10 Sep 2012, Mr Tim Kneen, BioSpectrum
Global pharmaceutical companies have traditionally not only focused their R&D activities and investment in key markets such as North America and Europe, but have also established clinical practices and mature research infrastructure in these regions. The rapidly changing world economy, however, is shifting the spotlight to emerging markets, perticularly Asia.
The past decade has seen an increase in the number of clinical trials in Asia, but these were largely cost-driven "off-shoring" of patient enrollment, designed to take advantage of the region's large population, diverse ethnic backgrounds and relatively low cost of clinical trials, rather than organically-driving innovation from within the region.
Opportunities in research and innovation
As companies shift their investments towards Asia, the region is quickly gaining importance as a discovery center for new drugs. Asia is the most populous continent in the world and has an abundance of talent as well as opportunity.
Asia Pacific's capacity for innovation is tremendous if you look at the level of private sector spending on R&D and the availability of scientific and engineering talenti. Another important reason global pharmaceuticals are keen to conduct research and innovation in this part of the world is because it serves as a stepping stone for them to build on their Asian presence.
Activities in Asia will strengthen company reputations. This will help them to shape domestic healthcare markets, build Asian data and information, and help improve healthcare provision in the region. The commercial result is potential to build market share, which is a strategic consideration as the eight markets in South East Asia alone are projected to have a total pharmaceutical market value of $77.4 billion at retail prices by 2016.
Asia's fast paced growth, increasing pharmaceutical market size and improving infrastructure make it the region of choice to conduct R&D. Furthermore, due to urbanization and diet, Asia is increasingly experiencing a high prevalence of "rich man" diseases previously more common in Europe and North America. India, for example, has the highest diabetic population in the world, while across Asia infertility rates are increasing. More than 40 million people in China are estimated to suffer from infertility problems, putting the infertility rate at 12 percent, as compared to just three percent, 20 years ago.
The region's healthcare priorities are gradually shifting from acute disease management to lifestyle disease management. Research into chronic diseases with high prevalence therefore, provides commercial opportunity while helping to address the local unmet medical needs - providing opportunities for global pharmaceutical companies, the regional scientific and medical fraternity, and the local population.
Unfortunately, conducting R&D in the booming Asian markets is not without its challenges. One of the most common issues faced by global pharmaceutical companies in Asia is the lack of strategic drug development capabilities. This coupled with a lower number of experienced investigators, and local experienced pharmaceutical clinical development staff may hinder those wanting to venture into R&D in Asia.
The standards of intellectual property (IP) in Asia have improved and regulations have increased as IP issues are constantly being discussed and new trends explored such as at the '3rd Global Forum on Intellectual Property', recently held in Singapore. Unfortunately, one issue related to IP protection appears far from resolution, which is that of trade secrets. In many emerging Asian markets, local regulations on clinical trials and approval processes for new drugs are not always clear and well communicated. Information related to drug registration, including information on how to manufacture the drug, is not always made readily available to foreign pharmaceuticals.
At times, even the rising cost of doing clinical work in Asia would derail R&D efforts and make it difficult to keep trials on track.
Foreign-based pharmaceutical companies face a host of challenges and often, it is not enough to merely establish a local presence in Asian markets. To overcome these hurdles, pharmaceutical companies are increasingly adopting a partnership model. This strategy allows companies to develop relationships with the local communities, businesses, authorities, as well as the scientific and medical fraternity in a complementary way to maximize the strengths and capabilities.
The benefits of local partnerships
Local institutions such as hospitals are generally keen to explore partnerships with foreign-based pharmaceuticals as these represent opportunities for skills transfer, professional development and scientific exchange. Such partnerships also present the institution with opportunities to be involved in the development of medicines and healthcare solutions for Asian patients. For pharmaceutical companies, partnerships with local academia and clinicians are crucial to gain local insights into Asian patients needs so that drug development strategies can properly address these needs.
Local partnerships in Asia could take several forms. For example, Merck Serono is involved in establishing centers of excellence together with local institutions to provide training and education in key areas of need. We also partner with R&D hubs in China and Japan to support innovation and drive early drug development for Asian indications. As market leaders in fertility and cardiometabolic care the company also has significant development programmes to generate local data that would benefit both the company and the local people.
Asia in the next decade
Asia's fast paced growth and potential market size can clearly be seen in markets such as India and China. For example, the Indian pharmaceuticals market is expected to grow to about $20 billion while China's pharmaceuticals market is expected to reach $38 billion by 2015. Other up and coming markets include Korea, Taiwan and Indonesia. Many global pharmaceuticals are already seeking ways to leverage the potential and drug development capabilities in these markets.
In the next decade, Asia is expected to be the highest growth region in the world. According to The Economist's forecast of global economies, by the year 2020, China is expected to become the largest economy in the world while Indonesia, and Thailand is expected to claim the fifth, and eighth spot respectively.
To fully capitalize on the R&D opportunities presenting themselves in the growing markets of Asia, we are likely to see more partnerships between Asian institutions and foreign-based pharmaceutical companies. The shift towards a model of multiple strategic partnerships will allow for the sharing of business knowledge and technical skills with local expertise and insights.