Contract Research And Manufacturing Services (CRAMS)

Presented by:Avinash Kumar Ch.M.Pharmacy (Dept. of Pharmacology)

April 8, 2023 1CRAMS

Introduction

• 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

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 efficiency2. Timely delivery3. R&D skills4. Regulatory Expertise5. 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

medical colleges).• 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 Western auditors.

• 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

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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

India Advantage

• 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 developed countries).

• 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 efficiency2. Timely deliveryLow 3. labor costs4. Regulatory Expertise5. US-FDA approved facilities6. IPR Compliance7. 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 presencec) Tap other geographies / therapeutic segments / customers.d) Enhance intellectual property portfolio.e) Barrier to entry.

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Reference

• Article by Shivani Shukla on Indian Pharmaceutical Industry - Emerging Business Model

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