Talent hunt

CRAMS space: Opportunities galore.

Drug discovery can prove to be a high-return gambit for Indian pharma companies, but alongside a lower-risk (and lower-return) strategy would be contract research and manufacturing services, or crams in quickspeak. crams is expected to be a $1-billion (Rs 4,100-crore) opportunity by 2010, from just $200 million (Rs 820 crore) today-in effect a cumulative average growth rate of close to 50 per cent between 2007 and 2010. These are industry estimates of the opportunity open for players out of India in the crams space. The driver: Constant pressure on global pharma innovators to explore ways to reduce costs (including through outsourcing to locations like India). India already has established players in this space like Divis Laboratories, Nicholas Piramal India, Dishman Pharmaceuticals, Jubilant Organosys and Shasun Chemicals. In 2005, for instance, the global outsourcing opportunity was estimated at $27 billion with contract manufacturing worth $15 billion and the balance accounted for by contract research. In this, India accounts for just $100 million (a 0.67 per cent market share) in contract manufacturing and an insignificant proportion in contract research.

So, it is a no-brainer that the opportunity is huge. But then, consider this: crams players out of India are already beginning to find a huge dearth of skilled resources in the critical areas of process development, manufacturing and quality control/quality assurance as compared to chemistry or analytical where the talent is available. "Except chemistry graduates and post-graduates, there is severe paucity of trained personnel," says Utkarsh Palnitkar, Partner and Industry Leader (Health Sciences), Ernst & Young. Not surprisingly, he feels: "Manpower training is emerging as a high-investment cost issue."

Most in the space would agree considering that companies are increasingly turning to in-house training to feed their future growth. Take, for instance, Laurus Labs, a crams player located near Hyderabad. The US-based Aptuit Inc, a global contract drug development firm, will invest $100 million (Rs 410 crore) over the next four years in Laurus Labs, making this arguably the biggest-ever overseas investment in the crams space in India. "There is talent available but it is raw and needs to be made employable. We have created the Aptuit Laurus University and here new graduate recruits are provided intensive 12-week classroom and lab-based training," says Kunal Khattar, Director (Corporate Development), Aptuit. In the last six months, Aptuit has trained 100 and plans to train 50 every quarter going forward. It is now also toying with the idea of tying up with a local university to give graduates professional certificates at the end of the training programme. Says Khattar: "We want to bring expertise into India so as to help create an eco-system that can spur development of innovative drugs.''

Indeed, time is running out. As Palnitkar points out: "For early-stage chemicals, India has already started losing out its cost-competitiveness to China. It is only for complex chemicals, final products (intermediates/active pharma ingredients) or formulations that India is seen as a destination for outsourcing with its large number of USFDA approved plants and CGMP (current Good Manufacturing Practices) compliant manufacturing facilities."