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Outsourcing drug development to Asia: An increasingly lucrative strategy

Monday, June 12, 2017

As biotechnology and pharmaceutical companies face escalating research costs and shrinking revenue, many are shifting clinical operations to Asia, where a rapidly expanding healthcare infrastructure and growing patient population have created ideal conditions for low-cost drug development.

According to a 2014 study, bringing a new drug to market can cost an estimated $2.6 billion. Yet in today’s globalized economy, companies can potentially outsource 75% of research and development spending, according to an estimate by Frost & Sullivan.

Asia contains nearly 60% of the world’s population but only 17% of clinical trials, based on 2016 data from ClinicalTrials.gov. Asian countries contain a largely urban, treatment-naive patient population. Patients are eager to seek care via clinical research, meaning trials tend to enroll quickly. In addition, disease prevalence in many Asian countries is now roughly comparable to that of the West, and many countries have highly-functioning research centers with robust technology infrastructure.

The 10 year period from 2007 to 2016 saw a 36% increase in newly initiated, industry-funded trials based in Asia, according to John Moller, chief executive officer of the CRO Novotech, headquartered in Australia. Interestingly, Moller continued, during that same period the U.S. saw an increase of only 6%, while the number of new trials in Eastern Europe shrank by 25% and in Latin America shrank by 32%.

“We are seeing increasing levels of interest [in Asia] from our core client base, which is mainly comprised of U.S. biotech companies,” said Moller. “Our clients are most interested in speed, quality and cost, but speed is a biggie.”

As Asia becomes an increasingly attractive drug development outsourcing opportunity, multinational companies are now engaged in a flurry of deal making with Asian firms and research organizations.

Chiltern recently acquired the Japanese CRO Integrated Development Associates, a decision that reflects the company’s desire to integrate Asia into its global drug development framework. Separately, the consulting firm Certara announced an alliance with Peking Union Medical College Hospital’s Clinical Pharmacology Research Center (phase I Unit) to spur Chinese drug development.

“We see great opportunity in both China and Japan as model-informed drug development and regulatory science become more accepted as levers for increasing the speed of drug development, optimizing core R&D decisions and increasing innovation,” said Dr. Stephen Toon, Certara’s Simcyp president and managing director.

Meanwhile, with one fourth of global cancer deaths in China, oncology companies are increasingly turning to Asia. For example, IBM recently partnered with Chinese firm Baheal Group to bring its Watson cognitive technology to China’s oncology research industry. The startup cancer diagnostic firm GRAIL, backed by Silicon Valley billionaires Bill Gates and Jeff Bezos, has also merged with Hong Kong-based blood diagnostic company Cirina.

Drug development in Asia does carry some risks for multinational firms, particularly around regulatory complexity, language and cultural barriers and diverse regional laws. However, recent top-down efforts to bring drug development in line with international standards, as well as a general trend toward strengthening IP laws, have created a more reliable clinical research environment.

In addition, Western drug regulators, including the FDA and EMA, are increasingly willing to accept clinical trial data generated in Asia, especially considering the growing similarities of Asian disease demographics to that of North America and Europe.

Meanwhile, the rate of regulatory actions in Asia is relatively low. When comparing the U.S. FDA’s rate of “official action indicated” regulatory findings, Asia has a lower rate than the U.S. itself. One important caveat, said Moller, is that the FDA conducts far more inspections within the U.S. than in Asia, yet the rate of those findings considered “serious” is still lower in Asia.

One potential pitfall of drug development in Asia is the wide range of approval timelines that vary from country to country. Although many countries have timelines similar to those in the U.S., others are much longer. In China, for example, it takes an average of 24 months to complete language translations, contract negotiations, import licenses and other logistics, according to Frost and Sullivan. However, China’s drug regulator is implementing new policies and “investing in its infrastructure to expedite its drug approval process,” said Certara’s Toon.

Research sponsors in Asia are usually expected to pay for the general healthcare costs of enrolled patients throughout the duration of a trial, unlike the West, where insurance providers or government payers step in. Yet overall, the total cost of running studies in Asia is 30 to 40% less expensive than running a study in the U.S. or E.U., according to Frost and Sullivan.

China is unique among Asian countries because of its massive population and untapped clinical research capabilities. China represents 20% of the global population, but only 2% of the global drug market, said Toon. The drug market in China alone is expected to reach $120 billion by 2020.

Chinese key opinion leaders are also becoming more internationally renowned, with the percent of citable journal articles from Chinese authors growing 150% from 2005 to 2015.

“In China, the landscape is changing,” said Toon. “Until recently, the majority of drugs produced in China had been generics. But now that more Chinese pharma companies are developing new drugs, they have started to use pharmacometrics to conduct research and are incorporating model-informed drug development into clinical trials.”

Previously, efforts to conduct clinical research in China were stymied by corruption and scandal. In recent years, “practice has been changing rapidly because the government has taken a hard stance against corruption,” said Moller, a stance exemplified by the 2007 execution of the former head of the Chinese FDA for taking bribes. This crackdown on corruption has unlocked some of the untapped potential for U.S. and European sponsors to begin setting up clinical trials in China.

Outsourcing clinical research to Asia is one of the “mega trends in terms of the way biotech companies in particular are thinking of the most effective way to conduct a clinical trial,” said Moller. Because of recent regulatory and population trends, China, in particular, has emerged as an attractive research location for Western sponsors seeking regulatory approval in the U.S. and Europe.

 

This article was reprinted from Volume 21, Issue 23, of CWWeekly, a leading clinical research industry newsletter providing expanded analysis on breaking news, study leads, trial results and more. Subscribe »

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