The contract research and manufacturing services may soon replace generic drugs manufacturing as the preferred business option for Indian pharmaceutical industry, if growing revenues from CRAMS business is any indication.
The growth potential is so huge in CRAMS, which spans clinical research, contract manufacturing and bioequivalance studies, that India could even claim up to 20 per cent of $30 billion global CRAMS business in the near future, it is felt.
Giving credence to the argument is the recent estimates of Frost & Sullivan that Indian CRAMS business valued at $895 million in 2006 will have a compound annual growth rate of 32 per cent for the next seven years to reach close to $6.6 billion by 2013.
"CRAMS is the business option for immediate future for the pharmaceutical sector. Indian pharma companies have proven their capabilities in pharma chemistry, medicinal chemistry and formulation business in the generic space.
"India's strengths have seen it grow as the powerhouse of generics during the 1995-2005 period. The decade of generics has now given way to the decade of CRAMS (2005-15)," said Sanjiv Kaul, managing director of Chrys Capital.
Among the early ones to have sensed the advantages of CRAMS are the companies such as Jubilant, Suven, Dishman, Divis, Biocon and Nicholas Piramal who have already made CRAMS an integral part of their business.
Jubilant's acquisition of the US-based contract injectable maker Hollister - Stier Laboratories for $138.5 million on April 24, 2007 is the latest development that demonstrates the growth trend among CRAMS players.
In a conservative analysis, Kaul says: "Of the $550 million CRAMS business in 2005-06, contract manufacturing segment accounted for $300 million revenues. The clinical research, including bioequivalance studies generated the rest. Pure clinical research - drug discovery research, which is going to be the future of Indian pharmaceutical industry post 2015, is also beginning to happen in the country," he added.
As per a Frost & Sullivan study, the CRAMS segment has been contributing 8 per cent to the total Indian pharmaceutical business. Factors such as vast expanse of specialty hospitals (nearly 700,000 hospital beds and 221 medical colleges), rich talent pool, large and diverse gene pool, increasing number of chronic diseases and a combination of diseases characteristic of developing and the developed countries are all highlighted as the reasons for emergence of the CRAMS industry.
According to Mahesh Sawant, Program Manager, Healthcare Practice, Frost & Sullivan, "The Indian life sciences industry is transitioning towards newer business models such as CRAMS. The CRAMS model is slowly moving up the value chain with focus, now shifting towards providing services in areas within contract research and manufacturing, which were traditionally not looked at."
