CRO Asia Pacific Expansion
Risk and reward
By Kristin Brooks
In an effort to get drugs registered and maximize uptake as quickly as possible, pharmaceutical and biopharmaceutical companies are being drawn to the Asia Pacific region, China in particular, with their growing number of trials -- and growing trials, for that matter -- to take advantage of the many opportunities the region presents. Access to large patient populations (estimated Asia-Pac population is 3.9 billion), lower costs, time-savings, as well as the opportunity to market drugs in the region, are the main drivers for the rapid growth in the region. Despite some of these convincing regional benefits, just as many challenges exist, among them: Intellectual Property (IP), a mire of regulatory hassles, and obtaining/retaining skilled staff. Clinical Research Organizations (CROs) continue to develop operations in the region in pursuit of sponsor trials, taking on the myriad opportunities and challenges of this still emerging market.
From the pharmaceutical industry perspective, there are many reasons for the explosive growth in the Asia Pacific region. "First, this region represents a huge market, billions of potential consumers, many of whom are quickly becoming more affluent, educated and interested in gaining access to advanced medical treatments. Second, given the pace of growth in India and China, many analysts today see both of these nations completing the transition from ‘developing' to ‘developed' within the next decade," said Dan Weng, M.D., president Rest of World Region, ICON Clinical Research.
A recent PriceWaterhouseCoopers survey of 185 senior pharmaceutical company executives from the Asia Pacific region found that 58% believe "the center of gravity" of the global pharmaceutical market will be in Asia rather than North America and Europe in the near future. According to Dr. Weng, "Their belief is reinforced by the fact that almost 27% of total market growth in the pharmaceutical industry is now coming from countries with a per capita gross national income of under $20,000 per year. As recently as 2001, these same countries contributed just 13% of growth."
Graham Bunn, Ph.D., vice president of Global CRO Partnerships at Medidata, added, "Since more than 50% of clinical trials are currently being outsourced to the CRO industry (a number that is rising and expected increase in forthcoming years) and because the biopharmaceutical industry is being driven towards the Asia Pacific region, it is only natural that the CRO industry is leading the charge. CROs are always looking for a competitive advantage and many pharma/biopharma companies are fearful of making large-scale investments in infrastructure in this new and sometimes challenging region of the world. CROs can increase their value proposition to the industry if they have good experience and an extensive presence in the region."
With a combined population of more than 2.5 billion people in China and India -- with Westernized disease patterns -- the opportunity to work with treatment-naïve patients, and the commercial and clinical research potential, is too good to pass up. Access to large patient populations speeds up enrollment in clinical trials and trials can often be completed quicker as a result. This in turn could potentially contribute to the overall speed of drug development.
Patient access, quality of data, and timeliness have trumped cost savings as driver for recent CRO expansion into the Asia–Pacific region, according to Dr. Ross Horsburgh, vice president of Global Clinical Development at Kendle.
"It's easy to assume that building a facility in China is a cost-saving strategy. That's because for many industries, such as manufacturing and financial services, this is usually the case. However, for drug discovery and development support, cost savings is never the reason for an international facility," said Chris Perkin, corporate vice president, Charles River Laborato-ries. "Our primary reason is to support our multinational clients' drug development efforts."
Mark A. Goldberg, M.D., president of Clinical Research Services and Perceptive Informatics, PAREXEL International, said, "Costs to conduct studies in some countries in the region can be approximately 30-60% less than in the U.S. Although lower costs have attracted sponsors and CROs alike, this is becoming less of a consideration in the wake of the region's opportunities."
"Although investigator fees tend to be lower as compared to the Western world, the quality data that is obtained in the region increases the ability to get drugs registered around the world at approximately the same time, maximizing the revenue uptake curve," added Lynn Kippenhan, vice president of sales and marketing, Covance.
"In terms of economic growth, China is projected to be the fifth largest pharmaceutical market in 2010 and the third largest in 2020, with 28% annual growth. It is also noteworthy that China is making very significant technology and infrastructure investments," said Douglas Peddicord, Ph.D., executive director of Association of Clinical Research Organizations (ACRO).
Dr. Weng at ICON added, "The medical infrastructure throughout the Asia Pacific region is excellent. Investigators in general are well trained (many are educated in Europe or the U.S.) and are very enthusiastic about conducting clinical trials. Patients are highly motivated to participate in trials, and compliance is quite good. Data generated in the region is generally of excellent quality, and has been used for both FDA and EMEA submissions."
According to Dr. Horsburgh at Kendle, "There are two absolute essentials for successful trials: patients and attitude. Patients and investigators alike have such a ‘can-do,' enthusiastic attitude, which is why such good metrics come out of the region."
However, all of these benefits don't necessarily come easy. There's a tremendous amount of knowledge needed to develop successful operations in this region, specifically in China, with regards to local regulatory authorities, culture/language and the talent tug-of-war. Access to and retaining of skilled clinical research staff is becoming an issue as trial activity explodes in the Asia Pacific region. Also, IP is still considered to be a pitfall in China and, unlike India, which is for the most part an English-speaking country, language and cultural barriers exist in China.
With demand comes shortage and then comes competition. Such is the case with obtaining/retaining experienced clinical staff such as coordinators, monitors, and other research staff. Winning the "talent war" is key, according to Dr. Horsburgh at Kendle: "To differentiate itself, a CRO must offer industry-experienced staff with expertise in managing global megatrials and navigating the regulatory landscape for their customers."
"While IP rights are improving in the region, it's still a concern to sponsors of innovative pharmaceutical products," said William Sharbaugh, chief operating officer, PPD. "We must be vigilant to avoid surprises."
According to Dr. Weng, "Protecting IP continues to be a troubling issue in the Asia Pacific region. In countries where counterfeiting consumer goods has risen to something of an art form, protecting a billion-dollar drug patent is an extremely serious matter. But many analysts see things improving in this area, in part because many Asia Pacific companies themselves are now developing and marketing new drugs, for which they are demanding copyright protection." Dr. Weng added that many observers report that the situation has improved dramatically since China joined the World Trade Organization (WTO).
One of the main regulatory obstacles for CROs in China is obtaining the necessary permits to conduct clinical trials. The SFDA requires inspection of sites and approval to conduct trials and gaining these regulatory approvals can be very complicated and time consuming. However, the regulatory authority in China is trying to speed up its regulatory process. "In October 2007, clinical trial approval went to a fast-track process, which could shorten the time for approval to six months," said Dr. Weng. That's down from a drawn-out nine to 12 months.
Asia Pacific Market Demands
Regardless of its benefit/risk profile, there is considerable market demand to conduct clinical trials in the Asia Pacific region. To support this growing demand, CROs are flocking to the region, setting up and strengthening operations. Demand in the region includes all phases of drug development, although multi-national companies are still not allowed to conduct first-in-human Phase I studies in India and China. According to all of the industry sources I spoke with, Phases II, III and IV trials are in greatest demand. For the most part, these CROs are working with western pharma/biopharma companies and for registration studies, in both local and global markets.
According to Dr. Weng, ICON currently has more than 150 on-going studies in the Asia Pacific region, with the majority from western large pharma companies. Approximately 15% of those studies come from local companies and 30% are from small-to-mid-tier pharma and biopharma companies.
"Traditionally, late-stage development has played a dominant role in the Asian market with the focus being on clinical research in registration studies. As the capabilities of countries increase and the willingness of sponsors to use Asian countries increases, we are seeing significant increase in the numbers of Phase II and even Phase I studies," said Mr. Sharbaugh at PPD.
Dr. Dale Evans, president and chief executive officer, Omnicare Clinical Research, commented, "We've seen our customers evolve over the last few years. Whereas we once worked primarily with western pharma companies, we're now partnering with more of the local biopharma businesses. The profile is also shifting to include a diverse blend of sectors beyond just big pharma. Biopharma, small-to-mid-tier pharma, specialty pharma, and nutraceuticals are all taking center stage today." Another key factor for trial demand in the region is related to desired disease indications.
According to Mr. Anand Tharmaratnam, head of clinical development Asia Pacific and chief executive officer, Southeast Asia, Quintiles, "Historically companies expanded their trial to Asia Pacific for ‘Asian indications' -- mainly infectious diseases. That has changed significantly as the region assumes a more western disease profile with lots of studies in oncology, CNS, cardiovascular and endocrinology."
"We are seeing a real transformation to Asia becoming an integral part of global drug development. Asia is now involved in all phases of the drug development process, in fact it has now become a test of how global a company is based on how engaged it is with Asia," said Dr. Horsburgh at Kendle.
Regulatory and IP concerns have long been cited as significant challenges associated with drug development in the Asia Pacific region, and some critical issues remain. However, adoption of international standards and the passing of patent protection laws have improved in the last few years -- particularly in India, China and Japan -- thanks to industry-wide efforts.
Regulatory agencies in the region are adopting more global standards, rather than trying to maintain their own individual standards. The most significant is the International Conference on Harmonization (ICH) Guidance document on Good Clinical Practice (GCP), which provides a unified standard for the European Union (EU), Japan, and the U.S. to facilitate the mutual acceptance of clinical data by regulatory authorities. ICH GCP was implemented nearly 10 years ago in much of the Asia Pacific region. As countries follow ICH GCP and companies establish the appropriate SOPs, the issues are fast becoming minimal. According to Dr. Peddicord at ACRO, "Leading CROs are fostering a movement by local and global CROs toward working on global industry standards (GCPs) and standardization (such as CDISC) and SOPs. CROs bring value to new clinical trial environments by helping bring the clinical and regulatory infrastructure and practices in these regions in line with ‘recognized' ICH GCP standards."
Even Japan, which has long insisted on its own complex set of regulations, is showing a willingness to make changes, according to Dr. Weng at ICON. Japan is now trying to comply with ICH GCP by revising its own GCP. "It has also been difficult to recruit patients in Japan, but they're starting to accept some data generated outside of Japan for NDA submissions," Dr. Weng remarked.
"Asia does not have a long history of conducting global studies. This lack of history means that we often find immature infrastructures and facilities, and unclear regulatory guidelines and ethics committees in hospitals who are not fully informed about GCP guidelines. However, sponsors, CROs and regulatory agencies are putting forth a great effort to increase GCP training and bring more scrutiny and adherence to GCP standards in this region," said Mr. Sharbaugh at PPD.
China also follows the ICH GCP guidance but some industry sources say the requirements in China are not as specific as the FDA's, leaving them open to interpretation. One area that lacks specificity has to do with where trial responsibility lies. Dr. Jason Chang, clinical operations manager for Global Clinical Development at MDS Pharma Services, said, "There may be some differences in specific requirements such as procedures. For example, the Chinese guidelines mention that a sponsor may transfer some duties to a CRO, but are missing some detailed information, such as the sponsor taking the ultimate responsibility for clinical trials outsourced to a CRO."
IP concerns are also being addressed. "The Asia Pacific region has come a long way in the last few years. China becoming a member of the WTO in 2001 prompted the country to tighten IP rights. At that time, the Chinese government also committed to upholding the Trade-Related Aspects of Intellectual Property Rights (TRIPS) Accord, which recognizes 20 years of patent protection for new drugs. More significantly, China formed the State Food and Drug Administration (SFDA), which is modeled after the U.S. FDA, and whose mission is to offer better protections and more transparency in the drug development process in China," said Dr. Horsburgh at Kendle. Also, the Patent Protection Association of China (PPAC) was founded in 2003. In January 2005, India also became TRIPS compliant and is making efforts to better protect international patents.
Despite patent protection efforts, there still exists a threat to IP, particularly in China. What differentiates China from essentially every other country in the world is that its SFDA drug applications require extensive amounts of information in terms of the level of detail and the kind of information required. Specifically, in the chemistry, manufacturing and controls (CMC) section, it's frequently more than a company is willing to disclose. In addition to information about the chemical entity itself, both from a chemical synthesis perspective with the bulk formulation, as well as the finished product formulation, the manufacturing process is required to be submitted. And, according to one industry source, they want the analytical methods associated with that process and the equipment used; here's where it gets down to IP. Providing that much information to a regulatory agency is a concern, to say the least, for pharma/biopharma companies. "Concerns regarding IP remain. For instance, a 2005 Ernst & Young study of 348 executives showed that one-third still consider that there is a significant IP risk in China," said Dr. Peddicord at ACRO.
For biopharmaceutical companies, an additional IP concern remains involving CMC and a Certificate of Analysis (CoA). "International companies that applied for clinical trial approval to the SFDA had been required to obtain a CoA from local labs. However, since 2007 the SFDA has begun to accept CoAs from labs outside of China, but CoAs from local labs are still mandatory for biological entities. This testing could potentially provide access to proprietary knowledge about a compound, which could be of concern if IP protection is not in place or enforced," said Dr. Goldberg at PAREXEL.
The regulatory approval process in China is still very challenging, according to QingAn Jiao, M.D., head of Clinical Operations (Asia Pacific), MDS Global Clinical Development. "Although many global pharmaceutical companies have already set up R&D centers in China, lengthy regulatory approval timelines prevents China from attracting more global studies. With recent changes in the top level of SFDA management team and the merge of SFDA into the Ministry of Health (MOH), we believe the agency will eventually consider taking actions to streamline the regulatory approval process and offer a more favorable timeline for global drug development in China, but we can not foresee how long it may take for this development," Dr. Jiao remarked.
With the passing of patent legislation and adoption of ICH-GCP guidelines in countries such as India, China and Japan, it is expected that these regions will see even further growth in the clinical trials and drug development arena but that is not withstanding revisions to the regulatory process and strengthening of IP rights.
Key Factors for Successful Operations
Having taken into account the many challenges in the region, CROs must address the key factors for setting up successful operations. CRO "must haves" include: local knowledge and expertise -- both regulatory and culturally -- industry-experienced staff, extensive SOP training programs to ensure GCP standards, and perhaps above all, a commitment to the region and strong government relations.
According to Dr. Horsburgh at Kendle, "Asia in particular places a high value on culture and tradition, so on-the-ground experience and local expertise is critical. Therefore, companies showing respect for the local environment and a commitment to developing local expertise are likely to see continued growth." Dr. Horsburgh emphasized that companies that approach Asia as a one-off or second-tier region are not likely to find success.
Although most countries in the Asia Pacific region, including China, have adopted ICH guidelines, CROs must have local knowledge of regulatory requirements and processes and an understanding of how to apply international standards to the local clinical research environments, according to Dr. Weng at ICON. Recruiting and training talent in global SOPs is essential and understanding GCP guidelines is relatively new for many sites. Mr. Sharbaugh at PPD commented, "Beyond patient consent and care, it's important to build a skilled core team to conduct trials and to invest in the right kind of training to ensure that GCP and regulatory guidelines are understood and followed." Many commercial institutions are being set-up in Asia to provide training and certification, according to Shirly Suresh, operations manager Asia Pacific, SGS Life Science Services. "Local educational institutions are also working in collaboration with western universities to provide certified courses. The SFDA of China has GCP-approved sites and in Singapore and key site personnel (especially the principal investigator) are required to be GCP-certified."
Keys to successful operations, according to Quintiles' Mr. Tharmaratnam, include "Investing and hiring talent as you would in traditional markets. This is not a region to flirt with. Take the decision to expand and go in comprehensively, meaning that in addition to investing in infrastructure and talent, place emphasis on building relationships with government, academia, and invest in quality and training."
Despite intense scrutiny around concerns and challenges in the Asia Pacific region, particularly China, the industry's enthusiasm for the drug development opportunities is unquestionable. Progress has been exponential, from addressing regulatory and IP concerns to the first drug submissions. Regulatory and IP concerns have abated to some extent, and as capabilities and sponsor demand to conduct clinical trials in the region increases, further expansion as well as more comprehensive drug development, is imminent.