Back to News

Developing capabilities to profile the next gen compounds in new modalities is expected to drive preclinical CRO growth

The preclinical Contract Research Organisation (CRO) sector in India is witnessing massive transformation with huge investments being made in this sector by domestic and multinational players to cater to the global needs. A significant boost to the Indian economy is expected over the next five years by the foreign and domestic investments being made in the preclinical CRO segment. In an interaction with BioSpectrum Dr Satinder Singh, Associate Director, DMPK Aragen Life Sciences, shared his insights about future growth drivers of preclinical CROs based out of India.

What is Preclinical CRO?

Preclinical is a stage of drug development that ensues before clinical trials (testing in humans) and during which drug potency, efficacy, pharmacokinetics, tolerability and safety data are collected, in laboratory settings to determine a starting, safe dose for FIH study, and forecast potential toxicity of the drug product in humans. The preclinical phase utilises a range of in-vitro platforms and in-vivo animal models to simulating human physiology and generate valuable insights into the biological activity, pharmacological effects, and potential toxicity of investigational drug candidates. Most pharma companies do not want to invest their time and resources in this domain and rather opt for professional expertise extended by the preclinical CROs. Preclinical CROs offer their expertise in the multifaceted management of this initial stage of the compound screening and evaluation process, which includes selection of suitable invitro profiling platforms, animal models, and the execution of pharmacokinetic, efficacy, mutagenicity, genotoxicity and in-vitro and in-vivo toxicity assays.

At Aragen Life Sciences, we support discovery, preclinical profiling and clinical candidate selection of NCEs for example small molecules and TPDs and NBEs for example peptides, mAbs, Oligos, RNA Therapeutics or therapeutic proteins. This also includes drug testing in rodents and non-rodents like minipigs, rabbits, beagle dogs or non-human primates like rhesus or cyno monkeys for assessing the pharmacokinetics, efficacy and safety of lead compounds.

What is the revenue forecast for preclinical CROs based out of India?

The global drug discovery research outsourcing market was valued at $3.8 billion in 2022 and is increasing @ CAGR of 7.3 per cent to touch $6.2 billion by 2031. The Indian preclinical CRO market size was around $183.3 million in 2023 and is slated to grow @ CAGR of 11.4 per cent in next six years to reach $393.6 million by 2030. The key factors driving this growth are increasing trends of preclinical R&D outsourcing by pharma and biotech companies to reduce drug development expenses, low operational costs in India compared to western countries, availability of technically and scientifically sound workforce, specialised resources, infrastructure, high throughput state of the art screening equipment in preclinical CROs based out of India. Amongst different verticals of preclinical CRO, biology service segment is expected to attain the fastest growth @ 7.5 per cent during the next six years.

How is revenue share structured amongst different preclinical CRO verticals?

The two broad verticals of preclinical CRO are chemistry and biology. In chemistry, custom synthesis and process development generate maximum revenue. In biology, Non-rodent animal toxicology studies contribute to the largest revenue share followed by bioanalysis and DMPK; because of the technological advancements in bioanalytical equipment, techniques and automation. Furthermore, DMPK studies and bioanalysis are conducted throughout the drug research and development process, thus contributing a good share to preclinical CRO’s total revenue.

Did COVID-19 impact business revenue of Indian preclinical CROs?

Prior to COVID-19, China was the front runner in the preclinical CRO segment. However, as a result of complete lockdown, movement restrictions and distancing norms during COVID-19 in China, the preclinical CROs, API and drug product manufacturing were temporarily closed. This disruption due to COVID-19 impacted the revenue and operations of CROs in China and timelines committed to clients were indefinitely stretched. Pharma and biotech companies shifted preclinical contract research to India and revived the projects at a fast pace to make up for the delay. So, business revenue of Indian preclinical CROs registered a positive trend during COVID-19.

What are the business models preclinical CROs practice?

It largely depends on the requirements of the client. Pharma or biotech MNC can partially or fully outsource their R&D activities to the preclinical CROs. The clients then don’t have to invest into laboratory infrastructure, high end equipment and skilled manpower and thus, these companies can focus on their core competencies and areas of expertise. In another model, the preclinical CROs do some groundwork and establish early POC into particular disease segments and then approach pharma companies having potential interest in that therapeutic area to secure the funds for late-stage drug development. This type of business arrangement generally involves upfront payment followed by milestone payments as the compound progresses through different stages of development, and eventually royalty payments on sales if the compound gets marketing approval. The intellectual property in this case is jointly owned.

Do preclinical CROs based out of India face domestic and global market competition and price war?

Pharma and biotech MNCs do bargain for the project cost, especially when they have various state-of-the-art CROs offering HQ services and time bound delivery at their disposal. A good number of preclinical CROs both domestic and international, operate in the Indian market. These CROs can cater to the concept of commercialisation requirements of pharma and biotech companies. There is intense competition amongst existing players. Additionally, there is a threat of new entrants too. Hence pricing needs to be very competitive. The other decisive factors are brand image, TAT, access to the test site, infrastructure and scientific capabilities, expertise in particular therapeutic areas, existing clientele, global footprint and client relationships. The established CROs capitalise on already well-fortified client relationships, and expertise in liaisoning with regulatory agencies across different geographies; thus, impeding the sustenance of new players.

The future ready CROs which are on path of continual innovation and expansion of service portfolio, having some key differentiators in kitty, improving research quality and efficiency, and maintaining solid client relationships will sustain in this competitive environment.

What therapeutic areas are expected to generate good business in the near future for preclinical CROs?

The key therapeutic areas including oncology, CNS disorders, autoimmune diseases and infectious diseases will generate more interest among the local and MNCs in near future for preclinical CROs.

How important is data confidentiality at preclinical CRO?

Preclinical CROs handle sensitive information and confidential data generated during the drug discovery process. Maintaining the privacy and confidentiality of research data generated for respective clients is paramount and any breach of data confidentiality can have legal and financial implications along with reputational damage. Therefore, ensuring confidentiality, whilst handling data of multiple MNC clients is imperative to the future of preclinical CROs.

What is the competitive advantage the Indian ecosystem offers to pharma & biotech MNCs intending to outsource preclinical R&D work?

India is a pharma hub, the pharmacy of the world; catering to 20 per cent of the global generics supply by volume and 60 per cent of the global demand for vaccines. India is the largest provider of generic drugs and the Indian pharmaceutical industry is currently ranked third in pharmaceutical production by volume and growing at a CAGR of 9.43 per cent since the last nine years. One of the key factors contributing to India’s success in the pharmaceutical sector is its strong chemistry research base. The complexities and resource-intensive nature of medicinal chemistry require special technical and scientific expertise, compound libraries, infrastructure and equipment. The increasing chemistry R&D expenditure worldwide has propelled the growth of India’s preclinical CRO market, as pharma and biotech MNCs continue leveraging India’s resources and chemistry expertise to advance their drug development pipelines. So, India is steadily emerging as an important CRO destination due to its scientifically and technically skilled workforce and cost advantages.

What is the likely impact of Artificial Intelligence (AI) and Machine Learning (ML) on the growth of preclinical CROs?

AI, particularly Gen AI, emerged as an efficient alternative tool to the traditional screening methods and navigates drug hunters in the development of new therapeutics. A transformative approach, Gen AI expedites drug discovery by contributing to target identification, predicting drug target interactions, compound generation, in-silico pharmacology analysis, drug formulation design and revolutionising clinical trials by better patient selection, predicting safety and tolerability signals for early action and this improving clinical trial success rate. Gen AI predicts physicochemical properties, binding affinity, bioactivity, multi-target effects and assists in prioritising compounds for further validation. ML and molecular dynamics (MD) simulations aid denovo drug design. Gen AI also helps in generating study protocols, comprehensive reports and drawing meaningful conclusions out of the voluminous data generated during the course of drug development thus saving cost and time.

Adaptyv Bio’s Gen AI-based virtual screening platform, for example, predicts the binding affinity of compounds to target proteins. DeepMind’s AlphaFold module helps understand biological processes and drug-protein interactions. PandaOmics identify and prioritise significant disease-related targets. Chemistry42 designed potential drug candidates that specifically targeted the identified proteins. Gen AI driven drug development helps discover drug candidates faster by synthesizing ~1/10 the number of chemical moieties based on predictive druggability attributes and the ability to “fail fast” in preclinical development to drop unfit molecules  early, thus saving cost and time.

What would be key growth drivers for futuristic preclinical CRO?

It is easy to make a mark but takes huge perseverance to sustain that; and sustainability is the key to success. Long term strategic collaborations and partnerships with Tier-I and Tier-II pharma and biotech MNCs shall boost the sustainability. Keeping the operational cost as low as possible, making rational investments based on realistic business forecasts and using the infra and equipment to maximum will fuel long term viability. 60:40 ratio of perennial Full-Time Equivalent (FTE) programmes and short-term Fee for Service projects [FFS] may impart better sustainability in the long run. MNC pharma and biotech companies prefer to work with CROs:

• Having well-equipped labs with advanced research tools to generate HQ data.
• Equipped with Next gen tech like HTS, molecular profiling and advanced imaging systems.
• Having implemented automation, robotics, assay miniaturisation and innovative assay formats for enhanced preclinical research efficiency, reduction of human errors and the turnaround time
• Capable of screening large compound libraries quickly and cost-effectively
• Having scientifically and technically sound staff
• Having seasoned project management team which can communicate effectively and provide updates on real time basis
• Having access to futuristic AI tools to support various stages of the drug development process.
• Practicing HQ electronic documentation
• Offering in-house validated Organs-on-chip, Organ on Chip/Organ Tox Platform, 3D Organoids, 3D Spheroid and 2D Cell Cultures to test the safety and efficacy of new drugs and establish PK/PD
• Specialised in preclinical services, such ADC quantification, multi-drug and metabolite-based bioanalysis and large molecule PK studies

Source: https://www.biospectrumasia.com/e-magazine