharmaceutical companies have set up R&D facilities inSingapore over the past 3 years, making Singapore all the more attractive for early phaseoutsourcing. Most recently, in 2010, Roche announced their investment of USD 134millionfor a Translational Medical Research Hub in Singapore, while Pfizer, Merck, and Eli Lilly willbe combining their resources to form the Asian Cancer Research Group (ACRG), in order toaccelerate research in lung and gastric cancers in Asia.To reinforce the development of specialized therapeutic research, Singapore also has strongIP protection, which brings reassurance to the many pharmaceutical companies investing indrug development there. The IP and copyright laws hold up to standards set by the WorldTrade Organization’s Trade-Related Aspects of Intellectual Property Rights (TRIPS)Agreement, along with those from the Paris and Berne conventions.Figure 1-2 provides a breakdown of clinical trials by their therapeutic area from 2007 to2009 in Singapore. As per the figure, oncology remains the most popular therapeutic area,followed by clinical pharmacology, while cardiology and neurology decline in focus.Figure 1-2: Singapore Clinical Trials by Therapeutic Area, 2007-2009 3
  4. 4. However, a current challenge is that the local talent pool that is still young and has limitedexperience in these specialized therapeutics. This necessitates importing specialists from theUS and Europe for clinical trials, and as a result, several of the key scientific leaders andspecialists in Singapore are foreigners.ConclusionThe CRO market across Asia is on the rise and each country must focus on its own strengthsin order to maximize its share of this growing market. Singapore, as a small country, mustespecially maximize on its strengths as a specialized location, both in trial types andtherapeutic areas, in order to keep attracting interest in an increasingly competitivemarketplace. However, the combination of governmental backing and MNC investmentsbode well for Singapore’s position within the CRO market.This article was authored by Rhenu Bhuller, Global Vice President of Pharmaceuticals andBiotechnology, and Neha Koul, Research Analyst, Healthcare Practice, Asia Pacific, Frost &Sullivan.Frost & Sullivan, the Growth Partnership Company, enables clients to accelerate growth andachieve best-in-class positions in growth, innovation and leadership. The companys GrowthPartnership Service provides the CEO and the CEOs Growth Team with disciplined researchand best-practice models to drive the generation, evaluation and implementation ofpowerful growth strategies. Frost & Sullivan leverages over 45 years of experience inpartnering with Global 1000 companies, emerging businesses and the investmentcommunity from 40 offices on six continents. To join our Growth Partnership, please visithttp://www.frost.com.Media contact, please email nicklaus.au@frost.com or djeremiah@frost.com 4

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