Healthcare companies are making foray into the contract research and site management space to leverage the synergies that emanate from having a hospital chain.
Sector analysts see this as a move by such firms to diversify in value chain by positioning as research centres.
Fortis Healthcare has become the latest entrant in contract research with its Fortis Clinical Research Services. Apollo Hospitals' site management organisation - Apollo Spectra Research Foundation - has been managing clinical trials for some years now and the Max group, owner of Max chain of hospitals, has a contract research organization called Neeman Medical International.
Upcoming healthcare complexes such as Dr Naresh Trehan's Rs 1,000 crore (Rs 10 billion) Medicity and Fortis' similar venture in Gurgaon and Apollo Tyres' maiden healthcare venture Artemis are focussing on developing medical research units.
Focussed on clinical trials in Phase I, II and III, bioequivalence and bioavailability studies for now, these healthcare players are looking at a pie of Rs 400 crore (Rs 4 billion) of the contract research market. This market would grow by 100 per cent in the next five years, pointed out a sector expert.
While a CRO would pitch for contract research of big Indian and international pharma firms, an SMO is the one that aids the actual implementation of the trials, enrollment of volunteers etc.
Harpal Singh, chairman, Fortis Healthcare, who pegs the outsourcing potential in the CRO business to be over $5 billion in the next 10 years, said, "As a group, we decided to set up a facility for clinical trials as we saw a big opportunity there."
Interestingly, the evolving model is in line with the international scenario where globally reputed healthcare providers such as John Hopkins have full-fledged clinical research wings.
Explaining the synergies, Jayanti Swaminathan, clinical project manager with Apollo Spectra Research Foundation, said that in case of a hospital chain such as Apollo, an SMO model fitted better as they could provide correct database, point out investigators, arrange for volunteers, infrastructural facilities, documentation etc. Spectra is currently the biggest SMO in the country and is set to have a dozen sites countrywide by next year.
"This trend is very heartening as hospitals are anyway an integral part of clinical research as they offer actual patient involvement and facilitate patient studies. It is smart business for hospitals to add one more vertical that spreads their presence across the healthcare value chain. It is a logical and synergistic extension for healthcare companies," said Surinder Kher, chief executive officer, Jubilant Clinsys.
With access to patients, doctors and laboratory facilities, entry into clinical research and site management is a natural evolution for most healthcare players looking to branch out.
More so, their status also gets a boost as they become research centres and not merely healthcare providers, added Kher.Do you want to discuss stock tips? Do you know a hot one? Join the Stock Market Investments Discussion Group
