CRAMS in

Pharmaceutical Industry
 What is CRAMS?
• CRAMS is Contract Research And
Manufacturing Services pertaining to
outsourcing of research and manufacturing
activities
• It involves custom chemical synthesis, clinical
trials & development
 What is Contract Research?
• CR includes preclinical & clinical trials, process
& engineering research which is supplied to
the innovator company at the pre-commercial
stage of the molecule
• CROs deal in clinical studies, monitoring,
regulatory and compliance services for new
drug development, evidence based research &
combination of other products & services
 What is Contract Manufacturing?
• CM involves supplying large quantities of the
drug. It could involve supply of intermediates,
APIs and formulations
Effects of Outsourcing
 Global Outsourcing Scenario
• Global market for Contract Research and
Manufacturing Services (CRAMS) was
estimated to be US$55.48 bn in 2007
• Global Pharmaceutical Outsourcing market is
approximately worth US$70 bn in 2009
Global Contract Research Scenario
Facts in drug discovery :
• 370 Biotech medicines to treat 200 diseases are
in the development pipeline from 144 companies
• Of every 5,000 compounds only 5 make it to
clinical trials.
• In spite of a sluggish economy R&D spending is
on the rise
• 6.8 percent increase in the R&D spending by top
five Pharmaceutical Companies
• Contract Research market US$32 bn, growing
at a CAGR of 13.8% in 2009
• Represents a significant 23 percent of the total
Global R&D expenditure currently being
outsourced
• Expected to grow to US$ 45-47 bn by 2012
Source: Goldman Sachs
 Global Contract Manufacturing Scenario

• Worth US$39 bn accounting for the major

share (approximately 68%) of the Total Global
Pharmaceutical Outsourcing market in 2009
 Reasons behind outsourcing
• Costly regulatory barriers
• Rising cost pressures
• Labor cost differences
• Long time taken to bring the drug into the
market
CONTRACT PHARMA OUTSOURCING SURVEY • May 2008
Reasons for Outsourcing by the
pharmaceutical companies

Other reasons like:

a.Resources not available internally
b.Data management expertise
c.Financial comparison (in-house vs. outside)
 Indian Pharmaceutical Market
• India is among the fastest growing
pharmaceutical markets in the world
• The domestic pharmaceutical market recorded
sales of US$ 15 billion in 2009, grew by 17.5%
over the previous year
• Pharma sector has witnessed an upswing in the
revenues from service segment, due to the
increase in outsourcing of Contract Research &
Manufacturing Services (CRAMS) to India
• Indian pharmaceutical offshoring industry is set to
become a $2.5 billion opportunity by 2012, growing at a
CAGR of 37.6% - by the management consulting firm
Zinnov
• Out of the projected $2.5 billion market by 2012, contract
manufacturing accounts for the maximum share as the
total manufacturing outsourcing business in India will
cross $900 million by 2010 followed by clinical trials which
are growing at the compound annual growth rate of 31
per cent and are set to become $608 million industry by
2012.
 India’s Edge
Basic Production Cost in India up to 50% lower than in the US
• 30 – 50% lower depreciation
– FDA approved plants can be constructed in India for 30 – 50% lower costs
– Higher utilization of equipment due to improved processes
• 85-90% manpower cost savings
– Labor costs in India typically 10-15 % of the cost in the USA
– Savings applicable across all hierarchal levels (e.g., operators, research
scientists, etc)
– Improved, more efficient processes contribute to lower labor costs per unit
• 40-50% savings in raw materials
– Bulk drugs can be manufactured in house at 40-50% of ethical’s cost
– Excipients and intermediates sourced locally at 20-30% lower costs
– Most other raw materials can be sourced
Source: OPPI – Adapted from Monitor Group, Study on Outsourcing Opportunities in
Indian Pharmaceutical Industry
Leveraging India’s Capabilities in Clinical
Research…
Discuss

IS CHINA A THREAT TO INDIA?

Thank You