BIO OUTSOURCING ASIA

Biopharmaceutical Outsourcing Opportunities and Challenges

DECEMBER 2007

VOLUME 1 ISSUE 1

TAIWAN’S TECHNOLOGY

TRANSFER PROMOTION

PLATFORM Relationship building with major Taiwanese players within the private sector and within

the government

SINGAPORE: THE BIOPOLIS OF ASIA

Singapore provides an extensive range of beneficial programmes, policies and

schemes to give investors, start-ups, and individuals a competitive advantage

Outsourcing to

and Understanding the rationale, opportunities and challenges

Biopharmaceutical Outsourcing

Rationale behind Biopharmaceutical Outsourcing in India by Dr. Anjali Shukla, Accure

Labs Pvt. Ltd.

Market Analysis

Booming Clinical Trials in India by RNCOS

Spotlight on Bangalore by CanBiotech

Comparing Trends across the Indian and

Chinese Drug Discovery and Development

Life Cycles by CanBiotech

Operations Management

Improving Efficiency through Consolidating Asset Management and Streamlining Processes by Mike Benevento,

Marketing Director, Global Services, GE Healthcare

Spotlight

TAIWAN by Dave Silver, President, Biotech

East Co. Ltd.

SINGAPORE by Mr. Keat-Chuan YEOH,

Executive Director, Biomedical Sciences Group

Advice from our Outsourcing

Service Providers

Doing Pharmaceutical and Nutritional Outsourcing in China and India: What Problems May be Encountered by Frederick D.

Sancilio, Ph.D., Jerilyn J.Spencer, and Nealie C. Newberger, Ph.D.

Bio Outsourcing Asia TABLE OF CONTENTS

December 2007 Volume 1 Issue 1 © CanBiotech Inc.

Format and Editorial Calendar

Formats: Online, Digital, and Print Subscription: 25,000 Content: Feature Stories, Trends and Analysis, Case Studies, Technology Profiles, Company Profiles, News, Events Access: Free

November-December 2007: Outsourcing Opportunities in Asia, The BioIndia, The BioTaiwan, The BioChina, and The BioSingapore Perspectives

UPCOMING ISSUE:

March-April 2008: India-Emerging Business Models, India vs. China-Competitors?, A Profile of India's Leading Companies and Service Providers

Contact the Editor at editor@canbiotech.com to learn more about writing for and featuring your expertise and/or company in our publication.

Biopharmaceutical refers to any product that is produced using biological processes, organisms, or products for the purpose of pharmaceutical consumption. It is the most upcoming segment of the pharmaceutical industry due to the evolution of biotechnology. This has resulted in highly efficacious products that aim at providing cures for life-threatening and difficult ailments. Certain factors, like increasing costs, complex regulatory issues, high prices, and tremendous competition, are forcing companies to improve their operational efficiency and productivity. Outsourcing has therefore, become a strategic imperative for companies in their quest to improve their efficiency and productivity. In today’s global economy, outsourcing has become a very common phenomenon. But biopharmaceutical outsourcing is still in the nascent stage.1 By outsourcing, management can focus their critical resources and competencies on developing new drugs through research and development, improving market share, gaining competitive advantage, generating more profits, and achieving customer satisfaction. Several large pharmaceutical companies have outsourced many of their business processes. Factors such as lower costs, improved productivity, higher quality, customer satisfaction, time to market, and ability to focus on core areas are some of the benefits of outsourcing. Biopharmaceutical outsourcing is moving to center-stage. However, there are many challenges and risks associated with biopharmaceutical outsourcing. Outsourcing biopharmaceutical development has crossed the rubicon as far as cost reduction is concerned. While the majority of the top service providers, like Boehringer Ingelheim, Lonza Custom Manufacturing, etc., are based in the United States, there are emerging opportunities in Asian countries, which are driving off shoring of biopharmaceuticals to these new destinations. For example, Biocon in Bangalore, India, has announced that it will manufacture Bristol-Myers Squibb’s (New York, USA) recombinant insulin product.

In the area of clinical trials, the Biopharmaceutical Manufacturing Technology Center (Singapore), a part of the Bio processing Technology Institute, has opened a pilot-scale facility to produce materials through Phase II clinical trials.

Benefits of Outsourcing in Biopharmaceutical Industry The pace of invention of new techniques in drug discovery is faster than can be mastered by any individual company. Therefore, by carefully planning the scope of outsourcing within a company’s overall research and development agenda, can have excellent payoffs in terms of utilizing locally non-existent technology, cost, and overall product development time. Some of the benefits of outsourcing are as follows: Reduce R&D Costs and Improved Margins Research and development costs are typically 20% of a company’s total sales. Companies have traditionally sought to reduce spending by engaging in selective outsourcing of fundamental research activities to universities, government laboratories, and research institutes. However, it is impossible for any single medium and small sized pharmaceutical company to beat the pace of innovation at the applied research level and stay ahead of external firms creating innovation in their respective core competencies. When the Swedish biotech firm KabiGen decided to make its foray into genetic engineering to manufacture pharmaceutical products, it did not have any resident expertise but was still keen on not missing the commercial potential of this new technology.2 KabiGen decided to jump start into this new technical trajectory by contracting R&D work to Genentech given the firm’s research competencies in genetic engineering techniques. KabiGen essentially funded Genentech to create new scientific techniques and absorbed the knowledge in-house.

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RATIONALE BEHIND BIOPHARMACEUTICAL OUTSOURCING IN INDIA

Dr. Anjali Shukla, Accure Labs Pvt. Ltd., New Delhi, India

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Biopharmaceutical Industry

Research and Development

Drug Development

Drug Discovery

Drug Delivery

Clinical Research

Bio-manufacturing

PackagingSales and Marketing

New ideas and technologies.

Source of raw materials.

Efficient manufacturing capabilities.

Lower labour cost in other countries.

Lower R&D cost in other countries.

Maximizing Internal Efficiency and Capacity The pharmaceutical industry is research and development intensive and hence product driven. Product differentiation and advertising place high importance on adoption and market demand. Traditionally, pharmaceutical companies have invested in their own manufacturing capabilities, sales and distribution channels as none of these segments were easily available in the external market at competitive prices. The critical task for the management in the most simplified terms is to create new drugs having minimal side effects and with high consumer demand. This of course is a highly difficult and deceptive task. Changing market conditions have given rise to a wide range of diversified companies specializing in different segments of the drug discovery process creating a highly competitive atmosphere.

The entry of generics has further intensified the competitive nature of this industry. Refocusing on core competencies allows firms to compete rigorously. For example, some companies may find it more effective to outsource their marketing, sales and distribution functions, while other companies find it more suitable to license drug compounds from other companies and capitalize on their own brand equity, established marketing and sales networks and geographical reach. For example, Novartis Pharma, signed a license agreement with Sigma Tau to develop, manufacture, and commercialize the drug compound Gimatecan having therapeutic value for the treatment of cancer.4 Time to Market First-to-market wins the allegiance of the market. For example, Pfizer’s Viagra generated sales of US $1.9 billion dollars in 2003 alone; this drug still owns a major share of the market in spite of at least two new entrants Cialis and Levitra to challenge its market dominance. The early phases of research can be isolated into constituent steps including chemical or biological screening services involving the isolation of compounds

Without such innovative contracting, it would not have been possible for KabiGen to move quickly into the commercial trajectory of using genetic engineering techniques to produce pharmaceuticals. Access to New International Markets There are several strategies employed by multinational pharmaceuticals to increase their geographical reach and international participation such as direct export, licensing, international strategic alliances through partnerships and outsourcing agreements, and Foreign Direct Investment (FDI). For medium and small sized firms, strategic outsourcing alliances pave the way to sharing complementary technologies in discovery processes, research, and manufacturing capabilities. Conditions for optimal scale of economies are created by bringing resources together. (Figure 1) Cost considerations are very important to be able to compete in international markets especially in Asian markets where the earning potential of consumers is enormously low in comparison with American or European counterparts. In this case, it makes business sense to locally manufacture products and leverage corporate high quality control, brand equity, and best practices to capture market share. Tapping Global Skills Most new innovations in any industry are dependent on computing power and software. No single R&D entity in the world can predict all the possible combinations of applying software and computing power to generate new products and processes. A firm can strive to gain competitive advantage over its counterparts by discovering sources of lower cost or differentiation in any of its activities from any part of the world such as:

Figure 1: Outsourcing across the Biopharmaceutical Value Chain 3

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using the latest computational power and automated high speed screening of leads. By opportunistically outsourcing these relevant areas, firms can shorten product development timetables. Many of the phases that are typically executed in a serial fashion can be done in parallel, that is, by outsourcing operations management to companies that excel in providing efficient drug development timelines including conducting as many steps in parallel. The ability of external companies to detect the toxicity of specific compounds, and perform target validation efficiently can save time and speed up the process. Outsourcing makes it possible for the sponsoring company to concurrently run multiple promising projects as additional resources are pooled in from the vendor. With new technological innovations made available almost continually by vendor biotech companies focused on innovating tools for drug discovery, establishing outsourcing alliances with such organizations can lead to successful completion of project within or exceeding timescales. Risk Factors Protecting IP through Patents In the biotech and pharmaceutical industries, patents are highly effective and remain the single most effective strategy of biopharmaceutical companies to protect their intellectual property rights. The US Patent system is a “give and take” bargain agreement between the inventor and the government. The inventor has to fully disclose to the public “the invention” in exchange for a government protected exclusive right to exploit the invention in the US for a limited time period.5 Patenting allows the inventor to fully exploit the commercial potential of an invention without the risk of theft via duplication by other competing firms. Global patent systems are slowly adhering to the US system. While the signs are positive that

intellectual property is valued in these new markets, sponsor companies should take caution when selecting outsourcing partners. FDA Regulations Biotech and pharmaceutical companies choosing to take advantage of outsourcing need to be similarly cautious in ensuring compliance to the regulatory requirements outlined by FDA. Vendor firms provide access to resources and expertise without high capital investment in equipment. In any outsourcing contract, the regulatory requirements should be specified and partners should be chosen on the basis of existing inherent capabilities and methodologies in place for adherence to such compliance requirements. If the contract firm violates FDA regulations, significant liability may exist for the client as well as the risk of attracting legal sanctions, product seizure, court injunction, and incurring penalties. To mitigate such risks, the sponsor company should take precautionary measures including interviewing partner references, reviewing vendor regulatory files and inspection reports filed at the FDA, as well as tracking of records of earlier dealings with the FDA.6 Tapping Offshore Resources – India Western multinational companies are attracted to India today more than ever before as India offers cost reductions in every industry, from software development to insurance claims-processing, and from customer care call centres to income tax return preparation. The second most important reason most large companies propose to expand abroad is in search of specialized capabilities that are not available locally. Biopharmaceutical Industry in India India is one of the largest and cheapest producers of therapeutic drugs in the world. It stands foremost among the third world and has excellent technology, R&D, and production facilities; a wide range of quality

medicines are made locally for most medical conditions ranging from common fever to specialized antibiotics and vaccines.7

Traditionally, the industry has been only excelling in reverse engineering and tweaking of drugs focused to sell in domestic markets. However, with the product patent rights regime coming into effect from 2005, major players in this industry are forcibly undergoing a strategic shift in their business models. Firms are moving from being copycat generic drug manufacturers to innovative drug firms in order to move higher in the value chain of the industry. These firms also now acknowledge the importance of original R&D work that can lead to filing for internationally patentable New Chemical Entities (NCE) to retain competitiveness. Buoyed with the success of the IT services industry, the government is actively engaging to promote the biopharmaceutical industry by focusing efforts on R&D for creating new molecules, microbial enzymes, gene expression technologies, and a range of genomics and proteomics related activities targeting export markets in drug discovery and development. India has access to a vast pool of well educated and talented workforce and a slew of research centres and world class laboratory facilities. There are a number of research activities in progress- for example, Biocon, Dr. Reddy’s Laboratories, and Ranbaxy are some of the leading companies that have filed for international patents. Indian companies have also started to successfully create strategic alliances with global heavy-weight pharmaceutical companies in the areas of drug discovery, development, and manufacture. In addition to high growth rates, India is also quickly emerging as a preferred destination for contracting research in biotech products as well as drug discovery, diagnostics development, and manufacturing.

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The presence of a large pool of research community that is fluent in English language (the largest outside of the US), biodiversity, a growing technologically sophisticated pharmaceutical industry (the industry is poised to grow at a rate of 25-30%) and India’s signing of TRIPS with a pledge to fulfill the agreement, has triggered a large number of Western alliances with local Indian pharmaceutical and biotechnology firms. Clinical Trials Conducting clinical trials captures a significant portion of drug development costs and is time intensive. A heterogeneous pool of genes and the availability of a large number of patients have attracted a number of companies such as Pfizer and GlaxoSmithKline to conduct clinical trials in India. According to estimates by Kotak securities (2003) it is 40-50% cheaper to conduct clinical trials in India compared to developed markets due to the availability of a large number of physicians, good clinical practices training, and the speed of patient recruitments. However, while most multinational companies conducting clinical trials in India do so through their fully owned subsidiaries, the design of including protocols of clinical trials is still not done in India, but in their other facilities. Only tasks with clearly defined inputs and outcomes are executed in India. Pfizer, Eli-Lily, and Astra Zeneca are a handful of international companies that are successfully conducting clinical trials in India. The sponsoring client company has to take the initiative to design protocols, monitoring criteria, and pre- define data management guidelines. There are very few independent Contract Research Organizations that are already capable of doing these tasks from start to finish without handholding. The leading companies specializing in this area include Clinigene International Pvt. Ltd., Lotus Labs Pvt. Ltd., and Siro Clinpharm. Contract Research Services The Department of Biotechnology (DBT) in India has been instrumental in creating basic infrastructural facilities to

accelerate R&D in the areas of molecular biology and modern biotechnology. Numerous national laboratories and university grants have enabled for large numbers of fundamental research projects in the areas of functional genomics, microbial genomics, human genome diversity, pharmacogenomics, proteomics, stem cells, and bio-computing. International pharmaceutical companies however have been very apprehensive to make any significant R&D investments in India, mainly due to earlier bad experiences involving weak intellectual property protection laws. However, there are signs of a changing attitude and mind set since the signing of WTO and it remains to be seen how the industry shapes up post January 2005. Presently, only few private Indian biotech companies such as Syngene, Aurigene, Shantha Biotechnics, etc., have undertaken contract research services for European and American clients and much of the R&D capability lies in government owned public laboratories. Furthermore, there is scope for many improvements in the areas of regulatory procedures, world class training on GCP (Good Clinical Procedures), and intellectual property protection before the R&D capabilities of India can be fully exploited. Intellectual Property (IP) Development and Protection The Indian Patent Act was passed in 1970 to protect intellectual property. The laws were formed to limit the influence of powerful multinational drug firms. Many safeguards were introduced to ensure easier access to drugs by common people. Product patents were not protected, only the process by which products were manufactured; as well, the duration of such patent enforcement existed only for 7 years instead of 14 years elsewhere. This allowed India to produce generic drugs at a fraction of the cost compared to Europe and America, leading to a rapid increase in the domestic production of generic drugs and bulk formulations, many of which were

reverse engineered and molecular level tweaked copies of blockbuster drugs. As a result, the domestic pharmaceutical industry increased its market share from 25% in 1970 to almost 70% presently. The loopholes in the patent laws caused global pharmaceuticals to view the Indian market with suspect and prevented any large deals from being established in the subcontinent. It is however anticipated that India’s entry into the WTO fold in 1995 and its agreement to ratify patent laws beginning 2005 will encourage a paradigm shift in terms of drug discovery and development by global biotech and pharmaceutical multinationals. References 1. Alvares, K., Chapman, T., Comerford, J., Hovey, V., Kovner, A. R., Peisch, R., Pisano, G. P. & Puryear, R. (1995). “When Outsourcing Goes Awry,” Harvard Business Review, May-June, 73 (3), 24-37. 2. Subhankar Dhar, Mahesh Rajan* College of Business, San José State University, San José, CA 95192. 3. Evalueserve Business Research; Bio Pharmaceutical Outsourcing – Moving to Centerstage. 4. Novartis Media Release; http://dominoext.novartis.com/NC/NCMediaRel9798.nsf/0/f7d10fa53da74677c 1256e12004f4e 5. Blaug, S., M. Shuster, and H. Su (2003). Complying With the Written Description Requirement under US Patent Law: Enzo Biochem v. Gen-Probe, Nature Publishing Group. 6. Kim; H. and I. Buchanan (2003). Biotech Companies and Contract Manufacturing: Regulatory Pitfalls and Commercial Solutions, Professional Corporation. 7. Maria, A, J. Ruet and M-H. Zerah (2003). Biotechnology in India, French Embassy.

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About the Report India has emerged as a strong base for clinical trials in recent times. Due to the multitude of benefits it offers, the country is fast growing as a centre for conducting clinical trials for many international companies. Therefore, RNCOS has launched its research report called “Booming Clinical Trials Market in India” to give first-hand information on the Indian clinical trials market. It investigates the key competitive advantages/disadvantages India has when it comes to conducting clinical trials in the country. The report also does a thorough study of the key factors which evaluate the country’s clinical trials, such as patient pool, patient recruitment, cost, time, government regulations, intellectual property, human resources, infrastructure and ethical issues. India, with its huge patient base, low cost advantage, completion of clinical trials on time, improving infrastructure, with strong government support, is witnessing double digit growth in its clinical trials market. All major pharmaceutical companies and Clinical Research Organizations (CROs) have already started conducting their clinical trials in India, and with improving infrastructure, industry friendly regulations and trained workforce; the growth is only likely to increase in future. However, to achieve its goal of becoming a global hub of clinical trials, the country will have to overcome challenges like unethical trials, delays in trial approval, inappropriate protection of clinical data, and lack of Good Clinical Practice (GCP) certified sites and investigators. Key Issues and Facts Analyzed

Evaluation of past, current and future market trends.

Discussion about the factors driving the clinical research market.

An analysis of the opportunities created by the market.

A review on the government regulations on the market.

An analysis of the major challenges faced by the market.

Key Findings

The Indian clinical trials market is expected to grow at a CAGR of nearly 36% between 2006 and 2011.

One of the biggest advantages of conducting clinical trials in India is the availability of a large patient pool that can be recruited at much shorter time than it takes to recruit patients in the West.

India by 2011, will be conducting more than 15% of the total global clinical trials.

India presently lacks in GCP trained investigators (which are less than 1000). Their demand is projected to reach between 3000 and 6000 by 2010.

India does not provide “Data Exclusivity” in clinical trials unlike US and EU members.

The salary of a clinical data specialist and medical writer in India is around 15% and 9% respectively of what is earned in the US.

The clinical trials market will drive the growth of the diagnostics and pathology industry in India.

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Clinical Trials in India Availability of eligible patients and their recruitment is a major bottleneck in the timely completion of clinical trials. Statistics indicate that only 6% of eligible patients in the US actually participate in clinical trials. As a result, 87% of trials in the US are behind in their recruitment and enrolment. In contrast, the recruitment times in India are much faster. It is estimated that patient recruitment for clinical trials in India is more than 3 fold faster with companies saving 68% of the time to recruit patients in India as compared to the US. (Figure 1) The number of patients per site remains high in India as compared to the US and Western European countries. This can be attributed to faster and easier patient recruitment in India; take for example the case where, Germany's Mucos Pharma asked Siro Clinpharm in Mumbai to help with a clinical trial for a drug to treat head and neck cancer. To find 650 out of 750 volunteers for the trial, Siro Clinpharm had to go to only five hospitals in India and found the volunteers within 18 months. To find the remaining 100 volunteers in Europe, Mucos Pharma spent nearly twice as much time and recruited patients from 22 hospitals. One of the major reasons, why sites can enrol a large number of patients in a short time is the fact that India has a large number of patients with unmet medical needs and by enrolling in clinical trials these patients are able to access free medical care, tests, and drugs, which they otherwise are unable to afford. Infrastructure & Expertise Trained Investigators An investigator is a medical professional, usually a physician, under whose direction an investigational drug is administered to a human volunteer. A principal investigator is responsible for the overall conduct of the clinical trial at his/her site. The number of GCP trained investigators is below the requirement. In 2002, India had around 200-250 GCP trained investigators, which increased to around 500-1000 in 2005. These small numbers

imply that many potential clinical investigators do not have the experience of conducting GCP trials. Thus, adequate training has to be provided by the industry if it wants to increase the number of trained investigators, so that more GCP studies can be conducted in India. With expansion of clinical trials market in India, it is expected that there would arise a need of around 3000 to 6000 investigators to conduct global clinical trials by 2010. The US market, in comparison to India, had 50,000 GCP trained investigators in 2005. This shows that there is still a lot to be done in India to take the clinical trials market to new heights. (Figure 2) Opportunities Demand for Clinical Training Institutes Despite the availability of infrastructure and manpower, clinical research is still in its infancy in India. This is calling for the development of capacities and capabilities in terms of infrastructure, regulatory structure, and the formulation of a specialized pool of research investigators. Hence, a bright future exists for institutes which can provide professional clinical research training in order to meet the growing demand for skilled manpower by the industry. As a result of the increasing demand, various institutions providing clinical research have already opened up in India providing both full-time and part-time courses in clinical research. An example is Institute of Clinical Research in India (ICRI) which, through its collaboration with Cranfield University, provides both M.Sc and management courses in clinical research. Many foreign companies are also making inroads into India to tap this market. For example, Clinfosource, a provider of e-training for clinical trials, is scouting for pharma companies and universities for partnerships. According to the company, the course content addresses FDA regulations, ICH GCP guidelines, ethical considerations, and practical applications.

Figure 1: India and US-Recruitment Time for Patients Participating in Clinical Trials (%)

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Challenges Intellectual Property Protection The Indian clinical trials market has a poor history of intellectual property protection. Although India’s IPR regime has improved immensely with the adoption of the product patents act in 2005, a large proportion of US and European drug firms are still hesitant to do business in India due to perceived threats to their intellectual property. There remains a risk of counterfeit drugs through the use of a foreign drug company’s clinical data by local companies. An innovator must provide confidential details (such as chemistry, manufacturing, and analysis) to the regulatory authorities of the country to which it wishes to bring its product. And as India heavily consists of generic manufacturers who can create identical copies of a brand drug through reverse engineering, international firms will likely continue to be hesitant to conduct business in India for quite some time. About RNCOS RNCOS specializes in industry intelligence and creative solutions for contemporary business segments. Our professionals study and analyze various industries, with a comprehensive study of changing market behaviours. We provide corporations with an insight of an industry necessary to compete in today’s business environment. Additionally, our team focuses on the cause and effect relationship between federal and state regulations and the industries affected by this regulation. The company also works closely with small and medium sized consultancy firms in various industry sectors. We assist in back-end research and data gathering processes. Our accuracy and data precision proves beneficial in terms of pricing and time management. Contact Information Tel: +91 (11) 42141229 Fax: +91 (11) 42141228 E-mail: info@rncos.com

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TO ORDER “BOOMING CLINICAL TRIALS IN INDIA REPORT” BY RNCOS PRICE: $1200 USD Online Download

Visit CanBiotech at: http://www.canbiotech.com/reportsStore_2492.asp?itemId=885&countryCode=CA Or Contact CanBiotech us at damani@canbiotech.com to place an order. Other Related Reports Global Protein Therapeutics Market Analysis This latest market research report “Global Protein Therapeutics Market Analysis” by RNCOS provides an exhaustive view on the global protein therapeutics industry, examining and giving a detailed analysis of the various protein therapeutics used for disease prevention. Asia Pacific Biotechnology Market (2007-2010) The report “Asia Pacific Biotechnology Market (2007-2010)” provides an updated and detailed overview of the Asia-Pacific Biotechnology industry. The report presents information regarding government policies addressing biotechnology and region-wise bioclusters in Asia-Pacific countries. Opportunities in the Indian Healthcare Sector RNCOS’ report “Opportunities in Indian Healthcare Sector” provides extensive research and an objective analysis on the healthcare sector in India. This report has been written to help clients in analyzing the opportunities critical to the growth of healthcare market in India. Detailed data and analysis will help investors to comprehend the changing dynamics of the healthcare industry.

For more reports visit CanBiotech’s Report Store at: http://www.canbiotech.com/reportsStore.asp

Figure 2: India - Number of GCP Trained Investigators (2002 & 2005)

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An Overview of the Life Sciences and Outsourcing

Landscape in India:

Spotlight on Bangalore

© CanBiotech, 2007

About the Report Countries that can offer lower costs during research and development while ensuring adequate protection of intellectual property and adherence to global regulatory standards are well positioned to attract the attention of large biopharmaceutical companies looking to outsource drug discovery and/or development. India is poised to make big contributions to the global healthcare industry. The country is emerging as a competitive base for several segments of the R&D value chain, especially in late discovery, preclinical, and clinical development. Major multinationals have established subsidiaries in India. US and European companies are collaborating with Indian firms to develop new drugs and vaccines, to conduct clinical trials and toxicity studies, to perform molecular modeling and lead optimization, to provide computer services such as bioinformatics, and to develop industrial production processes for new drug ingredients. Similarly, venture capitalists from the US and Singapore are helping to fund start-up biotechnology companies in India. Indian companies are also set to tap into the global biopharmaceutical outsourcing market. These companies are increasingly moving into the developed market and transitioning from bulk drugs to formulation exports. Indian companies are similarly expected to produce many of the top drop drugs that are scheduled to lose patent protection over the next few years. India will not only be accessing the generics market, but the research focus of many large companies has shifted toward the discovery of new chemicals-providing the skill set necessary for upstream outsourcing. Bangalore is fast becoming one of major hubs of the biotechnology industry in India. With Bangalore firmly established as the country’s premier IT and biotech hub, it comes as no surprise that the city is home to India’s largest biocluster. Approximately 158 of the 320 biotech companies are based there, with total revenues of Rs 1,400 crore. Further, 55 percent of India’s biotechnology companies are located in Karnataka. The Government of Karnataka is committed to establishing a biotechnology corridor for the development of the biotechnology industry in Karnataka. Companies in Bangalore with excellent technical manpower are therefore, well suited to take up contract research.

Apart from these companies, multinationals also have the benefit of world-renowned institutions located in Bangalore, which enhances the contract research dimension in Bangalore. (BangaloreBio.com) Contract Research Organizations have great potential to function as export oriented units and are comparable in their activity to the software development activities in the IT sector. Software services were outsourced by large overseas IT companies, starting initially with sub-contracting software development of small modules of complex software and a decade later, the Indian IT sector is now capable of handling the entire software development process-the primary reason for the prolific growth in the IT sector. Contract research in biotechnology offers the same growth potential and the Government of Karnataka is firmly committed to supporting these organizations. Through the use of brief case studies we provide an overview of the activities of several multi-national companies located in Bangalore as well as the current state of affairs of contract research outsourcing in Bangalore.

TO ORDER REPORT: $399 USD Online Download, contact CanBiotech at

damani@canbiotech.com

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Enabling Life Sciences and Outsourcing in Bangalore Various political, economic, and technological changes in India will provide a supportive environment for biotechnology, pharmaceutical, and outsourcing companies. Government Policy With strong traditions in education, in science, and in public sector initiatives related to science and technology, the Government of Karnataka hopes to build on these strong foundations to make Bangalore the Biotech City of India. To aid in this effort, the Government has created a Biotechnology Vision Group to spearhead initiatives in biotechnology. To attract investment in this sector, the State Government has further outlined incentives for the biotechnology industry which include: Exemption on payment of entry tax on machinery, equipment, capital goods, and construction materials; Up to 50 per cent exemption on payment of stamp duty and registration charges; Concessions for biotechnology parks certified by the Department of IT and Biotechnology with a built up area of 50,000 square feet.1 Karnataka is also committed to providing the right infrastructure and enhancing human resources for the development of biotechnology. The Government has established the Institute of Bioinformatics and Applied Biotechnology (IBAB) in the International Technology Park in Bangalore. It also plans to establish a biotech park at the University of Agricultural Sciences in Bangalore. This park will house research organizations and companies.1

Other institutions in the state that promote biotechnology include the Centre for Human Genetics and the Institute of Agri-Biotechnology. 1

These research institutes, the entrepreneurial spirit, pro-active policies by the Government, the cultural and economic milieu of a high-tech city are all the necessary ingredients for success. Biotech is in its nascency but promises exponential growth. Spurred by the fact that the biotech industry in the state is growing with one company being set up every 20 days, the government has also created an autonomous Karnataka Biotechnology Development Council (KBDC). KBDC was established to address issues ranging from biotechnology education to venture capital funding for startups.2 The Karnataka Cabinet has approved a proposal by the Karnataka Vision Group for setting up a Rs. 103-crore Biotech Park in Bangalore.3 The park is scheduled to have world-class R&D facilities, and plug-and-play amenities for life sciences research. It will comprise an R&D center, a management block, facilities for biotechnology company incubation, and other common facilities.4 As the biotechnology industry is in the initial stages, events such as Bio Bangalore provide strong visibility for the industry in India and Karnataka. Beyond such events, the industry will also require active monetary support from the Government. Accordingly, the government will encourage setting up of venture capital funds for biotech industries with private participation.5 Supporting Infrastructure Bangalore is fast becoming one of major hubs of the biotech industry in India. 6 With Bangalore firmly established as the country's premier IT and biotech hub, it comes as no surprise that the city is home to India’s largest biocluster. Approximately 158 of the 320 biotech companies are based here, with total revenues of Rs 1,400 crore. Further, 55 percent of India’s biotech companies are located in Karnataka.6 Karnataka has around 82 engineering colleges, 23 medical colleges, 46 pharmacy colleges, almost 200 polytechnics, and 300 industrial training centres.5

The Biotechnology Centre, located on Bannerghatta Road, is the first of its kind in the country in the public sector, aiming at integrating all spheres of biotechnology for the cause of horticulture development. Bangalore Helix is a biotech cluster also being planned by the Karnataka government. The first phase of this 106-acre park will house the Institute of Bioinformatics & Applied Biotechnology and the Centre for Human Genetics.7 Conclusion In context of the size and growth of the current Indian market vis-à-vis the Asian and global markets, it is clear that India promises great potential to become one of the most significant players on the global stage by 2010. The developments taking place in India at the national, state, and local levels appear to be the foundation for what should be a phenomenal biopharmaceutical industry in India. References 1.www.pppinindia.com/states_karnataka_sp.asp 2. Bhumika, K. (2003). “Govt sets up body to spur biotechnology”, The Times of India. 3. www.bangalorebio.com 4. Hector D.J. and Raghavendra R. (2006). “”, The Times of India. 5. Government of Karnataka. The Millennium Biotech Policy. 6. Knowledge Services. “Bio-IT – A lifeline for pharmaceutical and life sciences research”. 7. Bajpai N. and Sachs J.D. (2005)“India in the Era of Economic Reforms-From Outsourcing to Innovation”, The Global Economy. Handle with Care, Altana AG.

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India is positioned to grow into a major R&D centre for biotechnology companies. G Steven Burrill, CEO of Burrill & Company states, “We expect India to claim 8 %of the world’s biotechnology companies by 2010. India has a tremendous scientific base and a very successful generic pharmaceutical industry…”1 According to industry estimates, with the new product patent regime in place and a national biotech policy, the Indian biotech industry is set to touch US $5 billion in revenues by 2010.1,2 Ernst & Young has also selected India as one of five emerging biotech leaders in APAC. 3 The growth is being driven by increased partnering activity, the transition to a product-driven model, growth in the biogenerics market, and government initiatives directed toward increasing investment and expansion of the industry. Partnering activity between academia and the industry as well as foreign collaborations by Indian companies often involves contract research and manufacturing, co-marketing, technology transfer, joint research and development agreements. India and China are both regarded as major players in the development of the global biogenerics market.4 What will drive India ahead of China is the proportion of its population that has attained tertiary education using English as the primary language of instruction. India also ranks among the top countries in terms of the availability of skilled labour - well ahead of China. With India capable of not only conducting research and development activities at a more costly and in a more timely manner, but also capable of streamlining processes and developing new methods, India will be a favoured partner for many multinationals. 5 (Figure 1) According to Chairperson & Managing Director Biocon India Group, Kiran Muzumdar, clinical research presents interesting opportunities in India. Clinical research requires a large patient population to obtain statistically meaningful information. India has a large diseased population, with large numbers of people available for clinical

studies, accessing the latest health technologies. Kiran Muzumdar states that the sizeable patient population and the relative ease of identifying a large patient population in India makes it statistically superior - providing more reliable research findings. Companies conducting clinical trials can also competitively leverage the healthcare infrastructure in India. With hospitals treating a wide range of diseases, companies can efficiently access a range of therapeutic areas within a single hospital. The large patient pool with a diverse range of diseases and a significant population with a combination of diseases, provides for a statistically powerful sample. The underexposure of these patients to medicines further provides for a sample with relatively little cross interaction during clinical testing. 6 Muzumdar indicates that the immediate opportunity for Indian companies is in the area of preclinical and proof of concept clinical investigations. A larger future opportunity exists in Phase I-IV clinical trials, that is, once India completes implementation of the necessary regulatory infrastructure. 6 According to a report on clinical research by the Confederation of Indian Industry (CII), the Indian market for preclinical development was estimated to be $1.18 billion and the clinical development market was estimated at $1.63 billion in 2004. It is slated to grow to about $3.18 and $4.35 billion by 2011 respectively. 1 International companies like Quintiles, Covance, Clintec, Ikon, PPD Inc. and others have already established a base in countries such as India and China, in anticipation of emerging CRO opportunities. With high annual growth rates for these Asian biopharmaceutical markets, a growing population with the disposable income to afford new innovative pharmaceuticals, and the emergence of health insurance schemes, the global pharmaceutical industry is increasingly investing in these emerging markets.

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Comparing Trends across the Indian and Chinese Drug Discovery and Development Life Cycles

Dr. Minna Allarakhia, Editor, CanBiotech

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China has a promising biopharmaceutical pipeline of more than 150 products. This includes 35 innovative products at clinical trial stages and another 30 to 40 novel products in R&D. 9 Given that China has a tradition of producing generics and only started developing innovative drugs at this scale recently, the existence of such a pipeline is encouraging. China has started developing more innovative drugs than ever before. One particular focal point for Chinese bioentrepreneurs has been the production of new drugs from traditional Chinese medicines, which are part of the cultural heritage of the nation. 10 The increasing popularity of using China as a location for clinical trials has also encouraged the growth of the CRO sector and according to experts, there are now around 300 CROs operating in China – a sector set to experience rapid growth over the next decade. 11 (Figure 1) New job opportunities in urban centers are enabling the development of a sizeable, wealthier, middle class. It is anticipated that this urban middle class will demand higher quality goods and services including health care and medical products. According to Burrill & Company, insurance cover-

Figure 1: Trends across the Indian and Chinese R&D Value Chains 7, 8

Drug Discovery Preclinical

Clinical

I, II, III

Approval

IV Consumers

Some instances of

companies in India

outsourcing discovery

research

e.g. GSK-Ranbaxy Alliance;

R&D Centres Established

e.g. Astra Zeneca-

Bangalore, Aventis Pharma-

Mumbai

Clinical research is most

commonly outsourced in

India

e.g. GSK, Aventis, Pfizer,

Novartis, AstraZeneca, Eli Lilly

and Merck & Co;

Clinical Data Management

outsourced to CROs

India API/Bulk Sourcing

Sourcing base for MNCs e.g.

Roche, Bayer, Aventis and Chiron;

Indian companies have

developed manufacturing

processes for eight of the

world's ten blockbuster drugs

Single window

for clearance of

regulatory

issues;

Exemptions

from import

duty; MNCs

establishing

local in India

China has a promising

biopharmaceutical

pipeline of more than 150

products; R&D parks

established

e.g. Zhongguancun Life

Science Park

Increasingly popular as site

for clinical trials; Large

patient base

Approximately 100 CROs

operating in China

e.g. Shanghai Genomics,

Bridge Pharmaceuticals,

Starvax, Wuxi Pharma

Approval process shorter and

more cost effective in China

than US;

China considered a major

manufacturing hub; further

development of supportive

ancillary services

Development of

a sizeable,

wealthier,

middle class

with insurance

coverage in

China

age in China has increased 6-fold over the past five years and now covers over 130 million people. 12 Contract sales organizations should be well positioned to take advantage of this new market in China. Experts indicate that the approval process takes from five to eight years in China, in contrast to an average of eight to ten years in the US 10 Despite the shorter timeframe, the approval process is similar to that of the US and includes Investigational New Drug (IND) applications as well as three phases of clinical trials. These advantages are being used effectively by contract research organizations and regulatory specialists. Industry stakeholders believe that in the future, Chinese companies will be more strategically competitive in their work at both the Chinese and international standards levels. The Chinese State Food and Drug Administration (SFDA) has further taken on the role of enabling innovative drugs to reach the market and plays an indirect role to control the status of intellectual property associated with drugs submitted for approval. Failure to provide evidence of patent status on a drug application may still result in the approval of a drug, but

denial of a manufacturing permit. 10 The Advantages of Outsourcing to India and China Biopharmaceutical clients have increased their outsourcing expenditures dramatically over the last decade with an anticipated 40% of biopharmaceutical drug development expenditures presently committed to outsourcing. Globally, the biopharmaceutical outsourcing industry is estimated to reach US $60 billion over the next five years. 13 This number includes drug discovery and development, manufacturing, sales and marketing, and other expenditures made outside the company. Indian companies are set to tap into the global biopharmaceutical outsourcing market. These companies are increasingly moving into the developed market and transitioning from bulk drugs to formulation exports. Indian companies are also expected to produce many of the top drop drugs that are scheduled to lose patent protection over the next few years. India will not only be accessing the generics market, but the research focus of many large companies has shifted toward the discovery of new chemicals - providing the skill set necessary for upstream outsourcing. While India boasts relatively cheap manufacturing costs, the cost of developing and testing drugs in Indian labs can be 70% to 80% cheaper than in the US according to industry experts. 2 Besides faster and cheaper access to a genetically diverse patient population, the costs associated with human capital are dramatically lower in India than in the US. For example, a Ph.D. in chemistry with 10 years experience may cost a company $250,000/year in salary, benefits and overhead; a similar researcher in Indian will only cost a company $30,000-$40,000/year. 14, 15 Chinese service providers are similarly providing a variety of important services to enable the region’s biopharmaceutical industry including:

nucleotide sequencing and synthesis, protein expression, library development, chemical custom development and other chemistry-based services, drug screening, clinical development, early phase development services, and manufacturing services. 4, 16 With the development of ancillary services to support its large manufacturing base, outsourcing drug manufacturing to China is a cost-effective choice for global biotechnology and pharmaceutical companies. 17 The cost-efficiencies of developing drugs in China also come from lower labour (with many willing to work for comparatively lower wages) and clinical trial costs, as well as quicker time for approval. Some estimates indicate that drugs can be developed for as little as US $120 million, far less that the hundreds of millions if not billion dollars necessary to develop a drug in the US. 10, 12 Limitations to Overcome Concerns regarding intellectual property protection, regulatory reforms, and language issues in India and/or China each pose as challenges that will need to be addressed by the public and private sectors. Large MNCs continue to be apprehensive about the IP protection in India. While intellectual property protection is improving in China, most investors remain cautious. Patent reforms are essential to encourage foreign entry into China, enable partnerships such as outsourcing, and encourage technology transfer/technology licensing. 10, 18 Regulation With Good Clinical Practices (GCP) now mandated in India, every study whether pre-market or post-market requires strong control, monitoring, and audits from the Sponsor. Companies such as Pfizer, Eli Lilly, Novo Nordisk, and Aventis have been conducting global studies according to GCP for several years in India. In China, the State Food and Drug

Administration, P.R. China (SFDA) is trying to accelerate the approval process of innovative medicines as part of their commitment to research and development of innovative drugs. As well, the SFDA has increased its efforts to promote Good Clinical Practices by releasing standard rules in and introducing compulsory GCP training requirements. 19 Language and Culture Western firms should also be mindful of the cultural differences between regions when conducting business. How to conduct a business meeting, the negotiation process, and the communication process itself, must be understood when interacting with Chinese and/or Indian businesses. 20 References 1. Pai, J.L. 2006. India’s Surging Biotech Sector. InvestorIdeas.com. 2. Wilkie, D. 2004. India Wants to be Your Biotech Source. The Scientist. 3. Ernst and Young. 2004. On The Threshold -The Asia-Pacific Perspective. 4. Chervenak, Matthew. 2005. An emerging biotech giant. The China Business Review. 5. Financial Express. 2004. “Biotech: India Right on Track”. 6. PharmaBiz. 2004. 2010: Indian clinical research odyssey. 7. Kundu, K.K. 2004. India, the World’s R&D Hot Spot. Asia Times. 8. Department Of Biotechnology Ministry Of Science & Technology Government of India. National Biotechnology Development Strategy. 9. Zhou, E.Y. 2007. China Today: Defining the Chinese Biopharmaceutical Market. BioPharm International. 10. Louët, S. (2004). Can China bring its own pipeline to the market? Nature Biotechnology. 23:117. 11. Zhou, E.Y. 2006. Contract Research Drives China’s Pharma Sector. PharmaManufacturing.com. 12. Burrill & Company Presentation. 2005. A sober look at China. China Access Forums. 13. Dolan, K.A. 2004. The drug research war. Forbes. 14. Gross A. 2005. Outsourcing to Asia. Pacific Bridge Medical. 15. Singh H. 2005. India: Global R&D hub. The Financial Express. 16. Polastro, E.T., and Tulcinsky S. (2005) PFC Outsourcing from China and India-Myth or Reality. Innovations in Pharmaceutical Technology. 17. Furniss, T. 2003 China: The next big wave in offshore outsourcing. Outsourcing Asia. 18. Santini, Laura. 2004. Drug companies look to China for cheap R&D. The Wall Street Journal. 19. Hepeng, Jia. China beckons to clinical trial sponsors. Nature Biotechnology. July 2005. 20. Polastro, E.T., and Tulcinsky S. (2005) PFC Outsourcing from China and India-Myth or Reality. Innovations in Pharmaceutical Technology.

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Abstract The pharmaceutical and biotech industries are coming under increasing pressure to improve efficiency across drug discovery, development, and production. Regulatory pressures around the safety of medicines are also on the rise, especially as the proportion of biopharmaceuticals in development increases. To help companies address quality and efficiency issues, suppliers are now offering laboratory asset management, staff training, and process improvement services. By obtaining all three services from one supplier, companies can benefit from cost savings through economies of scale. Industry Challenges Pharmaceutical and biotech industries face mounting challenges. Traditional small molecule pharmaceutical companies have diminishing pipelines and key products nearing the end of their patents, forcing many to look towards biopharma for new opportunities. The relatively recent success of peptide and protein drugs, such as insulin, EPO (erythropoietin), and monoclonal antibodies, produced by bacterial fermentation and mammalian cell culture is now complicated by the real prospect of large numbers of biosimilars entering the market. Biopharmaceutical companies must identify new approaches that give them efficiency, speed, and agility. Finally, increasing global pressure to develop vaccines that can meet epidemic and pandemic threats is pushing vaccine producers to update or replace their traditional technologies. Drug development has never been a fast process and candidate attrition throughout development is large. Furthermore, biopharmaceuticals are produced using complex techniques and require elaborate downstream purification methods. There is close scrutiny of product efficacy and safety by regulatory bodies, and products which make it to market are subject to pricing and reimbursement pressures. This means that maintaining product quality as well as efficiency throughout

all processes is essential. At the same time, companies are required to become more flexible, so that they can match fluctuating demand for drugs in such a dynamic marketplace. Efficiently run laboratories, from discovery to production, can help ensure product safety and quality as well as reduce costs. Approaches to improving efficiency that are highly attractive for life-science companies include focusing in-house competence on unique skills related to drug development whilst outsourcing other functions, bringing in extra resources and skills at timely stages in a project, rather than employing them permanently, and bringing in consultant teams to address poorly functioning operations. One simple example is the maintenance of all laboratory or production equipment that can be handled through an external multi-vendor asset management service, rather than internally or by arrangements with many providers. These outsourced contracts can enhance the overall levels of service received, improve regulatory compliance and increase scientists’ productivity, by maximizing instrument uptime. However, managing equipment maintenance is only the start of what can be a much wider consultancy program that helps companies to decide when and where to replace equipment and what equipment would be most valuable in order to optimize existing work processes. Installation and commissioning of new equipment and safe disposal of old equipment can also be supported. Following customer consultation, GE Healthcare is offering even more wide-ranging add-on services to its laboratory asset-management programs, which focus on financing equipment purchases, staff training, validation, process development and wider process evaluation and improvement. By bringing in outside expertise to address all of these issues in parallel, companies will move much closer to achieving the operational excellence they desire.

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IMPROVING EFFICIENCY THROUGH CONSOLIDATING ASSET MANAGEMENT AND STREAMLINING PROCESSES

Mike Benevento, Marketing Director, Global Services, GE Healthcare

Laboratory Asset Management Services Historically, pharmaceutical and biotechnology companies have relied on original equipment manufacturers (OEMs) to maintain laboratory equipment. However, companies, many of them OEMs themselves, have begun to offer service programs that cover the maintenance of a wide range of different manufacturers’ equipment. The primary concern is to consolidate what could be more than 100 different maintenance contracts into just one. This reduces overall costs and simplifies administration. Often response and repair times also decrease, improving the efficiency of laboratory staff, not only because equipment is up and running more, but because staff are not trying to fix equipment themselves or searching for information on individual service contracts in order to call engineers. In GE Healthcare’s experience, those companies that opt to have a full-time engineer on site through GE Healthcare’s Scientific Asset Service not only experience cost savings of up to 20 per cent over three years, but can also see response time at less than two hours and average fix time at less than four hours. On-site engineers have extensive experience of maintaining equipment from a wide range of suppliers. Spare parts for the most commonly used equipment are held on site, to further reduce repair times. For more specialist equipment, or when the customer prefers to do so, it may be necessary for OEMs to be called out. However, this process is managed by the GE Healthcare team, both reducing the administration and ensuring that quality is not compromised

system, including preventive and corrective maintenance of equipment and customized operation qualification for instruments across the ranges required. In addition, the GE Healthcare team can work with a company to create standardized, validated protocols that are easy to follow and GMP compliant. Access to expertise to fully ensure quality and productivity, along with having functioning, validated equipment, laboratory staff must be adequately trained so that they understand the processes that they are carrying out and have the skills to troubleshoot should things not work as expected. A skilled workforce is also likely to produce safer products, as they will be more able to accurately follow validated standard operating procedures (SOPs). Training is a wide field, ranging from operator qualification to run a specific piece of equipment at one end, to education of staff in process development methodologies, such as filtration, cell culture and chromatography at the other end. Asset management programs frequently include time for training staff on the correct way to use equipment. In fact, GE Healthcare has found that when companies choose to have a service technician on site as part of such a program, the time spent on training around equipment usage often doubles, expressing a clear need. More in-depth training around specific lab techniques, optimization and scale-up of production, design of experiments, quality and validation can further improve the productivity of staff and help pharmaceutical products reach the market faster.

and service-level agreements are met. Overall, with the reduction in engineers’ travel time and administration time, customers can experience up to an average 30 per cent improvement in service efficiency. GE Healthcare provides its own software, AssetPlus™ to customers, which enables the creation of a digital inventory of all equipment owned by a company, as well as collating information about the service agreements, and maintenance history and costs for each individual item. Usage statistics can be accessed through the software, so any equipment that is not being used can be easily identified. These items can then either be recommissioned for a different use or to better effect, which could help streamline a company’s processes. Alternatively, the equipment could be decommissioned. Unlike other multi-vendor service providers, GE Healthcare offers options for the safe decommissioning and disposal of equipment, or resale through auctions. The increased knowledge that a company gains through collating information on its equipment can also inform future equipment purchasing decisions. Multi-vendor service providers offer help advice on these decisions as part of their offering. With its financial services arm, GE Healthcare can also help finance equipment with loans and offers lease or sale and leaseback agreements. Of increasing importance, especially to manufacturers of biopharmaceuticals, is the validation of equipment. Customers need confidence that the products they receive meet the high standards of regulators. In addition, non-compliance can incur high costs. Bringing in an outside supplier to maintain equipment can improve regulatory compliance by providing a consistency in the validation. GE Healthcare requires that its service’s engineers all have annual cGMP (current Good Manufacturing Practice) training. The on-site engineers can work with a company’s quality and compliance personnel to establish a quality

Figure 1: Fast Track BioAsia Process Laboratory

Looking to the Future The manufacturing industry worldwide is working to achieve more efficient, streamlined production where safe products can be created reliably, and high quality is achieved each and every time through robust, validated processes. Pharmaceutical and biotech companies need to have confidence that if they choose to outsource, the organizations they work with understand the stringent requirements laid down by regulatory agencies such as the FDA and EMEA. Improving activities ranging from equipment repair through asset management and staff training, to process design and performance improvement can help companies move towards operational excellence. GE Healthcare presently offers application support programs, instrument service, training and equipment qualification. In the future it will also offer larger validation programs (including whole-facility validation), performance improvement services, process trouble shooting and even complete process development to those drug companies that need to focus on their own core competencies whilst improving agility and speed to meet ever-changing market demands. Fast Trak and AssetPlus and are trademarks of GE Healthcare companies

Recognizing the importance of such courses for companies in the fast-growing markets of China and India, which are expected to meet increasingly high standards of production, GE Healthcare has brought its 20 years of experience in education and training to Asia. The company has set up two new Fast Trak™ training centers, one in Shanghai, China and the other in Bangalore, India, exploiting expertise from Sweden, the USA and Germany. (Figure 1) Optimizing Performance As well as troubleshooting broken equipment, developing and optimizing downstream purification process, GE Healthcare can ensure that these and other processes are optimized for efficiency, productivity, and quality. All processes contain both value-adding and non-value adding (waste) activities. To improve efficiency, tools such as LEAN can be used to identify which activities within a process do not add value, and to develop ways to reduce the proportion of these activities. Quality can be improved by identifying and addressing activities which lead to variation within processes, and tools such as Six Sigma can help with this task. GE Healthcare applies the LEAN and Six Sigma principles to the way in which it manages companies’ scientific assets to ensure that the service provided runs at maximum efficiency. However, these tools can also be applied to any process, such as deployment of disposable cell culture equipment, or wider processes such as managing material flow within a manufacturing facility.

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Taiwan’s Technology Transfer Promotion Platform

Dave Silver, President, Biotech East Co., Ltd.

Outsourcing and Technology Transfer: Peas in the same pod Probably the most famous cheerleader of the modern outsourcing movement, New York Times award-winning journalist Thomas Friedman, detailed in his 2005 best-seller “The World is Flat” the process of identifying and utilizing cost advantages, talent, new markets, new manufacturing resources and so on, from around the world. Whilst he implied that the West had the advantage when it came to creativity and invention, the underlying foundations that drives the process, these very globalization processes have levelled the playing field and ensured that invention and creativity can now to be found pretty much all over the world. Technology transfer can be considered the bridge between such invention and eventual commercialization, and is much a part of today’s flat world as is outsourcing. Licensing Connects Biotech to Pharma One of the best ways to form a new biotech company is to in-license a technology that has already been developed and form a company around it, adding management, marketing, and talent. Of course, this is also how Big Pharma operates as well, with the scale of the economics staggering. For example, Pfizer has reportedly earmarked US $17 billion to acquire new drugs or biotechnology treatments during the next two years, a company spokesman said in 2006, from tech transfer or M&A. An example of the process, and illustrating the global reach of the modern tech transfer deal, can be seen in the development of the new human papillomavirus (HPV) vaccine. Invented by Dr. Ian Frazer and his team at the University of Queensland, Australia; licensed on to CSL, a large biotech firm headquartered in Melbourne, Australia; then licensed on to US-based Merck and UK-headquartered GlaxoSmithKline (GSK). Merck is currently marketing the drug worldwide (80+ countries) after FDA approval in 2006, with GSK set to follow soon.

Analysts are predicting that the worldwide market for the HPV vaccine to be a whooping US $4-7 billion per year. Valuable technologies can be found in locations all over the world, sometimes in the most unlikely of places. However, tracking down technologies in other languages than your own can be tricky. This is why the prestigious publication Nature Magazine launched a dedicated China-focused publication in early 2007, to uncover and feature research from Chinese scientists that because of being originally published in Mandarin wasn’t getting international exposure. Concurrently, research institutes or companies that are not internationally networked or savvy can be sitting unaware of useful and valuable technologies, not knowing how to publicize or promote them. Similarly, companies looking for acquisition targets will overlook these opportunities simply because they are off the radar. The Taiwan Technology Transfer Promotion Platform That's where BiotechEast comes in. We are a life science-focused consultancy company based in Taipei, Taiwan. Working with Taiwanese universities, research institutes, and companies, we have developed a technology transfer promotion platform, with the aim of identifying, packaging, and promoting Taiwan-developed patented technologies to potential buyers or collaborators overseas. The format grew out of a realization that while valuable technologies were coming out of Taiwan, Taiwanese companies had unrealistic expectations about the preparation, cost and time involved in successfully commercializing or out-licensing these technologies, particularly to companies outside of Taiwan. BiotechEast had previously gotten involved fairly deeply in cases with several local companies that had come to a premature end due to such reasons, much to our disappointment and financial disadvantage. While we knew some great technologies were coming out of Taiwan, we did not want to tie ourselves

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too closely to the success or failure of a company’s deal. How it works is this: Technologies are promoted through a range of marketing vehicles (including CanBiotech.com), our own websites and email channels, as well as to a network of technology buyers and tech transfer consultants around the world, including acquisition directors at many Big Pharma firms. This package of services is offered at an affordable price point to our clients, encouraging participation from a range of both large and small companies as an entry-level window into the technology transfer process. At this stage, the package offers a 'first tier' level of services. BiotechEast helps with the promotion and exposure of these technologies only; companies which receive enquires from interested overseas parties through participation in the platform liaise and negotiate with such inquiries by themselves without our involvement. For where the program is in terms of its development, this is where we want to be. However, BiotechEast is in the process of developing a 'second tier' range of services such as technology valuation, legal services, and so on, to offer participating companies. The service has been running for a little over a year now, with impressive results to date. Out of the first batch of clients signing on for the one-year service, all have renewed their contract for another year, some with the same technologies showcased, some with updated technologies. Our clients have let us know they have received a lot of interest in their technologies since joining the program, some having to even take on extra staff to handle all the enquires and interest! With Taiwan’s experience and expertise in traditional herbal medicine, it is not surprising that a high proportion of companies participating in our program are from the herbal medicine industry. The typical model for a herbal medicine drug discovery company is to develop or refine botanical material with properties already well known and documented from thousands of years of use as a Chinese medicine, then spend years of lead

Technologies: 1. PHN032 - Adjuvant for oral/nasal vaccines against influenza and bird influenza. 2. PH3 (PHN031, PHN033) - For osteoporosis and diabetic vascular complications. Medigreen Biotechnology Corp. www.medigreen.com Another company with a foundation in herbal medicine, Medigreen provides R&D and new products for the global pharmaceutical and nutraceutical markets. Technologies: 1. 1217B - Asthma treatment. 2. CA-88 - Cancer chemotherapy and radiotherapy auxiliary treatment. 3. MIC-31 - Gastric ulcer treatment. SunTen Phytotech Co., Ltd. www.stpt.com.tw The drug discovery subsidiary of the Chinese medicine company Sun Ten Pharmaceutical, SunTen also has its own retail sales outlets in Taiwan selling nutraceutical versions of compounds the company hopes will one day become prescription pharmaceuticals. Technologies: 1. STD052/07- Fractionated herbal extract demonstrating cholesterol/triglyceride lowering, and a single active compound as potential drug candidate for the treatment of GI disorders. 2. STD06 - Active ingredient purified from herb for treatment of skin disorders. Golden Biotechnology Corporation www.goldenbiotech.com.tw Another herbal medicine company undertaking researching in a particularly wide-range of new drugs, cosmetics, and nutritional supplements. Technologies: 1. PCF1- Prostate cancer treatment. 2. Novel production method for tumour-inhibiting botanical medicine. CharSire Biotechnology Corporation www.charsire.com.tw Researches new skin care and hair care medical treatments; much of its research is performed on extracts of traditional ingredients.

development and preclinical testing in preparation for a submission to the FDA for IND approval. At the same time, it will be utilizing the same ingredient in a health food product, sold over-the-counter to earn revenue to support the drug’s development activities. With more and more companies in Taiwan successfully taking this route, it would not be surprising to see some exciting new drugs emerge from Taiwan in the years ahead. Participating Companies Participating in our technology transfer promotion platform are the following Taiwanese companies and research institutes, with respective license-ready technologies listed: PhytoHealth Corp. www.phytohealth.com.tw Focusing on botanical-derived new drug discovery, PhytoHealth is one of the few publicly listed biotech companies in Taiwan, and has a portfolio of six drugs - four of which are undergoing clinical trials.

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Technologies: 1. Soybean extract external application for skin treatment. NatureWise Biotech & Medicals Corporation www.naturewise.com.tw Having discovered and refined compounds which appear to encourage the growth of human neural (brain) stem cells in a laboratory setting, NatureWise's research could have applications for Alzheimer’s disease and other debilitating neurological disorders. Technologies: 1. New compounds showing cell cycle gene regulation, with implications for new cancer therapies. 2. New compounds for growth media, showing stimulation effects on neural stem cell growth and activity. Life Spring Biotech Co., Ltd. www.lsbiotek.com Specializing in collagen technology and biomaterials product development, Life Spring is currently focused on the development of innovative implants for eye surgery. Technologies: 1. SmarBUCKL - A scleral buckling band used for retinal detachment. 2. iGen™ - a biodegradable collagen implant for glaucoma, pterygium, and selected ophthalmic laser and ophthalmic surgery treatment. Animal Technology Institute, Taiwan (ATIT) www.atit.org.tw ATIT develops technology relating to animal husbandry, including using animal transgenic technologies to produce products for human use. Technologies: 1. Platform for the expression and production of multiple recombinant proteins in the milk of transgenic non-human mammals. Medical and Pharmaceutical Industry Technology and Development Center (PITDC) www.pitdc.org.tw A non-profit research institute, PITDC

works on developing new products and technologies unlikely to be developed by local companies due to their inability to yield short-term profit. Technologies: 1. 6-Fluro-1,4-Dihydro-7[4-(2-Hydroxyiminoethyl) -1-Piperazinyl]-4-Oxoquinoline-3-Carboxylic Acid derivatives, their preparation, and pharmaceutical compositions. 2. Anti-depression pharmaceutical composition containing Polygala extract. 3. Method of preparing an extract potent in anti-inflammation, anti-platelet aggregation, and anti-fungal activity from Zingiber officinale, and pharmaceutical compositions containing said extract. 4. Anti-ulcer pharmaceutical composition and the preparation thereof. 5. Formula and preparation method of an improved ointment for treating burns and scalds. PharmaEssentia Corp. www.pharmaessentia.com Primarily working on improving existing biopharmaceutical drugs through a proprietary protein engineering / drug development platform, PharmaEssentia is also the one of the world's largest manufacturers of the food and cosmetics supplement CoQ10. Technologies: 1. Novel site-specific PEGylated interferon-alpha (P1101) for treatments of Hepatitis B and C. BrainGenesis Biotechnology Co., Ltd. www.braingenesis.com.tw This botanical drug discovery and development company is currently working on developing the next generation of innovative stroke treatment therapies. Technologies: 1. BNG-1 – Treatment for ischemia stroke

About BiotechEast Co., Ltd. BiotechEast is a consulting company providing research and business facilitation services for companies wishing to connect with the emerging life science industries within the Greater China region. BiotechEast specializes in independent industry analysis, technology transfer facilitation, and in identifying outsourcing opportunities in the medical devices and bioproduct manufacturing sectors. Dave Silver - President, BiotechEast Dave has worked in media, marketing, and consulting for more than 14 years based in Taiwan, and is currently leading the consulting team at BiotechEast, which he co-founded in 2001. He is a recognized authority on Taiwan’s life sciences sector, having written more than 350 news and feature articles on the subject for www.biotecheast.com and a number of other publications. Dave also covers the industry as an independent analyst for BiotechEast’s private clients both in Taiwan and abroad.

BiotechEast Co., Ltd. www.biotecheast.com dsilver@biotecheast.com Ph: 886 2 27028100 Fax: 886 2 27069996 15F, No. 57 Tunhua S. Rd., Sec. 2, Taipei 10618, Taiwan

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Singapore’s distinction in Biomedical Sciences (BMS) stems from our unwavering commitment to the advancement of the medical field and our world class facilities dedicated to the industry’s burgeoning needs. Singapore’s vision is to be the Biopolis of Asia, a leading international biomedical sciences cluster advancing human health, through the pursuit of excellence in research and development, manufacturing and healthcare delivery. Singapore offers opportunities for BMS companies along the entire value chain. Strong government support and a pro-business environment have attracted industry leaders such as Abbott, Aventis, Baxter, Becton-Dickinson, Eli Lilly, Genentech, GlaxoSmithKline, Lonza, Merck & Co, Novartis, Pfizer, Schering-Plough, Siemens, and Wyeth to Singapore for manufacturing and R&D activities. The industry has grown strongly over the past few years. There are now close to 45 pharmaceutical, biotechnology and medical devices manufacturing plants in Singapore. The three agencies that are involved in Singapore’s Biomedical Sciences (BMS) initiative are the Economic Development Board’s Biomedical Sciences Group (EDB BMSG), EDB’s Bio*One Capital, and the Biomedical Research Council (BMRC) of the Agency for Science, Technology & Research (A*STAR). EDB BMSG is responsible for industry development, Bio*One Capital makes strategic investments in companies with spin offs to Singapore, while BMRC takes the lead in coordinating and funding public sector and academic research, as well as supporting the training of scientists. Biomedical Sciences Performance in 2006 The BMS industry did exceptionally well in 2006. The manufacturing output grew strongly to S$23 billion in 2006, an unprecedented 30% increase over 2005. Within a short span of six years, manufacturing output has grown almost fourfold from the year 2000. Pharmaceuticals accounted for 91% of the total output while Medical Technology maintained its output levels

at over S$2 billion. Employment expanded by 4% to reach 10,571. The target is for Singapore’s BMS industry to reach S$25 billion in manufacturing output and an employment of 15,000 by 2015. Manufacturing and R&D There are now close to 45 pharmaceutical, biotechnology, and medical devices manufacturing plants in Singapore. There are also over 30 companies doing R&D here. Below are three examples of leading BMS companies with significant operations in Singapore. GSK has six manufacturing plants in Singapore. GSK’s facilities in Singapore produce 12 key active compounds used in a broad product line including antibiotics, gastrointestinal, dermatological, respiratory, oncology, anti-viral, and neurology medications. In addition, GSK is also building a biologics plant for the primary production of paediatric vaccines. In 2004, GSK also established its first pre-clinical research facility in Asia Pacific for neurodegenerative diseases such as Alzheimer’s disease, Parkinson’s disease, and schizophrenia. Recently GSK expanded its research presence in Singapore to include a US $13 million medicinal chemistry laboratory that will double the number of scientists to over 60 researchers at steady state. GSK hopes to have a Singapore developed drug candidate in their R&D pipeline by the end of this year. Lilly announced a US $150 million expansion in drug discovery efforts in Singapore. The Lilly-Singapore Centre for Drug Discovery (LS-CDD) will triple the size of Lilly System Biology (LSB)’s operations in Singapore to 150 research scientists at steady state. Consisting of 3 components, Drug Hunting Teams (DHT), an Integrated Computational Science Centre, and LSB itself, LS-CDD will enhance Lilly’s efforts to increase the productivity and efficiency of its drug discovery and development process. Siemens Medical Instruments (SMI) in Singapore is the worldwide

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Singapore’s Biomedical Sciences Landscape

Mr Keat-Chuan YEOH, Executive Director, Biomedical Sciences Group, Singapore Economic Development Board – Dec 2007

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manufacturing and logistics headquarters for Erlangen-based parent company, Siemens Audiologische Technik GmbH. It produces close to a fifth of the world’s hearing aids. SMI is also investing in R&D capabilities to develop a new generation of products, such as the state-of-the-art “Triano 3”, the first digital hearing system in the world that is equipped with three microphones, which will allow users to understand speech even in very noisy environments. In addition to manufacturing and R&D activities, many of the world’s leading clinical research organisations (CROs) have also established operations in Singapore. These companies not only work with Singapore hospitals to conduct clinical trials, they have also set up their regional hubs in Singapore to manage clinical development activities in the region. Examples include Quintiles, Covance, ICON, MDS Pharma, PPD, and Gleneagles Clinical Research Centre. Likewise, a significant number of pharmaceutical companies including AstraZeneca, Bristol-Myers Squibb, GlaxoSmithKline, Novartis, Novo Nordisk, Sanofi-Aventis, and Schering-Plough have set up their clinical trials coordination centres in Singapore. Singapore has built a reputation for successfully hosting scientifically demanding early phase trials. Abbott recently selected Singapore as one of the key sites for Phase two clinical trials of its highly promising “small molecule” drug candidate – ABT 869. This drug compound aims to treat advanced stages of lung cancer and other forms of cancer. Abbott’s decision came after a Singapore team of physician scientists successfully completed the Phase 1 trial for the same drug which demonstrated promising anti-cancer activity. The results of this study in Singapore were announced at the American Society of

The take-up rate for Biopolis exceeded initial expectations, achieving full occupancy a mere one year after it was opened. Phase II, which was opened in October 2006 provided an additional 400,000 square feet of space, is now over 80% occupied. Work has already begun on Phase III of the Biopolis which is expected to increase research space by a further 420,000 square feet. Phase III will be completed by 2009. The Tuas Biomedical Park (TBP) plays an instrumental role in attracting global biopharmaceutical manufacturing activities to Singapore. TBP had been developed as a 'plug and play' environment for manufacturing operations, providing ready access to essential infrastructure such as roads, drainage systems, power and water supply, as well as telecommunication lines. Manufacturers can also leverage on third-party utilities and services such as steam, natural gas, chilled water, and waste treatment. TBP currently occupies a land area of over 370 hectares and is home to the following leading biopharmaceutical and medical technology companies: Abbott, CIBA Vision, Genentech, GSK Biologicals, Lonza, Merck Sharp & Dohme, Novartis, Pfizer, and Wyeth. Looking Ahead The first phase of the BMS initiative (2000-2005) put in place key building blocks by establishing core capabilities in biomedical research, and introducing important human capital and industrial capital development initiatives. For the next phase (2006-2010), we will build on this foundation and strengthen our capabilities in translational and clinical research to bring discoveries from the bench to the bedside and the marketplace, and ultimately improve human healthcare. Having established a reputation as the most competitive and trusted site for pharmaceutical bulk activities and secondary manufacturing, Singapore is now aggressively pursuing investments in biologics, an area that will drive growth in the drug industry. Singapore will also continue a focused effort to grow the Medical Technology sector in the areas of Cardiovascular, Vision, Diagnostic and Imaging, Research Tools, and Scientific Instruments.

Clinical Oncology (ASCO) conference in 2007. Two other major pharmaceutical companies, Lilly and Pfizer, have set up their own dedicated Phase I units in Singapore. Infrastructure In 2003, Singapore opened the Biopolis, an integrated R&D complex with two million square feet of space that houses nine public research institutes as well as R&D laboratories of pharmaceutical and biotechnology companies. (Figure 1) By co-locating private and public sector research, the Biopolis provides common infrastructure such as research facilities, equipment and amenities, thus encouraging the synergy of scientific ideas, facilitating cross-disciplinary collaborative research, and lowering the entry barrier for companies to set up operations here. The shared scientific equipment includes X-ray crystallography, nuclear magnetic resonance, electron microscopy, 9.4T MRI machine, DNA sequencing, and a research facility with specific pathogen free research animals and other facilities. Companies can also leverage shared infrastructure such as conference facilities and meeting rooms.

Figure 1: Biopolis-Biomedical Research Hub in Singapore

The US pharmaceutical and nutritional industries have migrated off-shore over the last two decades. What was traditionally a domestic industry is now a global one with continued changes in the location of suppliers, contractors, and researchers. Americans rely on medicine, vitamins and nutritional products sold by the US Pharmaceutical and Nutritional industries. However, what most Americans do not realize is that most of these products are either produced wholly or in part overseas. Over the past several decades, the sourcing of health care products has migrated first to Europe and then onto other countries like India and China. Increasingly, the American industry has sought lower cost environments to procure their active pharmaceutical ingredients (API), vitamins, and nutritional supplements. More recently, production of the actual dosage forms of many products has also migrated to India and now China. It is estimated that nearly 80% of all drugs sold in the US have in them materials that originate in China or India. It is likely that over 95% of nutritional products or their ingredients originate in these same countries. Considering that there are over 10,000 companies in China alone that produce these vital health care components, one would expect an army of Quality Control auditors to be filling the skies to visit the suppliers of American health care. The US FDA (and US laws) requires that off-shore suppliers of drugs and drug products be audited regularly by the industry, but few audits are likely done for generic, OTC, and nutritional products. Soon, the US FDA will also require that nutritional products be produced under US Good Manufacturing Practice procedures.1 This will add yet another burden to the US FDA that simply does not have enough inspectors to visit the growing number of companies involved with products sold in and into the US. The only resolution to this growing issue is to shift the burden back to the industry to self regulate and audit suppliers on a regular basis.

Taking China as an example, the Chinese people do not differentiate between nutritional and pharmaceutical products. Traditional Chinese Medicine (TCM) and Western medicines are regulated by the SFDA which is the Chinese equivalent of the US FDA. 2 The SFDA is similar to the US FDA in that they are guided by Chinese Good Manufacturing Practices (GMPs), which by and large mimic those found in the West. However, there is a fairly wide gap between the US FDA and the SFDA in the way GMPs are enforced. In China, a manufacturer must obtain a GMP Certificate in order to operate. 3 This Certification is the result of a very intensive series of inspections done when the plant is newly established. At that time the company is visited by a team of SFDA auditors and the inspection of the facilities may take several days or even weeks to complete. The Chinese inspectors are well trained and perform their jobs well. However, following Certification, routine follow-on inspections are rare and primarily driven by problems in “the field”. 4 Recertification is not done annually but very infrequently, and little is done to monitor the actual operations or product quality following the initial inspection. It is totally left up to management to monitor quality and validate that the process is in control (after Certification). The US FDA operates totally differently. While a plant is inspected and “passes” an initial inspection by US FDA auditors, they visit (unannounced) frequently and continuously while drug products are manufactured. The process of manufacturing is “frozen” upon a drug/plant approval, and any change to that process initiates another series of inspections, validations, and data review. 5 The vast majority of Chinese (and Indian) drug manufacturers (API and dosage forms) would fail an inspection by a US FDA auditor…period. However, there are several manufacturers who have upgraded their operations to international standards that can easily pass a Western inspection, but finding them is the real “trick of the trade”.

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Doing Pharmaceutical and Nutritional Out-sourcing in China and India: What Problems May be Encountered

Frederick D. Sancilio, Ph.D., Jerilyn J.Spencer, and Nealie C. Newberger, Ph.D.

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Today, as discussed earlier, the majority of API is procured from China and India. However, a fraction of the companies who procure them have audited the manufacturing facilities and even fewer have audited the processes, although the US regulations require it. 6 It is estimated that less than 5% of OTC and nutritional products produced with API or components from China or India have been inspected by the company who sells them. As a result, a dual standard is being applied to American medicine and nutritional products; if they are made in the US, they are subject to frequent and detailed oversight by US FDA, but if they are made (or contain material) outside of the US, they are highly likely to have never been inspected (if OTC or Nutritional) by either the US FDA or the company that sells them. Manufacturers of API and dosage forms in China with quality standards similar to those found in the US are available. However, finding them is fraught with difficulty. For example, most APIs are purchased though export agents and brokers who have a vested interested in selling materials regardless of where it might have been made. As evidenced recently in products originating in China, a firm must constantly check the suppliers and assure themselves that quality standards are being met and that changes are not being implemented to manufacturing methods that can influence the quality and/or safety of the product. Buying without first auditing, and having the ability to do “unannounced” quality audits is likely to result in severe issues down the road. Here are some of the issues our local auditors in China have encountered at Sancilio & Company during visits to various factories in China: A. While API production was contracted to a very clean and compliant factory, we found that some batches that were shipped originated from an entirely different and unacceptable plant located remotely from the original factory. B. More than one supplier was found to be manufacturing beta-lactams in the same facility as one that was manufacturing conventional API and dosage forms.

To send qualified US GMP auditors from the US to China to perform initial or unannounced audits is unrealistic. The cost to fly to China from almost anywhere in the US would make visiting the factory prohibitively expensive for most US OTC and Nutritional manufacturers. However, having a team of Chinese speaking but US trained auditors “on the ground” in China to drop in on suppliers is the only way to economically assure the quality of products purchased from either China or India. Few organizations offer such a novel contract service, but those that do can become a first line of defense for quality production of American products. References 1. 21 CFR 111 Current Good Manufacturing Practice in Manufacturing, Packaging, Labeling or Holding Operations for Dietary Supplements. 2. 21 CFR 210 & 211 Current Good Manufacturing Practice in Manufacturing, Processing, Packaging, or Holding of Drugs, General. 3. Drug Administration Law of the People’s Republic of China, Chapter II, Article 9 (www.sfda.gov.cn). 4. Interim Requirements for Unannounced GMP Inspections, for Human Drugs (www.sfda.gov.cn). 5. 21 CFR 314.70 Supplements and Other Changes to an Approved Application; Guidance for Industry: Changes to an Approved NDA or ANDA; Guidance for Industry: PAC-ATLS Postapproval Changes – Analytical Testing Laboratory Sites; Guidance for Industry: Immediate Release Solid Oral Dosage Forms. Scale-up and Post-Approval Changes: Chemistry, Manufacturing and Controls, In Vitro Dissolution Testing, and In Vivo Bioequivalence Documentation (www.fda.gov). 6. Guidance for Industry: Quality Systems Approach to Pharmaceutical cGMP Regulations. Authors Contact Information: fred.sancilio@sancilio.com, jerilyn.spencer@sancilio.com, nealie.newberger@sancilio.com

Most common is the warehouses that seem to store cephalosporins, beta-

lactams and conventional products together. While the firm denied this, samples of “white powder” were analyzed and contained these materials. C. Employees were not well trained, and new employees with little training were used for routine production while appropriately trained ones were displayed for the initial audits. D. Batch records for many products could not confirm that the processes used were identical to those that were contracted, and in fact confirmed the opposite. E. Laboratory testing was inappropriate and laboratory practices were inadequate to control product quality in some factories. F. Batch records were severely lacking for materials routinely produced. G. Cleaning records and cleaning validations were absent in many processes. H. While new machines and installations were validated, changes made after the plant was certified were not properly documented, validated or communicated to the procurer. I. Water systems generally did not meet US standards in many plants visited. Rust, inappropriate welds, valves and filters were the primary problems encountered.

Figure 1: Dr. Frederick

Sancilio

Technology Title: Fractionated herbal extract demonstrating cholesterol/triglyceride lowering, and a single active compound as potential drug candidate for the treatment of GI disorders (STD 052/07) Summary Description: STD052 is a fractionated herbal extract from a plant which is broadly used in traditional herbal medicine in China and European countries. However, in large dosages this plant often causes severe side effects such as diarrhea and abdominal cramps. A sophisticated purification process was applied to separate the active ingredients from the herbal extract to minimize its inherent severe side effects. STD052, with a good safety profile, has demonstrated its efficacy in cholesterol/triglyceride lowering, as well as maintaining normal GI function in animal studies. In-vitro genetic and animal toxicology studies demonstrated STD07 to be a safe product for further clinical development. Development Status: Preclinical Type of Business/Licensing Sought: Available for Out-Licensing Licensing Contact: Dr. Yi-wen Chu, Ph.D., head of business development department SunTen Phytotech Co., Ltd. Email: yiwen@stpt.com.tw

Technology Title: Novel site-specific PEGylated interferon-alpha (P1101) for treatment of Hepatitis B and C Summary Description: Third generation long-acting, site-specific PEGylated interferon-alpha, having one predominate positional isomer, offering a longer half-life and therefore requiring a less frequent administration regime. The new design also results in an improvement in production yields. Development Status: Preclinical Type of Business/Licensing Sought: Licensing or Partnering Licensing Contact: Shu-Fen Li, MBA Manager PharmaEssentia Corp. Taipei, Taiwan 115 Email: shufen_li@pharmaessentia.com

Technology Title: Active ingredient purified from herb for treatment of skin disorders (STD06) Summary Description: STD06 contains botanical active ingredients purified from a medicinal herb which has been widely used in Traditional Chinese Medicine for various skin diseases. In vitro biological assays of STD06 showed strong inhibitory activities against 5- and 15-Lipooxygenases. Several other anti-inflammatory and anti-microbial effects were also observed. Development Status: Preclinical Type of Business/Licensing Sought: Available for Out-Licensing Licensing Contact: Dr. Yi-wen Chu, Ph.D., head of business development department SunTen Phytotech Co., Ltd. Email: yiwen@stpt.com.tw

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Technology Title: MIC-31- Gastric ulcer treatment Summary Description: MIC-31, a single plant extract, is used for preventing and treating the gastric ulcer caused by Helicobacter pylori and alcohol. MIC-31 was developed based on the results of in vitro assays, in vivo animal models, and preliminary human studies. Both animal studies and preliminary human studies have shown that MIC-31 creates significant gastroprotective action against the ulceration caused by Helicobacter pylori and alcohol. Development Status: Pre-IND Type of Business/Licensing Sought: Drug Development Collaboration Licensing Contact: Frank Tung, Business Development Manager Medigreen Biotechnology Corp. Taipei, Taiwan Email: frank@medigreen.com

Technology Title: CA-88-Cancer chemotherapy and radiotherapy auxiliary treatment Summary Description: CA-88 is a botanically derived extract that has been shown in preliminary studies to help relieve leukopenia, nausea, parageusia, quadriplegia, anesthesia and hearing loss-side effects that are associated with cancer chemotherapy and radiotherapy. The product is a food product, nontoxic, orally taken, convenient to carry, does not require in-patient treatment, and has the potential to be developed into medicine. Development Status: Pre-Clinical Type of Business/Licensing Sought: Drug Development Collaboration Licensing Contact: Frank Tung, Business Development Manager Medigreen Biotechnology Corp. Email: frank@medigreen.com

Technology Title: 1217B- Asthma treatment Summary Description: 1217B, a complex mixture of botanical extracts, has been derived from four traditional Chinese medicinal herbs. It was studied for its pharmacological activity regarding the release of cysteinyl leukotrienes, IL-4 and TNFα in vitro and the airway hyperreactivity in an antigen sensitized-challenged mouse model in vivo. Preliminary results indicate that 1217B can inhibit the synthesis of several key pro-inflammatory mediators involved in the pathophysiology of allergic asthma and can also improve lung function in a mouse model of allergic asthma. Safety studies have also been performed on cardiovascular, respiratory, and nervous systems using 1217B, and results indicate that no side effects are caused. Development Status: US FDA IND approved (No.74229) Type of Business/Licensing Sought: Drug Development Collaboration Licensing Contact: Frank Tung, Business Development Manager Medigreen Biotechnology Corp. Taipei, Taiwan Email: frank@medigreen.com

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India Contract Manufacturing 2008 Mumbai, India January 21, 2008-January 22, 2008 The India Contract Manufacturing 2008 will diagnose the current cost and compliance issues of Indian CMOs, and address the performance and quality concern of drug companies towards CMOs. Through this 2-way extensive discussion and sharing, the future of India contract manufacturing will be clearly examined. The conference also addresses financing and strategic alliances of Indian CMOs in the face of globalization and new opportunities offered by biopharmaceuticals and biogenerics. Event Contact: Kelly Lee Email: KellyL@marcusevanskl.com

Clinical Trials Asia San Francisco, CA March 26, 2008-March 28, 2008 Learn about designing and planning trials in India, China and Southeast Asia, effectively identifying, selecting and engaging clinical sites, and navigating the regulatory landscape throughout Asia. Understand strategic and tactical considerations when designing and conducting trials in Asia. Learn also about managing the ethical review committee process as well as safety reporting and implementation of pharmacovigilance practices at Indian sites. Event Contact: Jim Prudhomme Email: jprudhomme@healthtech.com

BioMedical Asia 2008 Singapore April 14, 2008-April 17, 2008 BioMedical Asia 2008 is the largest and most comprehensive biomedical event in Asia Pacific where top minds from every continent will convene. Featuring 6 conferences, 2 summits and 5 workshops, BioMedical Asia 2008 is the ONLY biomedical event in Asia offering you an unparalleled opportunity to meet and network with over 1,000 biomedical scientists and executives from different parts of the biomedical industry value chain. This is Asia’s most prestigious biomedical event of the year. Event Contact: Ting Ting Wang Email: tingting.wang@terrapinn.com

MedChem India Bangalore, India March 18, 2008-March 19, 2008 Agenda Topics: • Target Identification • Lead Optimization • Natural Product Synthesis • SAR and Molecular Modelling • Fragment Based Drug Discovery • Microwave-Assisted Organic Synthesis • Case Studies • Call for Posters- Deadline: 4 February 2008

Event Contact: Paul Raggett, Exhibition Manager Email: paul.raggett@selectbiosciences.com

China 2008 R&D Summit Shanghai, China March 31, 2008-April 02, 2008 In today's global environment you need to have a China strategy. Do you know how your competitors are leveraging the China advantage? Are you aware of the scientific advances that China is undertaking today? Can you identify the next growth areas where China will play a critical role in the world pharmaceutical stage? IBC's 3rd International Conference & Exhibition: China 2008 Pharmaceutical R&D Summit brings you the opportunity to learn all these and more from industry experts in just 3 days.

Event Contact: Ellen Cabral Email: ecabral@ibcusa.com

Drug Discovery & Development of Innovative Therapeutics Japan Tokyo, Japan May 07, 2008-May 09, 2008 IBC's Drug Discovery & Development of Innovative Therapeutics (DDT) conference is coming to Tokyo, Japan, May 7-9, 2008! Based on the annual DDT Boston World Congress (www.drugdisc.com) of the same name, our 2008 Tokyo event will discuss cutting-edge scientific and business/partnering strategies to help build your drug pipeline from discovery to clinical proof-of-concept. Event Contact: Ellen Cabral Email: ecabral@ibcusa.com

Inauguration of the Singapore Chapter of Association of Clinical Research Professionals ACRP is the pinnacle international body in clinical research and is the primary resource for clinical research professionals in the pharmaceutical, biotechnology, and medicine device industries, as well as those in hospital, academic medical centers, and physician office settings. With the launch of ACRP Singapore this month, clinical research professionals here and the region will gain access to the global library of clinical research resources available through the professional body. The inauguration of ACRP Singapore is the first step towards setting up the Bilcare Research Academy. The first ever ACRP accredited professional educational course in the South East Asian region will be made available through the Academy, which is a one-year Masters Program in Clinical Trials Management to graduates from the field of pharmacy, life sciences, and medicine. Contact Information: Ian Tang Ian.tang@imsg.sg

BSP: Appointing Representative in Asia Pacific

BSP (Biological Signal Processing Ltd.) an Israeli ground-breaking start-up company which develops and markets innovative, simple, and cost effective systems for early stage non-invasive diagnosis and monitoring of ischemic heart disease through biological signal processing, announced that it recently signed a representation agreement with AsiaHQ, for marketing and distributing BSP’s systems in the Asian market. AsiaHQ will be responsible for locating distributors, developing, and operating the distribution activities, and overseeing marketing and sales in the region. The company estimates that sales potential during the next two years originating from the Asia-Pacific market could reach up to US $6 million. BSP's flagship system, the HyperQ™ System for cardiac stress testing, will be launched in the Asian market this month, at the APCC conference and tradeshow in Taipei, one of the most prominent cardiology events in Asia. A short time afterwards, the HyperQ™ systems will be positioned for routine use in the Seoul National University Hospital, Korea. Contact Information: Shirley Shoshaney Kleiner shoshaney@idancom.com

GE Healthcare and Novavax establish collaboration to develop and market pandemic influenza solution GE Healthcare, a unit of General Electric Company (NYSE: GE), and Novavax Inc. (NASDAQ: NVAX), announced on December 10th a collaboration agreement to develop and market a pandemic influenza vaccine manufacturing solution for selected international countries. This collaboration leverages GE Healthcare's bioprocess solutions and design expertise and Novavax's virus-like particle (VLP) and manufacturing platform. Health planners around the world are looking to increase manufacturing capacity and vaccine stockpiles to counter the threat of a global avian flu pandemic; the global demand for pandemic influenza vaccine has been reported as possibly approaching 13 billion doses, with current world capacity at best 2.4 billion doses. “This collaboration is a great first example of GE Healthcare realizing its strategy of enabling affordable and safe vaccine production for countries that need to better prepare for emerging infectious diseases,” said Peter Ehrenheim, President and CEO of GE Healthcare Life Sciences. Novavax's VLP-based H5N1 pandemic flu vaccine is currently in Phase I/IIa clinical trials. The goal is that any required recombinant vaccine could be produced in cell culture within 12 weeks of identification of a pandemic strain, without using eggs or live influenza virus - as little as half the time compared with currently available processes. Commenting on the collaboration, Dr. Rahul Singhvi, President and CEO of Novavax said, “This collaboration is a critical milestone in addressing one of the most pressing global healthcare issues of the 21st century. We believe the combination of these technologies will enable the creation of a country’s rapid response supply and self-sufficiency in pandemic flu vaccine.” GE Healthcare's new ReadyToProcess portfolio of ready-to-use systems and devices is designed to increase speed, simplicity, and safety for all areas of bioprocessing, including the time it takes to build and validate a facility. With Novavax's VLP and manufacturing platform, the intention is that it could enable commissioning of a new facility from scratch in approximately two and a half years - half the time for a traditional egg-based vaccine production facility, and at a potential capital reduction of approximately 60 per cent. Contact Information: Conor McKechnie conor.mckechnie@ge.com 35

Sancilio & Company, Inc. Announces First China-Based 21 CFR Part 210/211 Compliance Audit Group Sancilio & Company, Inc. announced in October the first professionally staffed and experienced 21 CFR Part 210/211 Compliance Auditing Services for drug manufacturers importing from Asia. The new service is based in Shanghai. According to Fred D. Sancilio, PhD, CEO and Chief Scientist of Sancilio & Company, Inc., “Recent quality issues discovered in a variety of products from Asia are urging US companies to increase their vigilance in quality when importing materials from overseas. American pharmaceutical, nutritional, and food manufacturers typically have responded by physically sending auditors from the United States to Asia. Our new facility obviates this approach, as our Chinese auditors - fully fluent in English and Mandarin and trained in US cGMP procedures - are already on the ground.” Contact Information: Nealie Newberger Nealien@sancilio.com

Merck & Co. Extends Investment in Singapore with New Regional Headquarters The global pharmaceutical giant's latest extension in the region is part of its global strategy to strengthen its focus on emerging markets. The new regional headquarters expands Merck’s scope and capabilities in Singapore, building on its already strong manufacturing presence, and bringing the company's total investments in Singapore to over S$1 billion (US $650 million). It will also add to the company’s staff strength, which includes more than 500 employees found across its commercial and manufacturing operations currently. Alongside the opening of its headquarters in Singapore, the company also recently completed its S$152 million (US $100 million) Tuas Biomedical Park facility to support future introduction of new products, including an investigational medicine for lipid management (MK-524) that is currently in Phase III of its development. Spanning a total of 49 acres, the Tuas facility produces both active pharmaceutical ingredients as well as finished products for sale worldwide. Source: Singapore Investment Newsletter, Nov. 2007

Carl Zeiss Licenses Harvard University’s Coherent anti-Stokes Raman-Scattering Microscopy Technology Thornwood, N.Y. – Carl Zeiss Inc., a leading provider of microscopy solutions for research, clinical and industrial applications, is pleased to announce that they have signed a licensing agreement with Harvard University’s Office of Technology Development (OTD). The agreement will allow Carl Zeiss to use Coherent anti-Stokes Raman-Scattering (CARS) to develop label-free imaging techniques that complement and enhance fluorescence microscopy. The revolutionary CARS technology, developed in the lab of Xiaoliang Sunney Xie, Ph.D., Professor of Chemistry and Chemical Biology at Harvard, will be used by Carl Zeiss MicroImaging to image biochemically important molecules in living cells without having to label them with a dye. Instead, the contrast is created by intrinsic vibrations of molecules in the specimen, avoiding the sometimes complex fluorescence labelling procedure and the potential for the specimen to be influenced by the label. CARS microscopy can be used for measurements where there is a high sensitivity to labelling with marker molecules, and therefore complements and enhances fluorescence microscopy by contributing to a more in-depth understanding of biological and biochemical processes. A potential application for CARS technology includes pharmacokinetic examinations on the transport of active ingredients in biological tissues. The label free imaging, combined with the visualization of molecular labels that barely affect the properties of the marked biomolecules, make this application possible and will help advance important biomedical research. Other applications for CARS technology go beyond cell biology and into the development and testing of new active ingredients in the pharmaceutical industry or for medical diagnostics. Carl Zeiss, Inc. in Asia We have in most countries direct sales organisations with well trained sales, application support, and service personnel with large growth potential in India and China. Furthermore, Zeiss is a market leader in high-end system business in Korea and India. Contact Information: Karin A. Salerno ksalerno@zeiss.com 36

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