Autumn 2005
Establishing Operational Sites in India
With ever increasing pressures on the industry to improve productivity and reduce costs, it is small wonder that western-based pharmaceutical companies and CROs are looking further afield to conduct clinical trials and related support activities. India is responding well to this opportunity and the potential benefits to all are evident, but a long term, clear business strategy is essential.
As pharmaceutical companies race to get new drugs to market, pressures on finite patient populations and spiralling developmental costs are making the industry look beyond traditional centres of clinical research to Eastern Europe, Latin America and Asia. The last decade has seen a slow but steady growth in clinical research being conducted in India, and just as it responded to other western-based industries, the country is rising to the challenge. Hospitals have developed well-equipped research facilities, increasing numbers of ICH/GCP trained investigators are available and the Indian government is set to establish a regulatory framework compatible with global standards, with a number of key initiatives already in place. In addition the local pharmaceutical industry is experiencing considerable growth, constituting approximately 1.3% of the world market in value and 8% in volume in 2002.(1)
As a result of modern, robust technology infrastructures, information processing and exchange is now a global activity, making the international transfer of data and business activities routine. India already has a growing reputation in the field of business process outsourcing and its rapidly developing IT market has grown tenfold from approximately £1billion to >£10billion in less than a decade. Over 200 of the Fortune 500 companies outsource software development to India(2) and Britain's National Health Service has recently awarded an IT contract worth more than £100m to two Indian firms.(3)
India boasts a vast pool of English speaking graduates that are supported by a strong educational and training system that can offer a solid and stable resource. Overheads, such as salary and business premises are considerably lower than in the West and high quality technical facilities are available across the country. All these factors not only make India a viable and attractive location for clinical research but also the potential base for many related global operational activities such as systems design, development and validation, programming, clinical data processing and statistical analysis.
However, a company looking to establish a resource centre in India must have a clear business and operational strategy that goes beyond following latest industry trends or cashing in on reduced overheads. It requires planning and significant investment of both time and money. As a minimum the strategy should address the following points.
Clear identification of business processes to be placed offshore; short, mid and long term
Resource management
Technical infrastructure
Communication strategies including company/client interface
Product quality management
Risk assessment and management
These points need to be considered in unison and are critical to ensuring a robust and coherent platform on which to establish a successful offshore operation. An alternative option is to outsource the identified processes to a third party already established in India but these points still require full evaluation.
Business Processes
A clear vision of what business processes are to be located off shore is at the heart of developing a solid plan. Decisions, which are made with short-term goals only in mind, or that do not fit coherently with the overall company strategy, will face longer-term issues of product consistency and quality, negating any potential cost savings made. Some of the specific points to be considered are:
Can processes be taken offshore in a stepwise approach, starting with the simplest processes and increasing as skill levels grow?
What are the realistic time frames for each step?
What are the perceived and actual business risks?
How can those risks and perceptions be managed?
What are the organisational implications?
Will taking processes offshore result in local redundancies? Other HR issues.
What are the legal implications and how will those organisational changes be managed?
What sort of staff will you require in India?
Are they available?
How will you train and monitor them?
What technical infrastructure is required?
Having established a clear vision of the process to be moved offshore identifying an appropriate location is the next critical step.
The pharmaceutical and CRO industry tends to focus on establishing offshore operations in Bangalore and Mumbai (Bombay). This is in part because local pharmaceutical industry is located in these regions, which makes them an obvious consideration. Also a sense of comfort is gained from the fact that other companies have chosen these regions, especially if the organisation has little first hand knowledge of India. However, it is worthwhile to consider how important and/or helpful it is for the offshore operation to be geographically aligned with industry colleagues.
A good understanding of resources required, both human and technical, is probably a better place to start an assessment of potential locations. Other factors may also be considered such as local costs (they vary across India), access, political landscape, etc. Focused research can then be conducted to draw up a short list of potential sites. Plenty of information can be found to support this research effort, such as the study conducted by the Confederation of Indian Industries, in late 2000.
Technical Infrastructure
Having drawn up a shortlist of potential locations visiting these regions and the available technical facilities is essential. Western-based companies take for granted the constant availability of all services. Despite its growing relationship with western industry in recent years, India remains a third world country and local infrastructure cannot be depended upon. Power cuts are not unusual and therefore it is essential that when evaluating facilities that independent power generators, water plants and network communications are part of the assessment checklist. There are many well-established and internationally accredited (ISO, CMM) Business Parks throughout India.
There has been much reported in the media about the availability of high calibre staff in India, and to a large extent it is true. Some states have high levels of literacy and produce impressive numbers of graduates a year but this is not the case throughout the country. In addition there is a lot of migration of people across states seeking employment. For example a high percentage of the people working in Bangalore will have come from outside that region. Again this information should form part of the location assessment.
Having identified a good pool of graduates/skilled personnel to recruit from, there are a number of additional points that should be addressed:
Indian employment law and bureaucracy.
Interview candidates; do not leave to local employment bureaus.
Develop relevant skill tests to conduct at interview.
Always ask to see copies of qualifications and follow up on references if available.
Pay particular consideration to English language skills if these are of the slightest importance and be prepared to invest in them (watching Eastenders is not a suitable strategy, despite its implementation by a UK company for its Indian based call centre!)
Develop a clear, formal training plan and invest in appropriate delivery systems
Develop a performance monitoring system with documented results and feedback.
Look at ways to build career opportunities for staff longer term.
Invest in the long-term growth and development of the staff.
Successful staff and process management will depend significantly on the communication mechanisms implemented. Equally important is the interface with internal and/or external clients. The business strategy must clearly address how these points of contact will be managed.
For example:
Whether clients should routinely have direct access to Indian employees or only a UK based interface.
How information and data is shared across sites.
Use of intranets for information sharing.
Management of Indian facility audits by internal and/or external clients.
Management of the time difference (5 hours ahead of the UK).
Face-to-face communication with staff, through a programme of regular visits from UK managers.
Organisations frequently play lip service to the need for strong and effective communication channels, recognising in theory the benefits but not investing sufficiently in implementation and maintenance. With the potential for miscommunication increased through distance and cultural differences, adequate and sustained communication systems are essential.
Confederation of Indian Industries Study: September 2000 (4)
Product Quality Management
When establishing any new operational unit increased quality control processes are important. Established QC procedures should be supplemented with additional review steps, dependent on the processes involved. These may need to start with 100% review of some activities, reducing to random sample checking over time and based on results. It is vital for the confidence of both internal/external clients and the offshore team themselves that the integrity of the product is sound and that improvement and/or adjustments to processes are implemented quickly.
Risk Assessment and Management
Performing business risk assessments is now normal practice within the clinical environment, and phrases such as "Business Continuity Planning" and "Disaster Recovery Procedures" are commonly used as part of system audits. Ensuring that appropriate measures have been implemented to safeguard the business or functions of a business is of paramount importance, particularly when establishing new operational sites and especially for organisations that place enormous value on information, whether intellectual, electronic or paper based.
Risk assessment for Business Continuity should always be kept simple, as it is often easier to implement a well defined and simple action plan in the event of a crisis. There are several steps in any risk assessment plan so this is not an exhaustive list:
Identify potential risks based upon:
Environmental Factors
Political/Regulatory issues
Technological, Physical Security, Data Integrity
Identify what is at risk:
People, Productivity, Intellectual property
Property and Business Continuity
Data and Technical Systems supporting data
Evaluate and prioritise the potential impact of a risk, if something were to go wrong, how severely would it impact upon business. Identify whether any existing control measures are appropriate and adequate or whether new procedures need to be created and implemented.
Develop risk management documentation, whether in the form of a Disaster Recovery plan, Business Continuity document or simple procedures. Ensure that the documentation meets current regulatory requirements or legislation.
Review and update your plans on a frequent interval.
These basic measures can safeguard a business in the event of a problem.
Do It Right, or Don't Do It
If sufficient consideration has been given to developing a clear business strategy that is consistent with overall business objectives, and appropriate investment has been made into the implementation of that strategy through robust systems and processes, then an offshore operational unit can afford organisations and the industry significant business advantages as outlined at the start of this article. But there is a danger that the industry, having moved from a slow and conservative attitude toward India to one of general acceptance, will throw all caution to the wind and assume establishing or working with Indian based operational units is a quick and simple solution. Indian sites and/or affiliations that are set up quickly as a knee jerk response to industry trends or in an attempt to make some short-term operational savings are destined to fail. Getting it right may take longer but the benefits will be realisable and sustainable.
(1) India Infoline Study
(3) BBC News
Tina Young
Paragon Biometrics