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Pharma's Evolution

by Rudy Baum
November 26, 2007 | A version of this story appeared in Volume 85, Issue 48

Two major stories in this week's issue illustrate well the changes occurring in the global pharmaceutical industry. These shifts have profound implications for drug discovery and development, on the one hand, and are profoundly disturbing for the consumers of pharmaceuticals, on the other. As with so much else in today's world, developments in China and India are the primary drivers of change.

This week's cover story on contract research organizations (CROs) around the world was written by C&EN reporters based around the world: Jean-François Tremblay, C&EN's Hong Kong bureau head; Sarah Everts, the magazine's European science and technology correspondent based in Berlin; and Rick Mullin, a senior editor based in Edison, N.J.

CROs provide a wide range of chemistry and biology services to pharmaceutical companies—everything from high-throughput screening of compound libraries to assistance with sophisticated synthetic and medicinal chemistry.

The C&EN reporters write: "As recently as two years ago, the trend in the contract research industry was clear. CROs in China and India were prospering while those in Europe or the U.S., unable to compete with lower costs in Asia, were retrenching. The Chinese and Indian CROs were expanding their labor force and range of capabilities, while Western ones were contending with payroll reductions."

Much has changed, however. Pharma's infatuation with screening large libraries as a tool for discovering drug candidates has faded. Firms in China and India can no longer rely as much on their cost advantage over Western firms. Buyers are looking for specific technologies or an integrated range of services and often prefer to work with a company geographically close by. These trends created opportunities for CROs with sophisticated chemistry capabilities in Moscow and Kiev, Ukraine, and for new and established CROs in North America.

The competition, though, is fierce. Andrew S. Thompson, CEO of J-Star Research in South Plainfield, N.J., told Mullin: "We are always busy. But there is this constant threat, this sword of Damocles. There are always 50 to 100 companies in China or India that claim they can do exactly what you do for one-fifth the cost."

The lead Government & Policy Department story by Senior Editor Bette Hileman focuses on a different and troubling aspect of the rise of drug manufacturing in China and India. While an increasing proportion of the advanced pharmaceutical ingredients (APIs) and finished drugs in the U.S. come from China and India, FDA's inspections of the facilities that manufacture those compounds are woefully inadequate.

Hileman's story is based on a recent hearing convened by the House Energy & Commerce Subcommittee on Oversight & Investigations. Witnesses' testimony "disclosed a myriad of problems involving FDA's ability to ensure that imported drugs are safe," Hileman writes.

FDA, for example, "maintains two, radically inconsistent, databases for listing foreign makers of finished drugs and active ingredients," Hileman writes. One covers 3,000 companies registered to market drugs in the U.S. in fiscal 2007; the other lists 6,800 firms that actually shipped drugs that year. What's more, the lists were created with different computer systems and cannot be reconciled with each other.

According to the Government Accountability Office, of the thousands of firms exporting drugs into the U.S., 295 were inspected by FDA in fiscal 2007. In China, the country with the largest number of drug exporters, FDA inspected only 13 out of at least 714 plants exporting to the U.S.

And there are no easy solutions to the problem. FDA desperately needs to upgrade its information technology systems, which FDA Commissioner Andrew C. von Eschenbach told the hearing was one of his top priorities. The agency also needs to set up permanent offices in foreign countries to shift the current approach to import safety "with a prevention-focused system." All of which will take money. Considering the stakes, it would be money well spent.

Thanks for reading.

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