Indian clinical research organisations are witnessing a downshift and companies are learning from others. Though the market is not in favour of the CRO industry, Quest Life Sciences has chosen to expand its business in both domestic as well as international markets. It has already acquired an established CRO, FCRL. TS Jaishankar, Managing Director, Quest Life Sciences shares the company’s corporate plans and details of the recent FCRL deal, in conversation with Usha Sharma
Why did you decide to acquire Fortis Clinical Research Ltd (FCRL), a division of Fortis Hospitals Group?
Initially, Quest Life Sciences intended to acquire Fortis Clinical Research (FCRL) shares. The advantages would have been the following :- FCRL is an established CRO and well known for having done BA/BE studies for several regulatory markets such as US FDA, ANVISA, UK MHRA, MOH Malaysia and MOH Turkey, to name a few. Quest even thought that most of the regulatory approvals, except ANVISA and Turkey, have been ideally beneficial to straight away enter into these two markets. However, it decided against acquiring shares of FCRL but preferred to acquire the entire FCRL assets without the liabilities for financial reasons.
Can you give us financial details of FCRL and Quest Life Science deal? How did you arrange the funds?
Quest Life Sciences is currently setting up a state-of-the-art facility in Gujarat with 40000 sq. ft area, which is nearing completion. So, it decided to acquire only the assets of FCRL besides taking over regulatory services for and on behalf of FCRL for their existing clients. All the equipment of FCRL have current AMCs with IQ/OQ/PQ documents and validation. A few of the senior technical staff have also agreed to join us. It was beneficial to take up only the assets without the liabilities. Quest has funded the entire acquisition through internal fund generation and additional term loan from the banks viz, Central Bank of India, Chennai.
Presently, how many studies are in the pipeline and are at what stages?
Presently, Quest has nearly 30 studies in the pipeline. Besides, over 50 studies are in the advanced stages of negotiations and will be scheduled based on approvals from the Drugs Controller General (India) (DCGI).
You have acquired FCRL at a time when the whole industry is facing regulatory issues. How are you going to tackle this challenge?
The CRO industry is no doubt facing several challenges, particularly in reference to regulatory affairs. This certainly is a matter of concern. However, the industry as a whole, has enormous potential. India has a distinct advantage in the global pharma industry because of a vast pool of disease profile; large volunteer population and advanced information technology, highly experienced and skilled manpower and above all, extremely competitive compared to global CROs. The DCG(I) has made tremendous improvement in their systems and guidelines leading to faster approvals. In spite of several impediments, India has the ability to provide high quality services with assured timelines. The pharma industry in general, and particularly in the regulated markets, are seeing stiff competition in generics and thereby multinational pharma companies are presently keen to work with domestic as well as Indian CROs in view of the advantages mentioned above.
What are your learnings from GVK Bio’s Data manipulation incident and what are the proactive steps taken by your country to avoid such an incidence?
GVK Bio’s unfortunate episode has in fact shaken the CROs and BA/BE centres in India. We, at Quest, have taken enormous steps in not only strictly adhering to Good Clinical Practice (GCP) and Good Laboratory Practice (GLP) but have also strengthened our quality assurance (QA), data security and integrity. We have additionally added an external auditor to counter verify our systems and manpower training. Kandla project of Quest is almost nearing completion. We are expecting construction work of the facility to be completed by July, 2015. As we have already acquired the FCRL assets, the Kandla project will go but stream by September, 2015. The estimated project cost is Rs 20 crores and is being funded by SIDBI and Quest, besides a private equity fund.
Quest is setting up a BA/BE centre at Kandla, Gujarat in the Special Economic Zone. What kind of investment has been been on this project and by when it is likely to be commissioned? Also, what are the studies you plan to conduct and why?
The reason for setting up a facility in Kandla is primarily because there is single window clearance by the Gujarat Government besides excellent infrastructure. More importantly, SEZ provides enormous benefits including 10 years income tax concession, exemption from sales tax, service tax, excise, and central excise.
Beside this upcoming facility in Gujarat, the company is also planning to set up full-fledged BA and analytical research laboratory facility in Thailand. Will this facility tap the Asian market?
The objective of setting up a BE centre in Thailand is primarily because the Thai government has made it compulsory for all clinical trials and BE studies to be conducted only in Thailand; for registration of drugs in the country. There are 150 pharma manufacturers in Thailand besides all global pharma companies including multinationals and large Indian pharma companies are forced to do their studies only in Thailand. One of our valued customers in Thailand has provided us adequate support and many Indian companies have already indicated their desire to offer us studies. There are only two centres in Thailand and as such we have distinct advantage of enormous back up support from Quest. Quest will be able to offer complete technology SOPs and training besides deploying a minimum of three senior officials. Also, Quest will additionally offer the analytical services for the local pharma companies at extremely competitive rates.
What is the company’s current manpower strength and do you have plans to increase it in the near future?
Quest Life Sciences, Chennai has a strength of 150 scientists. Quest has been audited six times by US FDA besides regulatory audits from UK MHRA, AEMPS Spain and WHO, MOH, Malaysia. Studies of Quest has been submitted for Europe, the US, the UK, Philippines, Malaysia, Korea and South Africa, Australia and the Middle East.
How large is your international presence and do you have plans to expand it further?
Our current international presence is very few. Keeping in mind our facilities in Chennai and Kandla and the upcoming one in Thailand. The company has expanded its operations with country managers based in New Jersey, Greece, Europe, Moscow and soon in Thailand.
How much turnover you are expecting from 2015-16.
We are estimating revenue of Rs 75 crores in 2016.
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