the World is Flat

The world, indeed, is flat.

Mention outsourcing and you hear all kinds of claims about American jobs being stolen by China, India and other countries in Asia. But for much of San Diego's pharmaceutical industry, outsourcing is a financial necessity.

"Competition is everywhere. With prices going up and salaries going up, it would be prohibitive to get drugs to the market" without turning outside the United States for cheaper labor and less
costly trials, said Scott Saika, CEO of Ambit Biosciences in San Diego. Saika was joined by Dr. Penny Randall, senior director of medical and scientific services for Quintiles, and Krishna Kanamuri, chief business officer for Sai Advantium Pharma Ltd., both San Diego firms. All
three were part of a panel, moderated by Dinu Sen, , CEO of Avera Pharmaceuticals Inc., dealing with the topic "Outsourcing and Offshoring in the Life Science Industry: Challenges and
Opportunities," during the monthly meeting of TiE, the Indus Entrepreneurs, at
the La Jolla Women's Club.

The panel took the gathering through all the stages of bringing a drug to market and the costs involved at each stage. And while seeking opportunities overseas may be the way to survive these days, it is not without risk, according to the panelists.

Said Saiko: "You have to be careful who you partner with. You may find your idea in a catalogue of a small company" in Asia.

All three, who represented life science companies involved in outsourcing and offshoring,
discussed quality, regulatory, legal and financial challenges companies face in today's extremely competitive business environment.

"You have to pay lower to remain competitive," said Saiko, who added that countries in Asia are already catching up in the amount of money they spend on getting pharmaceutical products to market.

While the United States spends 2.6 percent of its gross domestic product on research and development, for example, Japan spends more - 3.5 percent - while Korea and China spend 2.6 percent and 1.4 percent, respectively.

In the United States, according to the panelists, it takes between $500 and $900 million and 10 to 12 years to get a drug to market, which makes it financially practical to cut costs anywhere during the pocess, from discovery through the three rial phases to actually marketing the
final product. Some of the issues that have to be considered include case control, control over
discovery, confidentiality and failure todevelop in-house expertise. On the plus side, there's a lot of money to be saved.

In India, for example, it costs about $25 a day to house a patient, compared to $1,000 a day in the U.S. This can be especially crucial during the final clinical trial, which requires thousands of patients before a drug will pass U.S. Federal Drug Administration Approval.

Ironically, the panelists concurred, the most important phase, the initial discovery, is the toughest to raise money for. "The nature of the product has not been established," Saiko pointed out. "But savings here means more money later in the crucial trial phases." Outsourcing and the ability to speed development of drugs by working with overseas partners was one of the main
topics of last November's second annual Pacific Forum, produced by the Sino- American Biotechnology and Pharmaceutical Professionals Association (SABPPA).

According to testimony at the conferece, some life science firms are saving as much as 75 percent on projects by completing them in Asia. In fact, according to industry sources, partnering with companies in China, India, Taiwan, Singapore, Japan and, more recently, Vietnam, are becoming the norm more than the exception.

At the TiE meeting, Randall said, "A lot of work is going to India. Most major companies have trials going on there now." Her fellow panelists agreed that India as an outsourcing partner has a lot going for itself.

While 1,650 languages are spoken throughout India, 24 of them by a million or more people, English is spoken extensively. Also, the country's infrastructure "is sometimes good," said Sen, who drew some laughs form the largely Indian audience. India also has a large patient population, who are more family oriented, less prone to drug problems and generally in
better health than their American counterparts, according to Kanumuri. Also on the plus side, and in China as well, the work force is highly educated.

Contrary wise, managing trials at a variety of sites throughout India may behard to manage because of the proliferation of so many local languages. Also, added Sen, the learning curves of staffs is not as fast as in the U.S., some hospitals are not "up to speed," regulatory timelines
are different and many labs are not fullyaccredited.

In the end, a lot depends on the quality of partners one finds. The topic of outsourcing was also the topic at an informal luncheon gathering recently by SABPPA members. Hui Li, the group's president, contended that as few as 30 percent of all discoveries are profitable.
"If you have resources in these Asian countries, it allows you to do research at lesser costs and helps American companies to be more productive," said ZhuShen, senior director at Immusol and one of the founders of SABPPA.

"The world is flat, with technology able to connect people globally. And that promises innovation," added Shen, who was recently nominated for a prestigious Athena Pinnacle Technology Award for contributing “to the vitality of women's roles in the San Diego technology community.”


Conclusion: As for outsourcing, "people will take advantage of that. If they don't, they will be left behind,"

(Source: http://www.asiamediainc.com/atf/cf/%7B8654644D-2241-4F54-B13D-589F4D8E9C1F%7D/ASIA%20April%206%20Outsourcing.pdf)