Pre-feasibility Study for Setting up an Animal House on KAPL land situated on Magadi Road, Bangalore

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Disclaimer

The study is based on responses from suppliers and producers from the industry as well as secondary sources Frost & Sullivan does not take responsibility for any incorrect information supplied to us by manufacturers or users

Quantitative market information is based primarily on interviews and therefore is subject to fluctuation The information available in the public domain has also been taken into consideration and the same is used for the preliminary understanding of the project

No part of this document may be given, lent, resold, or disclosed to non-customers without written permission.

Furthermore, no part may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the permission of the publisher.

For information regarding permission, write to: Frost & Sullivan Unit No. 641/642, 4th Floor, Solitaire Corporate Park, Chakala, Andheri(E). Mumbai-400093, India.

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Contents
PART I Identification of Existing Animal Houses in India and Understanding of their Business Models ........................................................................................................................................... 7 Ownership and Business Model of Animal Houses in India..................................................... 8 Analysis of Business Sponsors Recurring vs. New business .................................................... 9 Revenue Contribution ................................................................................................................11 New Business Pre-Clinical Services .........................................................................................15 Types of Animal Houses in India ............................................................................................... 17 Type of Studies ............................................................................................................................ 18 Number of Animal Houses in India........................................................................................... 25 Value and Volume of Study Conducted................................................................................ 26 Project Component and Infrastructure Requirements ......................................................... 27 Infrastructure Required for an Animal House ......................................................................... 27 Regulatory Compliance............................................................................................................ 36 Regulatory Requirements for an Animal House ..................................................................... 39 Environmental Impact of an Animal House............................................................................ 41 Gaps in Facilities as Perceived by Sponsors ........................................................................... 42 Importance of Bangalore as a Suitable Location for Animal House .................................. 44 Benefits of setting up facility in Special Economic Zones (SEZs) ......................................... 49 Type of projects that can be sourced in India but are not there presently ...................... 66 PART II Financial Viability Assessment comprising of CAPEX requirements and revenue estimation .................................................................................................................................... 69 Built-up Infrastructure Requirements .........................................................................................70 Equipments Requirement...........................................................................................................72 Land Area Requirement.............................................................................................................73

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Operational Costs of an Animal House....................................................................................74 Capital Requirement and Cash Flow Estimation for an Animal House .............................. 76 Case Study 1: AAALAC Approvable Small Animal House.....................................................76 Case Study 2: GLP Approvable Small Animal House .............................................................78 Conclusion....................................................................................................................................80 PART III Land Requirement and Site Suitability Assessment for Setting up of an Animal House ...................................................................................................................................................... 81 Estimation of Land Estimation for setting up of Envisaged Project...................................... 82 Key Parameters for selection of a site for project.................................................................. 83 Cost Based Factors......................................................................................................................84 Broad Sensitivities for selection of Land....................................................................................87 Assessment of classification of project by pollution control board and bye laws / prerequisites for setting up animal houses.................................................................................... 88 Frost & Sullivan Recommendations.......................................................................................... 92 Go/ No-Go Decision ...................................................................................................................92 Proposed Animal House Model.................................................................................................92 Facility Infrastructure ...................................................................................................................93 Business Model .............................................................................................................................94 Suggested Ownership Model ....................................................................................................95 Land Requirement.......................................................................................................................96 Expenditure ..................................................................................................................................96 Annexure 1: Animal Types for an Animal House .................................................................... 97 Annexure 2: Products Offered by Animal Houses.................................................................. 99 Small Animals ...............................................................................................................................99 Large Animals ............................................................................................................................105 Annexure 3: India Pharmaceutical & Biotechnology Industry Overview ...................... 108 India Pharmaceutical Industry Overview............................................................................108
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India Biotechnology Industry Overview...............................................................................109 India BioClusters........................................................................................................................ 110

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List of figures
Figure 1: Animal House Ownership Figure 2: Business split Figure 3: Clientele Figure 4: Revenue Contribution by Client Types Figure 5: Pharmaceutical R&D Expenditure, 2008-2015 Figure 6: Percentage of R&D budget allocation towards CRO activities by Sponsors, 2009-2015 Figure 7: Preclinical Services CRO market revenue forecasts (India), 2009-2015 Figure 8: Types of Animal Houses Figure 9: Split of Animal Houses Figure 10: Flowchart for Animal disposal Figure 11: Regulatory Approval Process Figure 12: Number of life sciences companies in Karnataka Figure 13: Karnataka Industry segment Figure 14: Client Profiles Figure15: Clientele Figure16: Business procedure of getting orders and supplying animals Figure17: Clinical trials in India, 2008-2015 (e) Figure18: Clinical trials by phases in India, 2008-2015 (e) Figure19: Therapeutic split (Phase-wise) for the clinical trials in India Figure20: Typical Animal House setup in India

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PART I Identification of Existing Animal Houses in India and Understanding of their Business Models

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Ownership and Business Model of Animal Houses in India
Animal Houses are typically understood to be enclosures where animals are raised and/ or bred for the purpose of lab testing while ensuring animal comfort. Animal houses can be large enclosures housing large animals like buffaloes, cows, horses, to smaller establishments containing small mammals like mice, rats, guinea pigs, etc. In India animal houses are either owned privately (independent animal houses), by government organizations (stand-alone or as a PPP) or by Pharma companies. Some animal houses in India are owned privately. These independent animal houses have the objective of utilizing the animal house to breed and supply animals for studies, also in some cases the animal houses have study areas where toxicology or pharmacology studies can be performed for research studies. Government owned animal houses are typically alliances between the government and private organizations, like ACTREC. Such organizations are focused primarily on maintaining animal houses for study of diseases. They also supply their specific animal strains on requirement to other study centers, when required. Pharma companies and Clinical Research Organizations also have their own in-house animal areas, or vivariums, which are maintained for toxicology and / or pharmacology studies for their own studies, or for studies contracted to them. Figure 1: Animal House Ownership

Animal House Ownership

Private

Government Associated

Pharma companies/ CROs

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Analysis of Business Sponsors Recurring vs. New business
All multinational and domestic Pharma and biotech companies, along with Clinical research Organizations and Medical Colleges/ Government R & D labs/ Research centers, etc. need to perform some preclinical testing, safety trials and other routine molecule studies before establishing the safety and efficacy of any product. For the initial preclinical testing, in most cases where cell lines cannot be used, animal models are used. Due to this continual requirement, such facilities generally maintain their own animal houses and raise the animal strain depending upon their forthcoming needs. Sometimes, however when the need for animal models is unprecedented or there is inadequate stock, they need to go out for private vendors and buy animals from there. Nearly all multinational companies (MNC) who have R & D presence in India, have their own animal house for supply of animals for routine tests. Same is true with major CROs involved in Pre-clinical testing. In such cases, they raise only those animals which will be needed the most for experimentation purpose, while in case of privately owned animal house, they have to keep sizeable stock of all types of strains ready so as to supply to the client when ordered. Now since the cost of maintaining animal models as per the CPCSEA guidelines is costly and the animal lifespan for mice, rat, etc. is low11, it sometimes becomes practically difficult to run a private animal house with considerable profits. MNC companies generally need to establish standard results globally and are somewhat more involved into innovation products rather than Biosimilars or generics, hence they prefer sourcing animals from their own Certified and internationally accredited animal house facilities. So, MNC companies with presence in India limit their animal studies, or perform them within their premises. This is because of the very few animal house facilities which are certified and accredited at an international level. Indian Companies/ CROs, may have a preferred tie-up or repeat business with a particular privately-owned animal house and they may source animals from there on a periodic basis either to maintain their standard stock by buying standard breeding pairs or directly using the animals from the vendor for studies. That may again depend on the demand of animals used for the study.

Typically, the lifespan of a rat is 2 years, of which the mature age which can be used for most studies lasts 6-10 months
1

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Figure 2: Buisness split

5%

95%

Repeat Clients

New clients

For an animal house, the business usually comes from a set of clients who rely on the quality of animals provided to them in the past. The animal house in that case becomes the preferred vendor and the client becomes a repeat client whose demand can be estimated by the animal house. Approximately 5% of the customers are new customers who reach the animal house either because a. they have started a new study type, for which they do not have existing animals, or b. because their preferred vendor is unable to supply them the complete animal lot size required

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Figure 3: Clientelle

10%

90%

International Clients

Indian Clients

Since most animal houses in India are GLP certifiable, and do not have international accreditations, the scope of servicing MNC companies reduces. Also, Indian companies prefer to source their study materials from within India, which ensures easier follow up and feedback, as well as a faster turnaround time. As a result it can be seen that 90% of the existing clients of an animal house are Indian companies, while only 10% are MNC or international companies. As more animal houses gain international certifications, the ratio is expected to shift towards international clients.

Revenue Contribution
Animal houses supply animals and perform studies for pharmaceutical studies. For an Animal House facility the main clients can be categorised as 1. Pharma Companies 2. Biotech/Biopharma Companies 3. Pharmacy Colleges 4. Research Institutes 5. Hospitals

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Figure 4: Revenue Contribution by Client Types

Presently the distribution of clients between the given client types are provided in figure 3 above. We expect the distribution to remain the same over the next few years, with Pharma companies increasing in the total contribution to the toplines of existing animal houses. Each of the client types are explained in details below.

Pharma Companies
For a typical independent Animal house facility majority of the clients are research driven pharmaceutical companies. These companies are the ones who focus on New Chemical Entity (NCE) research. Presently, almost 90-95% of these companies are local companies such as Dr. Reddys, Ranbaxy, Glenmark, Zydus Cadila etc. The remaining are MNC pharma companies who have an R&D division in India, companies such as Astra Zeneca, Bayer Schering etc. The requirements range from animals for their own studies, and also to a limited extent also involve the animal house in performing the study as well. This depends on the facility of the animal house, its accreditations and prior experience. Some of these companies require close to 1,000 animals (mice and rats) per month. Their demand annually is more or less constant as they have a pre-determined number of molecules in pipeline. This segment contribution is expected to increase over the next 5 years as these companies are investing more funds in their R&D activity. This was confirmed by a recent Frost & Sullivan survey of leading research driven Pharma companies in India. The R&D expenses of Pharma companies are a direct indication of their focus on NCE research, and hence their needs for studies to be performed for their new molecules.

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Since local Indian Pharma companies are the main clients for animal houses, below is an analysis of the research budgets of come Indian companies.
Figure 5: Pharmaceutical R&D Expenditure, 2008-2015
Total Pharmaceutical R&D Expenditure, 2008 2015 (USD Million)

800 700 600

Million USD

CAGR (2008(2008-2012):11%

500 400 300 200 100 0 2008 2009 2010 2011 2012 2013 2014 2015

The R&D expenses of local companies has been increasing consistently over the past few years (10% yoy) The growth in R&D budgets for 2009-10 would have been higher, however it was impacted by recession and companies focusing more on sales generation R&D expenses are expected to continue growth due to increased tax benefits as declared in India Fiscal Budget 2010 R&D expenses have grown by 11% in the year 2007 to 2008 and are expected to grow at a similar pace over the coming years, with Indian companies focusing on new drug development Apart from buying animals for studies, Pharma companies also outsource their studies to animal

houses which have facilities to perform such experiments. In such cases, we expect the financial allocation of Pharma companies to be a part of their outsourced research budgets. Below is an analysis of the outsourcing research allocation of Pharma companies, and our expected budget allocation over the next few years.
Figure 6: Percentage of R&D budget allocation towards CRO activities by Sponsors, 2009-2015

Less than 10% 100% 75% 50% 25% 17 0% 2009 75 8.33

11 % - 20 %

21% - 40% 8.33

41% - 60%

61% - 80%

Percentage of Companies surveyed

36.36 41.67 27.27 50

36.36

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In 2009 17% of Sponsor companies surveyed allocate less than 10% of their total R&D budget for CRO activities, 75% companies allocate about 11 to 20% towards CROs and 8% companies allocate 20 to 40% for CRO activities By 2012, 50% of Sponsor companies surveyed will allocate 11 to 20% of their total R&D budget for CRO activities, 41% companies allocate about 20 to 40% towards CROs and 8% companies allocate 40 to 60% for CRO activities. By 2015, 36% of Sponsor companies surveyed will allocate 11 to 20% of their total R&D budget for CRO activities, 27% companies allocate about 20 to 40% towards CROs and 36% companies allocate 40 to 60% for CRO activities. 90% of the companies that were surveyed said they would spend close to 20 to 60% of their R&D budgets on clinical research. These companies comprised all the MNCs such as Astra Zeneca, Bayer Schering Pharma and Key Local companies such as Dr. Reddys, Biocon, Piramal Life Sciences etc. The remaining 10% of the comprised of small and medium companies that were surveyed, these include companies such as Titan Pharmaceutical, Aristo Pharmaceuticals This year on year increase in allocation of funds toward CRO related activities is an indication of the increased NCE work that is expected to be undertaken by companies in India. Companies doing research on New Chemical Entities require Animals both for Basic Research and also for Preclinical Toxicology testing. This increased NCE research work will translate into good business opportunity for Animal House facilities

Biotech/Biopharma companies
They are the second biggest clients for Animal Houses. This segment comprises of Biopharmaceutical companies such as Biocon, Intas, Avesthagen etc, vaccine manufacturers such as Serum Institute, Shantha Biotech, Bharat Biotech etc and Contract Research Organizations such as Advinus, Syngene, Jai Research Foundation etc. The Biotech Industry which is seeing a lot of encouragement and support from both the central governments is expected to grow rapidly. Indian companies are gearing up for producing Biosimilar drugs which require substantial R&D investment. This will be translated into increased use of animals for both basic and toxicology research. This segments contribution is expected to grow from 22% to about 25% or more over the next 5 years. The companies that will contribute to this growth will be the Small and Medium Biotech companies, CROs are not expected to contribute significantly as they are self sufficient for their animal requirements and prefer importing the animals rather than sourcing locally.

Medical and Pharmacy colleges

These are the third biggest segment. They will require small animals for their physiology and pharmacology experimental purposes. They typically consume about 750-1000 animals. The demand from this segment spikes during the exam months of March to May. This segment will remain more or less constant or reduce slightly over the next 5 years.

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Research Institutes and Universities
They contribute another significant chunk of clients. The contribution from this segment too is expected to remain the same of decline slightly as most institutes are self sustained for animals.

Hospitals
Hospitals are a smaller segment and require the animals for raising antiserum and polyclonal antibodies for diagnostic purposes. The demand from this segment too is expected to remain constant

New Business Pre-Clinical Services

The global pharmaceutical industry is nearing the patent expiration dates beginning 2012, especially since blockbuster molecules are fewer in number and their R&D pipelines are scanty. Also, though research has taken an upper hand, outsourcing has emerged as the new paradigm in business with pharmaceutical companies minimizing costs and timelines by outsourcing part of their research activities to competent organizations. Multinationals are looking for ways and means to reduce cost, time and risks associated with developing a drug. Therefore while outsourcing used to initially comprise only of non-core activities, now it also encompasses activities that are technically intensive and possibly high amount of confidentiality. Once such area of outsourcing that is seeing a lot of activity is the Pre-Clinical Toxicology services segment. This segment is still in a nascent stage and is one of the fastest growing segments on the outsourced Contract Research Services industry and is expected to grow at a CAGR of 34% over the next 5 years. This presents an opportunity for an Animal house facility to move up the value chain from being a supplier of Animals to a service provider.
Figure 7: Preclinical Services CRO market revenue forecasts (India), 2009-2015
Preclinical Services Contract Research Market: Revenue forecasts (India), 2009-2015

200 180 160 140

USD million

120 100 80 60 40 20 0 2006 2007 13.17 2008 19.95 2009 26.91 2010 36.03 2011 48.23 2012 65.01 2013 87.64 2014 116.35 2015 154.46 Source: Frost & Sullivan

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Industry Size: The market revenue for 2009 was approximately 27 million USD. The revenues are expected to rise to USD 154 million by 2015. Phase of maturity: Market is in the Growth Stage Preclinical toxicology services have a CAGR of 34% through the forecasted period. India Advantage: Skilled manpower, low costs. Areas of Improvement: India still lags behind China in offering toxicological services. This mainly due to regulatory hurdles that limit the experimentation in higher mammals. Experimentation in primates is still an area that is seeing a lot of debate in India. Although the government has planned primate testing facilities on a Public Private Partnership basis, more needs to be done to facilitate experimentation in primates.

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Types of Animal Houses in India

Animal Houses are typically understood to be enclosures where animals are raised and/ or bred for the purpose of lab testing while ensuring animal comfort. Animal houses can be large enclosures housing large animals like buffaloes, cows, horses, to smaller establishments containing small mammals like mice, rats, guinea pigs, etc. There is no particular classification of animal house types, but they can be classified either on the basis of the type of animals or on the basis of function of the animal house. One the basis of the type of animals sheltered in the facility, animal houses can be classified into Large Animal Houses and Small Animal Houses. There may be some containing both small and large animals, with common lab areas and separate animal housing areas.
Fig 8: Types of Animal Houses

Animal Houses

Small Animals (Rodents - rats/ mice/ rabbits/ hamster)

Animal area enclosed in cages Random Monitoring Testing facility Breeding enclosures

Animal area enclosed in wirehash Free Run Area surrounded by proper fencing Open Shed for animal resting Breeding Enclosures Testing facility

Large Animals (Dog / Sheep/ Monkey/ Cat/ Horses/ Cows, etc.)

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As seen in Figure 7 above, animal houses for small animals which house rodents like rats, mice, hamsters, rabbits etc., have indoor animal shelters. Such animal houses usually cater to studies performed for pre-clinical to clinical drug development. Animal Houses for large animals need to have shelters suitable for the larger animals. These areas may be open air (dogs) or caged (monkey). Apart from this, they also need to have a free run area for the natural frolicking activities of the animals as well as a shed area for resting of animals.

Type of Studies

Animal housed can be used for different types of studies depending upon the permission granted to the animal house. Small animals are used for pre-clinical drug testing, study of diseases like cancer as well as toxicology studies. Large animals in India are usually kept for Commercial purposes like sera production (eg. Horses and sheep) Antibody evaluation and production/identifying target molecules on big animals those can produce sufficient amount of antibodies when infected Nutritional studies General anti-venom studies Toxicology studies

On an average, nearly 300 horses are needed for studies related to antibodies production and sera-based studies in large animals Also, in a typical facility housing mainly small animals or rodents, nearly 50:50 ratio is maintained between animals used in studies and animals used for breeding, where the bred rodents are used for internal consumption.

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The different types of studies performed in animal houses are mentioned in details below:

I. Preclinical Services
A] Pharmacokinetics (PK)

Single Dose PK Dose proportionality studies Absolute Bioavailability Multiple Dose Pharmacokinetics Multiple routes of administration: Intravenous, oral, subcutaneous, intraperitoneal and dermal. Tissue distribution intramuscular,

B] Efficiency Studies

Acute efficacy screening models Chronic efficacy screening models Based on the project suitable animal models will be used for screening Development of new animal models Genetically modified animal models

C] Toxicology

Abnormal toxicity Abnormal Toxicity is a European Pharmacopoeia standard for assessment of biological products. The test material is administered to mice and guinea pigs, which are then evaluated for signs of toxicity.

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Animals used: mice and guinea pigs Specific toxicity Pyrogen testing A pyrogen is a substance (often bacterial) that causes elevation to an animals body temperature. Pyrogenicity testing seeks to find any possible fever-causing contaminants in items such as vaccines and injectable drugs. The rabbit pyrogen test, in use since the 1940s, requires the injection of the material into the rabbits blood stream and then monitoring for temperature increases. The rabbits sensitivity to the test is greatly affected by the strain of the pyrogen, as well as differences in age and gender Animal used: Rabbits Safety and potency tests Biological assays Bioassays are typically conducted to measure the effects of some substance on a living organism and are essential in the development of new drugs, and in monitoring environmental pollutants. For example bioassay test for pituitary , serum , glycogen etc. Animal used: Rabbits, toads Potency assays Potency assays are animal studies in which a defined animal model demonstrates a measurable, physiological change in response to application of the drug. Animal used: Hamsters, Guinea pigs Eye irritation test Ocular toxicity is determined by applying a test substance for one second to the eyes of 6 test animals, usually rabbits. The eyes are then carefully examined for 72-hours, using a magnifying instrument to detect minor effects. The ocular reaction may occur on the cornea, conjunctiva, or iris. It may be simple irritation that is reversible and quickly disappears or the irritation may be severe and produce corrosion, an irreversible condition. The eye irritation test is commonly known as the "Draize Test."

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Animal used: Rabbits Systemic toxicity studies Male fertility studies These studies are conducted to determine the adverse effect of any drug on the male fertility. Semen parameters or reproductive organ histopathology and functioning are observed. Animal used: Rats, Dogs Female reproduction & Development toxicity studies The reproductive toxicity testing is intended to determine the effect of substances on gonadal function, conception birth and the growth and development of offspring. The oral route is preferred. Animal used: young adult rats Development toxicity is used to detect the potential of substance to produce embryo toxicity and birth defects. Animals used: Rats, Mouse, hamster and rabbits (young adult females) Female fertility study (Segment I) Teratogenicities study (Segment II) Teratogenicties studies are conducted to investigate the incidence of birth defects in the offspring when it is exposed to medicinal drugs. Animals used: Rat Perinatal study (Segment III) Animal used: Fetal and neonatal nonhuman primate, pregnant sheep, lamb, puppy, piglet and immature rodents

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Local toxicity studies Dermal toxicity study- Dermal toxicity tests determine the potential for an agent to cause irritation and inflammation of the skin. This may be the result of direct damage to the skin cells by a substance. It may also be an indirect response due to sensitization from prior exposure. There are two dermal toxicity tests: i) Primary Dermal irritation Determines direct

toxicity. ii) Dermal Sensitization Assays for immune hypersensitivity of skin. Animal Used Albino rabbits Vaginal toxicity study Animal used: Rats, rabbits and dogs Rectal tolerance test The method determined the tolerance of a site( rectum) which comes into contact the medicinal product as a result of method of administration. Observation of the anal region and anal sphincter, clinical signs and faces is carried out. Animal used: Rabbits & Dogs Ocular toxicity studies Ocular toxicity is determined by applying a test substance for one second to the eyes of 6 test animals, usually rabbits. The eyes are then carefully examined for 72-hours, using a magnifying instrument to detect minor effects. The ocular reaction may occur on the cornea, conjunctiva, or iris. It may be simple irritation that is reversible and quickly disappears or the irritation may be severe and produce corrosion, an irreversible condition. The eye irritation test is commonly known as the "Draize Test." Animal used: Rabbits Inhalation toxicity studies Several groups of experimental animals are exposed for a defined period to the test substance in graduated concentrations, one concentration being used per group. Where vehicles used to help generate an appropriate concentration of the substance in the

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atmosphere a vehicle control group should be used. Subsequently, observations of effects and deaths are made. Animals which die during the test are necropsied, and at the conclusion of the test surviving animals are sacrificed and necropsied as necessary. Acute inhalation toxicity is the total of adverse effects caused by a substance following a single uninterrupted exposure by inhalation over a short period of time (24 hours or less) to a substance capable of being inhaled. Animal used: Rats Allergenicity/ Hypersensitivity Guinea pig maximization test - The Guinea Pig Maximization Test is a widely-used test in the screening of contact allergens for the possibility that they may act as sensitizers in humans. Animal used: Guinea Pigs Genotoxicity a. AMES - This test uses amino acid requiring bacteria of at least five strains of Salmonella typhimurium and Escherichia coli to detect point mutations. Bacterial cells are plated on agar lacking an amino acid required by the test strain, and then exposed to the test compound in the presence and in the absence of an exogenous metabolic activation system. The principle of this test is that it detects new mutations which revert mutations already present in the test strains, and restore the functional capability of the bacteria to synthesize an essential amino acid. The revertant bacteria are detected by their ability to grow in the absence of the amino acid required by the parent test strain. Lack of bacterial growth may indicate that test compound is non-mutagenic. b. Micronucleus - This is a genotoxicity test system used for the detection of micronuclei in the cytoplasm of interphase cells to investigate the mutagenic potential of a test compound in vitro.

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II. Laboratory Services

1. Surgical Services

Cannulation Jugular vein Customized surgeries

2. Histopathology Services

Gross pathology Organ collection and preservation Tissue processing Embedding

3. Clinical Pathology Services

Serum chemistry Plasma chemistry Hematology Urinalysis

III. Miscellaneous Laboratory services

Drug Testing Laboratory Services as per IP, BP & USP Report in Form 39 of Drugs & Cosmetics Act Quality plasma & serum Bioassays FSH, LH, HCG, Insulin, EPO etc. Vaccine toxicity testing Antibody production in rabbits and guinea pigs.

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Number of Animal Houses in India

Fig 9: Split of Animal Houses

The number of Animal Houses in India is estimated to be close to 1300. Of these, 70% are under Medical Colleges and Research Institutes such as All India Institute of Medical Sciences (AIIMS) New Delhi, Christian Medical College (CMC) Vellore, Indian Institute of Science Bangalore National Center for Biological Sciences Bangalore, Center for Cellular and Molecular Biology Hyderabad, National Institute of Immunology New Delhi. 20% of animal houses are present in the facilities of pharmaceutical Companies such as Cadila Pharma, Dr. Reddys Labs, Ranbaxy Laboratories, Biocon, as well as International companies like MSD, Novartis etc. 10% animal houses are with Contract Research Organisations such as Advinus Therapeutics, Syngene, Jai Research Foundation, Raj Biotech, Intox Labs etc. A few animal houses are also well known for their bred strains which they supply to other animal houses. These stand alone animal houses include institutes like NTC, IISc, etc.

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Value and Volume of Study Conducted

A typical small animal house with 5,000 animals can supply upto 2,000 plus animals on a monthly basis. The number of studies that can be performed with a number of animals depends widely on the basis of the following criteria: a) Strain and breed of animal to be used b) Type of study 1. Therapeutic area for the study: this helps in identification of the strain of animal to be used for the study, whether it can be a generic mouse type, or a specific mouse with a glaucoma strain 2. Model used for the study: the model used for a study determines the specifics of the study, starting with the number of animals, to the duration of the study and type of experimentation to be performed 3. Number of animal groups to be used: this can vary from 2 groups of 3 animals each, to 10 groups of 10 animals each or more c) Duration of study the study can be a periodic repeat study or a one-time study. E.g. The effect of a molecule can be tested on a group of mice over a period of 3 months, while another study may require a one time 2 week study

Thus, the volume of study performed by an animal house are difficult to estimate. However, it has been observed that on an average, the leading animal houses in India starts around 30 new studies on a yearly basis. The value of each study similarly depends upon a number of factors, ranging from cost of animals used for the study, to the complexity of the model used for the study. However, for a vanilla toxicology study performed for a group of 15 rats, the study can cost as much as INR 3 lacs.

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Project Component and Infrastructure Requirements

A typical animal house has a number of rooms and areas stipulated by the regulatory authorities. Apart from these, they have to follow norms and processes which have to be adhered to ensure certifications and compliance with norms. The main component of this aspect, however, are the infrastructural requirements which ensure that the animal house complies with the basic requirements on a long term basis and the animals are in a comfortable and suitable environment.

Infrastructure Required for an Animal House

Animal houses need to have specific areas for different kinds of activities involved, to ensure proper mental and physical care of Animals in the facility. In planning an animal facility the space should be well divided for various activities. The animal rooms should occupy about 50-60% of the total constructed area and the remaining area should be utilized for services such as stores, washing, office and staff, machine rooms, quarantine and corridors. The environment of animal room (Macro-Environment) and animal cage (Microenvironment) are factors on which the production and experimental efficiency of the animal depends. Since animals are very sensitive to environmental changes, sharp fluctuations in either: temperature, humidity, light, sound and ventilation, should be avoided. Broadly, an animal house should have within its premises, or at least easy access to the following facilities: 1. 2. 3. 4. 5. 6. 2010 Animal Rooms Service Area Animal Runs Storage Area Health Labs Personnel Area Confidential

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7. 8. 9.

Autopsy/ Test rooms Incineration Facilities Research Labs (not mandatory)

Each of the above mentioned infrastructural requirements are explained below in details.

Animal Rooms:
Animal rooms are where the animals are kept. This may comprise of either caging facility or housing system depending upon the type of animal that is kept. For smaller animals like rats, mice, rabbits, etc, cages are maintained, while for large animals like Horses, goats, cattle, etc. are kept in sheds and outdoor facilities with a proper fencing done. The animal housing system taken overall, should be designed carefully to facilitate animal well being, meet research requirements, and minimize experimental variables. The housing system should: Provide space that is adequate, permit freedom of movement and normal postural adjustments, and have a resting place appropriate to the species; Provide a comfortable environment Provide an escape proof enclosure that confines animal safety Provide easy access to food and water Provide adequate ventilation Meet the biological needs of the animals, e.g., maintenance of body temperature, urination, defecation, and reproduction Keep the animals dry and clean, consistent with species requirements Facilitate research while maintaining good health of the animals

Small Animal Requirements

Basic requirements for keeping rodents (small animals): Standard cage sizes depending upon the weight/ size of the animal Standard floor space/ animal Controlled temperature and humidity

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To simplify servicing and sanitation, cages should have smooth, impervious surfaces that neither attract nor retain dirt and a minimum number of ledges, angles, and corners in which dirt or water can accumulate

Feeding and watering devices should be easily accessible for filling, changing, cleaning and servicing

Particular attention must be given to eliminate sharp edges and broken wires, keeping cage floors in good condition

Area requirements for keeping mice:

Floor area per mice (cm2) Weight of animals (grams) Small cage (24 cm x 14 cm) Large cage (32.5 cm x 21 cm) 38.7 51.6 77.4 96.7

<10

Up to 15

Up to 25

>25

17

14

Table explanation: eg., with a floor area of 96.7cm2, mice with cumulative weight more than 25gm can be kept. However, such mice should not exceed 3 in number for a small cage, and 7 in number for a large cage.

Large Animal Requirements

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Humidity and temperature control in case the animal is caged, for example, in case of monkeys Fenced grounds/areas so that the animal can not escape from the surrounding, as well as some outside animal should not enter into the reserved area, eg. In the case of cows and horses

Area requirements for keeping monkeys:

Weight (kgs) Floor Area (ft2) by kilo wt as defined 1.6 3.0 4.3 6.0 8.0 Height (cm)

Up to 1 Up to 3 Up to 10-12 Up to 12-15 Up to 15-25

50 72 72 72 90

* A single monkey can weigh up to 25 kgs, hence cage floor area is determined by weight

Area requirements for keeping farm animals:

Weight (kgs) Sheep and Goats <25 Up to 50 >50 Swine Up to 25 Up to 50 Up to 100 Up to 200 12 15 >8 24 48 10 15 20 8 Floor Area /Animal (ft2) Height (ft)

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Service area:
This area is reserved for the cleaning of animals and animal cages, as well as is concerned for all the routine sanitation activities. Sanitation is essential in an animal facility. Animal rooms, corridors, storage spaces, and other areas should be cleaned with appropriate detergents and disinfectants as often as necessary to keep them free of dirt, debris, and harmful contamination. Cleaning utensils, such as mops, pails, and brooms, should not be transported between animal rooms. These activities need to be done in service areas.

Animal Runs:
Large animals like horses, goats, etc. should have proper and spacious open-air animal runs (open areas) with a proper fencing and wired mesh, where these animals can be let open, play and run. This will help in keeping the physical and mental health of the animal in a stable condition. The animal runs may be separate for separate group of animals. This type of provision should always be made for animals with specialized locomotor pattern to express these patterns, especially when the animals are held for long periods. For e.g. ropes, bars, and perches are appropriate for branching non-human primates. Cages are often used for short-term (up to 3 months) housing of dogs and may be necessary for postsurgical care, isolation of sick dogs, and metabolic studies. Pens, runs, or other out-of-cage space provide more opportunity for exercise, and their use is encouraged when holding dogs for long periods.

Storage area
This area is used for maintaining the feed storage as well as spare cage storage and also for other necessary machineries or equipments related to animal house. Animals should be fed palatable, non-contaminated and nutritionally adequate food daily unless the experimental protocol requires otherwise. Feeders should allow easy access to food, while avoiding contamination by urine and feces. Food should be available in amounts sufficient to 2010 Confidential

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ensure normal growth in immature animals and maintenance of normal body weight, reproduction, and lactation in adults. The animal feed should contain moisture, crude fiber, crude protein, essential vitamins, minerals crude fat and carbohydrate for providing appropriate nutrition.

Health labs
Animals need to be monitored for their health on a routine basis to ensure healthy animals available for studies to be conducted. Health labs enable checking of the vital statistics of animals and ensuring that the population is disease free and healthy. All animals should be observed for signs of illness, injury, or abnormal behavior by animal house staff. As a rule, this should occur daily, but more-frequent observations might be warranted, such as during postoperative recovery or when animals are ill or have a physical deficit. It is imperative that appropriate methods be in place for disease surveillance and diagnosis. Unexpected deaths and signs of illness, distress, or other deviations from normal health condition in animals should be reported promptly to ensure appropriate and timely delivery of veterinary medical care. Animals that show signs of a contagious disease should be isolated from healthy animals in the colony. If an entire room of animals is known or believed to be exposed to an infectious agent (e.g. Mycobacterium tuberculosis in non-human primates), the group should be kept intact and isolated during the process of diagnosis, treatment, and control. Diagnostic clinical laboratory may be made available. Health lab may be a part of the animal house, or located in another facility near the animal house, so as to ensure speedy checks if required. A typical health lab should include: - Blood pressure monitoring - Blood testing facilities - Stool testing - Ecto-parasite testing - Height/ weight monitoring - X-ray Facility - Diagnostic analytical tools 2010 Confidential

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- Microbiology section - Pathology section clinical and surgical (optional) - And other routine health check facilities

Personnel Area
This area is meant for the staff and is used by them for their work. This also includes the administration section of the building. It is essential that the animal care staff maintain a high standard of personal cleanliness. Facilities and supplies for meeting this obligation should be provided e.g. showers, change of uniforms, footwear etc. Clothing suitable for use in the animal facility should be supplied and laundered by the institution. A commercial laundering service is acceptable in many situations; however, institutional facilities should be used to decontaminate clothing exposed to potentially hazardous microbial agents or toxic substances. In some circumstances, it is acceptable to use disposable gear such as gloves, masks, head covers, coats, coveralls and shoe covers. Personal should change clothing as often as is necessary to maintain personal hygiene. Outer garments worn in the animal rooms should not be worn outside the animal facility. Washing and showering facilities appropriate to the program should be available.

Autopsy/ Test room

This area is meant for conducting autopsies on animals post experiment if necessary or for performing surgeries or tests on animals during the studies. This area may also support storage units maintained at low temperatures for storing animal organs needed for toxicological studies.

Incineration Facilities
Sacrificed animals should be properly disposed and immediately removed from the facility so as to reduce the chances of contaminations or any kind of infections. Incineration facilities may be part of the facility or may be conducted at a separate incinerator facility. Guidelines for incineration facilities are independent of those for animal houses. In case of large animals, burial may also be conducted for sacrificed animals. Local municipal corporations are also helpful in arrangement of disposal of sacrificed animals. Small animals are wrapped in specific bags designed for the purpose and immediately transferred to the cold 2010 Confidential

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storage rooms wherein they are kept at -20oC temperatures until the time they are sent for incineration to the corporations involved in such kind of activities. (See Case Study for Mumbai)

Research Labs (Not Mandatory)

Generally animal houses maintained by any Pharmaceutical company or a CRO may have one more additional lab for research purposes where the liquid preparations, molecule suspensions can be made and other research issues are taken. However, this is not mandatory for individual animal houses.

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Fig 10: Flowchart for Animal disposal

Case Study: Sacrificed Animal Disposal in Mumbai

Disposal of dead animals

Small animals (rodents)

Big animals (cattle/horses)

Stored to -20oC

Bombay Municipal Corporation has incineration facility where they are either buried or burnt

Biomedical waste management unit maintained by Bombay Municipal Corporation have biomedical waste collection Vehicles. Similar facilities in Mumbai are maintained by Taluja group. Also there is SMS Enviroclean group who look after these issues

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Regulatory Compliance

Every animal house supplying animals of any kind to the companies for test/ research purpose must be setup and supervised in accordance to Committee for the Purpose of Control and Supervision of Experiment on Animals (CPCSEA) which is duty bound to take all such measures as may be necessary to ensure that animals are not subjected to unnecessary pain or suffering before, during or after the experiments on them. CPCSEA guidelines are in accordance with Prevention of Cruelty to Animals Act (PCA). For this, government has made Breeding and Experimentation on Animals (Control and Supervision rules), 1988 which was amended thereafter in 2001 and in 2006, to regulate the experimentation on animals. Every such animal house or any institution having animal house with animals being sourced for research purposes should have an Institutional Animal Ethics Committee (IAEC) so that to maintain the quality and consistent ethical review mechanism. For experiments and studies involving some bacterial infections or fungal studies and other concerns similar to that like toxicology studies, there needs to be an Institutional Bio Safety Committee (IBSC) to regulate and supervise the experimentation and disposal of waste matter and animal dead bodies All the animal house are supposed to function in all respects in accordance with CPCSEA guidelines and routine inspection and survey needs to be get done by the owner to renew his certification. Other certifications which a particular animal house can go for but which are not mandatory are: DSTGLP (Department of Science and Technology Good Lab Practices) NABL (National Accreditation Board for Testing and Calibration Laboratories) accreditation for labs There are a few international accreditations: Accreditations from Jackson Laboratory, Maine, USA AAALAC (Association for Assessment and Accreditation of Laboratory Animal Care) accreditation. AAALAC International is a private, nonprofit organization that 2010 Confidential

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promotes the humane treatment of animals in science through voluntary accreditation and assessment programs. This is the only major organization that is only for animals FELASA (Federation of Laboratory Animal Science Associations) accreditation. The Federation of European Laboratory Animal Science Associations (FELASA) is composed, at present, of 12 independent European national and regional laboratory animal science associations. It can speak for laboratory animal scientists and technologists in at least 20 countries: Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Latvia, Lithuania, the Netherlands, Norway, Spain, Sweden, Switzerland and the United Kingdom

However, very few Animal houses in India are having these international Accreditations like AAALAC and FELASA. The reason being: Non-competitive attitude of the animal houses in India to struggle and look forward for improving their facility standards Lack of proper planning and vision Lower revenues which restrict them from getting their facility maintained and functional according to the standards Improper business models which are not renewed routinely Dependency on repeat clients Lack of proper trained professional in India

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Infrastructural Requirements for an Animal House A Summary

Type of facility Animal rooms Service area Animal Run Storage Area Health Labs Personnel Area Autopsy/Test room

Small Animals Y (Cages) Y N Y Y Y Y

Large Animals Y (large areas) Y Y Y Y Y Y

Incineration Facility

May be present in own campus / Outsourced

May be present in own campus / Outsourced

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Regulatory Requirements for an Animal House

For any animal house to function in India, it needs to be compliant with the regulatory requirements. The following flowchart outlines the regulatory procedure to set up an animal house
Figure 11: Regulatory Approval Process

Basic Infrastructure in accordance to CPCSEA

Registration of breeding

Formation of Institutional Animal Ethics Committee

Animal House ready; Projects designed

Inform authorities / CPCSEA about the details of every project; IAEC approval

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All animal houses should function in accordance with Committee for the Purpose of Control and Supervision on Experiments on Animals (CPCSEA)

Facilities must be accredited with NABL (National Accreditation Board for Testing and Calibration Laboratories) and DSTGLP (Department of Science and Technology Good Lab Practices) to assure quality maintenance and safety of animals used in laboratory studies

All animals must be acquired lawfully as per the CPCSEA guidelines A health surveillance program for screening incoming animals should be carried out to assess animal quality

Animal care programs require technical and husbandry support. Institutions should employ people trained in laboratory animal science or provide for both formal and on-thejob training to ensure effective implementation of the program

For animal experiments involving bio-hazardous agents, the use of animals in such experiments require special attentions. The procedures and the facilities to be used must be reviewed by both the Institutional Bio-safety committee and Institutional Animal Ethics Committee (IBSC)

Transgenic animals are those animals, into whose germ line foreign gene(s) have been engineered, whereas knockout animals are those whose specific gene(s) have been disrupted leading to loss of function. These animals can be bred to establish transgenic animal strains. Transgenic animals are used to study the biological functions of specific genes, to develop animal models for diseases of humans or animals, to produce therapeutic products, vaccines and for biological screening, etc. These can be either developed in the laboratory or produced for R&D purpose from registered scientific/academic institutions or commercial firms, and generally from abroad with approval from appropriate authorities

Apart from DST/GLP and NABL accreditations, animal houses can also get international accreditations. These can help them while performing studies for international organizations, or for study results to be submitted to international drug authorities. While breeding imported strains of animals, the animal house may also be accredited by the international company from where the imports are done, to ensure quality of animals. Some of the well known accreditations are:

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Accreditations from Jackson Laboratory, Maine, USA AAALAC (Association for Assessment and Accreditation of Laboratory Animal Care) accreditation. AAALAC International is a private, nonprofit organization that promotes the humane treatment of animals in science through voluntary accreditation and assessment programs. This is the only major organization that is only for animals

FELASA (Federation of Laboratory Animal Science Associations) accreditation. The Federation of European Laboratory Animal Science Associations (FELASA) is composed, at present, of 12 independent European national and regional laboratory animal science associations. It can speak for laboratory animal scientists and technologists in at least 20 countries: Austria, Belgium, Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Iceland, Ireland, Italy, Latvia, Lithuania, the Netherlands, Norway, Spain, Sweden, Switzerland and the United Kingdom.

Environmental Impact of an Animal House

The animal houses may at times, have an impact on the nearby environment if not maintained properly. However, all the Animal houses are supposed to function according to CPCSEA guidelines. Deviations may happen at times which may have negative impacts on the surroundings. Few of the impacts: There are chances of grazing animals or rodents who may slip out of the animal house and may enter the nearby farms/fields destroying the standing crops or other properties If proper drainage and waste removal system is not functioning in order, that may again harm the environment Animals used in toxicology studies should be under proper surveillance and should not be allowed to go out of the farm Sacrificed animals should be properly taken care of as per norms, otherwise the improper disposal may create foul smell and spread of infection to the nearby water bodies. Noise pollution is again a problem with large animal houses housing large animals like horse and cattle Since incineration and burial of sacrificed animals is as per state protocol and can be outsourced, they do not have a direct role in the environmental impact of a stand-alone animal house.

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Gaps in Facilities as Perceived by Sponsors

Most of the Pharma companies as well as CROs consider using their own Animal house facility animals for conducting tests and studies. However if the requirement is large, then they may opt for buying animals from outside. However, the animals are generally bought from the vendors who have good quality animals and have supplied to the sponsor earlier also. Following are the key points which are mentioned as gaps by the sponsors for any general Animal house facility functioning independently: Lack of proper accreditations at national level, which include bare minimum like ISO or DST accreditations. The study results, if needed to publish at an international level, need to have animals that are from a certified facility following GLP, which gives an extra edge towards the acceptance of the results Sometimes necessary Animal certificates are also needed like Certificate of Birth or Genetic Monitoring Certificate for a particular stock, which may not be available in proper form with an animal house Animal health is again a major concern. Animal may be supplied to the sponsor in a poor health condition, or may be a significant percentage of animals in a stock may not be at a good physical level top conduct experiments or studies. Maintenance of typical animal models like Diabetes mouse or Cancer models all the time is again not possible for all kinds of animal houses, since extra care has to be taken for these models Breed mixing and maintenance is again an issue which is encountered some of the times. Like, there is a possibility of strain mixing in the animal house which may then contaminate the stock and the same is unknowingly transferred to the sponsor. This may again foul the results of the experiment Supply of animals is also a problem to some extent because if a large sample is required for some test, the animal houses ask for a time of atleast one to two month so as to raise the animals. That is, they act only on getting the orders from sponsors and very few animal houses in India have necessary stock ready all the time

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Importance of Bangalore as a Suitable Location for Animal House

Karnataka Life Sciences Industry Overview and Feasibility of Setting up Animal House in Bangalore

Karnataka Life Sciences Overview

o Karnataka states capital city Bangalore is ranked as the fourth best technological hub in the world by United Nation's Human Development Report o This State is a home for the more than 187 biotech companies, which forms 50% of the Life Sciences Companies in the country o The Government of Karnataka was the first state government to bring out a Biotech policy. It is one of the most pro active state governments in promoting Biotechnology in the country. o The annual Flag ship event of Bangalore Bio is the largest and the most important Biotech event in India. o The State houses leading life science research institutes of the country like Indian Institute of Science (IISc) ranked as the eighteenth best institute in the world by the World Education Report and has produced several Noble Laureates, National Centre for Biological Sciences (NCBS) one of the 10 institute in the world that is recognized by NIH, USA for stem cell research, Jawaharlal Nehru Centre for

Advanced Scientific Research (JNCASR). National Institute of Mental Health and Neuro Sciences is Indias leading Neurology research center. o Karnataka is home to the second largest number of Medical Colleges in India at close to 40.

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Fig 12: Number of life sciences companies in Karnataka

Fig 13: Karnataka Industry segment

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Karnataka- Requirement for Animal House

Bangalore is home to the largest Biocluster of the 6 Bioclusters in India. The Bangalore Biocluster comprises close to 40% of all the companies in India that are undertaking research in the field of Biopharmaceuticals, Enzymes, Contract R&D services, Bioprocessing and Genomic/Proteomic research. The cluster is a well balanced interdependent web of companies, research institutes, government agencies and stake holder groups 60% of the market is controlled by the Research Services and Human Health based products. The Research Services are for Drug Discovery Research, Preclinical Research and Toxicology services. The leading national biological research institutes of IISc, NCBS, JNCASR, NIMHAS, etc are engaged in basic and applied biology research. The companys and research institute present a significant market for Lab Animal and Animal testing services. On an average a Pharma Companies and Contract Research Organization engaged in Drug Discovery and Development research spends close 25 Lakhs to 1 Crore annually on Lab Animal. High concentration of Medical Colleges will drive demand for Lab Animals Most institutes and companies import animals as there are very few local players with the capability and infrastructure to meet the demand.

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Drivers for Bangalore as an Ideal Location

Companies Close to 200 Life Science Companies in the state Biotech exports in 2009 are close to INR 3000 Crores Many leading Indian and MNC companies comprise this cluster e.g. Biocon, Avesthagen, Stempeutics, Astra Zeneca, Novo Nordisk. Bangalore has one of the highest number of Biosuppliers. E.g Invitrogen, Sigma Aldrich, Millipore, Waters, Sartorius, Pall Significant number of Drug Discovery and Genomics/ Proteomics companies

Government Support Bangalore Biocluster Karnataka was first in the country to announce Biotech Policy in the year 2001. This policy was revised in 2009 with a number of additional benefits. Single Window Clearance agency has been created to fast track project clearance. Projects with value over USD 10 Million to receive special package. All research labs to come under the Green category. State-of-the-Art Animal Quarantine and BioSecurity Facility to be set up at Bangalore International Airport Bangalore is considered Indias main Biotech Hub. The Competitive Strengths of Bangalore are suited for supporting Biotech Cluster. This Biocluster is also ably supported by allied industries such as the Large IT sector and BPO sector. Due to the relatively high R&D and capital demands of the Life Sciences sector Karnatakas relative strength in R&D, Proactive government policies, world class Institutes and Active Public Private Partnership makes Bangalore and natural Hub for Life Sciences research in India.

Stake holder groups The Bangalore Cluster is unique in having Institutions for Collaboration (IFCs), which focus on cluster communication and collaboration. Examples include the Association of Biotechnology Led Enterprises (ABLE), the Vision Group on Biotechnology, which has organized the nations flagship annual biotechnology exhibition, Bangalore-Bio International Fair (Bangalore-Bio), since 2001. Bio-Venture Fund of US$

Research Institutes

Karnataka is home to many world class universities such as IISc, NCBS, JNCASR, NIMHANS. 15 out of the 30 universities offering degrees in biotech in India are based in Bangalore. Karnataka has the second highest number of medical colleges in India at close to 40. Proposed National Center of Excellence in Stem Cell Research is expected to come up in Bangalore
Source: Frost & Sullivan

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SWOT Analysis of Bangalore as a location for Animal Houses

Strengths Strong Scientific resource base with presence of a large number of of Research Scientific Institutes focused on Life Science Research Large Second Concentration Largest of of Oriented Life Science Companies number of Medical manpower Veterinary due to College in India Availability presence Institute Acknowledged R&D capital of India Proactive Government Policies Weakness Infrastructure Bottlenecks Lack of quality manpower due to lack of specific courses which Research -

Opportunity Large Market Demand for Lab Animals and Services (Initial estimate of

50,000 animals annually) Minimal Competition- There is just one major independent lab animal provider in Bangalore. Increased Drug Discovery Outsourcing activity with emphasis on Biology

based research for which Bangalore is hub. Setting up of National Center of

Excellence in Stem Cell Research will boost demand. Threats Highly regulated environment for Animal Experimentation Competition from Hyderabad Requirement facility can for High increase standard initial

specialize students in working in an animal house, leading to on-the-job training of veterinarians

infrastructure costs Mind set of local companies to

import Animals due perceived lack of credibility of Indian suppliers

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Benefits of setting up facility in Special Economic Zones (SEZs)

Special Economic Zone (hereinafter referred as as SEZ) is a geographical region that has economic laws that are more liberal than a country's typical economic laws. An SEZ is a trade capacity development tool, with the goal to promote rapid economic growth by using tax and business incentives to attract foreign investment and technology. Today, there are approximately 3,000 SEZs operating in 120 countries, which account for over US$ 600 billion in exports and about 50 million jobs. By offering privileged terms, SEZs attract investment and foreign exchange, spur employment and boost the development of improved technologies and infrastructure. There are 13 functional SEZs and about 61 SEZs, which have been approved and are under the process of establishment in India. As observed in various interactions with stakeholders of animal houses, an SEZ for an animal house may not be of immediate value to the system. Advantages of having an Animal House located in an SEZ: Availability of an animal house in a Pharma/ biotech SEZ will be of immense value to the Pharma/ biotech companies who will not need to have to maintain their own animal houses or outsource to animal houses far from their location, thereby making monitoring activities simpler The animal house will be assured of a captive client base from the companies in the vicinity Presence of other animal houses in the same SEZ can facilitate sharing of resources like health labs and incineration facilities. This can help in reduce the running cost of the facility Being inside an SEZ can help the animal house in the cost of sourcing international strains of animals. However, this has to be explored in further details.

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The advantages listed above for presence in an SEZ however, are not unique. While companies within the SEZ may choose to conduct their studies in an animal house in the same SEZ, they will also consider other factors such as capability of the animal house and pricing of study before awarding a project to an animal house. If presence in an SEZ constraints the animal house with respect to availability to other companies outside the SEZ or other similar constraints with respect to facilities, the animal house may not benefit from being present in the SEZ.

(A) The Units set up in an SEZ which have begun to manufacture / provide services during the financial year beginning April 1, 2005 will get the following exemptions: 100% exemption of profits and gains from business for the first 5 years.

50% exemption on profits and gains from business for the next 5 years.

50% exemption to the extent that such amounts is re-invested in the SEZ Special Reserve Account.

If the SEZ Unit has already availed of benefits for 10 years under Section 10A of the ITA, the above exemptions are not available. Further, when a Free Trade Zone (FTZ) or an Export Processing Zone (EPZ) is converted into an SEZ, the Units, which have already availed of the 10-year tax exemption in an FTZ or EPZ, cannot avail of the Section 10AA exemptions.

(B) Losses falling under the heads Profits and Gains from Business or Profession and Income from Capital Gains can be carried forward / set off as long as such loss is related to the business of the SEZ Unit.

(C) Capital Gains on transfer of assets in case of shifting of an industrial undertaking from an urban area to an SEZ shall be exempt, provided that 1 year before, or 3 years after the transfer

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(i) machinery / plant was purchased for the business of the industrial undertaking in the SEZ, (ii) building or land was acquired or building was constructed in the SEZ, (iii) the original asset was shifted and the establishment was transferred to the SEZ and (iv) the assessee incurred such other expenses as are notified by the Central Government

(D) Interest income received by a non-resident or a person who is not ordinarily resident in India, on a deposit made in an OBU situated in an SEZ, shall be exempt from total income

(E) No tax deduction shall be made by the OBU from interest paid: (i) On deposits made on or after April 1, 2005 by a non-resident or a person not ordinarily resident in India; or (ii) On borrowings on or after April 1, 2005 from a non-resident or a person not ordinarily resident in India

(F) The gross total income of an assessee having an OBU or an assessee being a Unit of an IFSC shall be deductible to the extent of 100% for 5 consecutive years from the year of grant of permission under the Banking Regulation Act / SEBI / other relevant law and 50% for the next 5 years12. It further defines the exempted income, which is:

Income from an OBU in an SEZ ;

Income from business referred to in the Banking Regulation Act, 1949, or any other Unit which develops, develops and operates, or develops, operates and maintains an SEZ ;

Income from an approved unit of an IFSC.

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(G) Exemption from Securities Transaction Tax available to taxable securities transaction entered into by a non-resident through the IFSC.

Other Benefits

Customs and Excise

Exemption from Customs Duty: SEZ Units may import or procure from the domestic sources, duty free, all their requirements of capital goods, raw materials, consumables, spares, packing materials, office equipment, DG sets etc. for implementation of their projects in the SEZ without requiring any license or specific approval Goods imported/procured locally which are duty-free could or should be utilized within the approval period of 5 years Domestic sales by SEZ Units will be exempt from Special Additional Duty Domestic sale of finished products, by-products is permitted on payment of applicable Customs duty Domestic sale of rejects, waste and scrap is permitted on payment of applicable customs duty on the transaction value Exemption from applicable excise duty on goods brought in from the DTA to an SEZ

Foreign Direct Investment

100% FDI under the automatic route is allowed in the manufacturing sector in SEZ Units, except for arms and ammunition, explosives, atomic substances, narcotics and hazardous chemicals, distillation and brewing of alcoholic drinks and cigarettes, cigars and manufactured tobacco substitutes

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Exemption from the applicability of Press Note 2 (2005) that prescribes certain conditions that a foreign investor proposing to make foreign direct investment in real estate sector in India has to satisfy.

Banking / Insurance / External Commercial Borrowings

Setting up OBUs has been allowed in SEZs. External Commercial Borrowings by SEZ Units up to US$ 500 million a year is allowed without any maturity restrictions Freedom to bring in export proceeds without any time limit Flexibility to keep 100% of export proceeds in an EEFC account and freedom to make overseas investments with it Commodity hedging permitted SEZ units allowed to 'write-off' unrealized export bills

Central Sales Tax

Exemption from Central sales tax on inter-state sale or purchase of goods

Other Central Enactments

State Taxes
The respective State Governments may for the purpose of giving effect to the provisions of the SEZ Act, notify policies for Developers and SEZ Units and take suitable steps for the enactment of any law for granting exemption from state taxes, levies and duties to a Developer or an entrepreneur

Service Tax
Exemption from Service Tax to the Developer and the SEZ Units to carry on authorized operations in the SEZ. Service tax exemption granted only to Units in the DTA providing services to a Developer or to a Unit.

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Labour laws
All labour laws as applicable within the country apply in an SEZ.

Stamp duty
No stamp duty is chargeable in respect of any instrument executed, by, or, on behalf of, or, in favor of, the Developer, or Unit or in connection with the carrying out of the purposes of the SEZ

Sub-Contracting
SEZ Units may sub-contract part of their production or production process through Units in the DTA or through other EOU / SEZ Units SEZ Units may also sub-contract work from the DTA exporters, and export from the SEZ Units can be set up to provide manufacturing services to overseas entities subject to certain conditions

Transaction incentives with DTA

Any supplies from a DTA to an SEZ are to be treated as physical export. A DTA supplier would be entitled to: Drawback / DEPB Exemption from Central Sales Tax Exemption from State Levies

Income-tax benefit as applicable to physical export under Section 80 HHC of the Income Tax Act

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Benefits of SEZ Setting up in an SEZ offers the a lot of tax benefits and incentives as highlighted. Customs exemption import of equipment and sale in the domestic market. By setting up in a Pharma SEZ an assured clientele is accessed Single Window clearance mechanism are in place in most SEZs and some of them have Pre approved Pollution Control Clearance. Common utilities such as Electricity, Water Supply and Incinerator services. Good connectivity and infrastructure.

Analysis

Limitations of SEZ 95% SEZs are focussed toward manufacturing set ups which have very little of no requirements for Animal House. Most Pharma/Biotech SEZs are developed by single partys e.g. Serum Institute SEZ in Pune, Biocon SEZ Bangalore etc. These companys possess their in house Animal House facilities and also do not source from local vendors. No access to common equipment facilities as most of the companies are manufacturing facilities and not R&D facilities

Strategic Recommendations We feel that the benefits of setting up in an SEZ are not that significant. Instead focus on setting up in a Biotech Park which may not offer as much benefits as an SEZ but will be able to sustain the business better. Biotech Parks are more focussed towards R&D and some companies house their R&D sets with them. Bioparks are also know to nurture small and medium companies that do not have the capital to set up a full fledged Animal House and Toxicology division and could provide a captive client base. Most Bioparks generally have common instrumentation facility and air conditioning and other utilities which can reduce the capital expenditure.

Financial Benefit of an Animal House in a SEZ

The financial benefits from setting up an animal house in an SEZ is only derived on the taxation front, which does not directly impact the cash flow of the animal house. Revenue generation may be easier if the animal house is located within a Pharma R&D SEZ,

however, that is rare in practical scenario and difficult to implement. Frost & Sullivan surmises that the financial benefit of setting up an animal house in an SEZ is not significant.

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Case Study of captive business potential of Biotech Park

Biotech Park- S P Biotech Park

Introduction: The Shapoorji Pallonji Biotech Park (SPBP) is spread over 300 acres near
Hyderabad, India and was the first of its kind in the country. It is the hub of Genome Valley, Indias first state of the art biotech cluster for life science research, training and manufacturing activities. This is one of the most successful Biotech Parks in the country working on a Public Private Partnership model between the Shapoorji Pallonji group and the Andhra Pradesh Government.

Facilities Overview:
The park offers common effluent treatment facilities, power back up, compressed air and other facilities. It also has a biotechnology incubation center to support start up companies in translating their research ideas into commercially viable technologies without making large R&D investments up front. Modular laboratory units with standard facilities and services Telecom network Power and water supply and sewerage treatment Common effluent treatment facility Security, housekeeping, roads, fire detection and protection and landscaping

Assistance in getting started Technology Incubation Centre Facilitates validation of science and technology without making large scale investment up front Pilot Plant Support in meeting statutory requirements

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Figure14: Client Profiles

All the companies that are housed in this park are focused on R&D activities. 87% of the companies are focused on human health related applications. Out of these 57% are Biopharmaceutical companies such as Avesthagen, Biological E etc. 22% are Contract Research Organizations such as Vimta Labs, Albany Molecular Research Inc. etc. 9% are Pharma companies who have housed their R&D set in this park, companies such as Uni Sankyo, Sandor etc. This 87% of companies provide a potential captive customer base for an animal house as majority of the companies have housed their discovery, development or pre clinical activities in this park.

Business Potential:
A typical Biopharmaceutical R&D facility consumes roughly 500 rats/month, 500mice/month and 30-50 Guinea Pigs and Hamsters. The price of the animals can vary from INR 200 for ordinary animals to INR 4000-10000 for highly specialized animal. This is dependant on the kind of R&D programs of the companies. Some small and medium companies might have molecules is an advanced stage of development where in they would require mammalian studies such as dog and 2010 Confidential

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primate toxicology. Primate toxicology studies are yet to take off in a big way in India and majority of the companies are forced to look at companies in China mainly due to stringent regulatory restrictions in India. Dog toxicology studies too are in a nascent stage but are slowly picking up. Indian companies can charge a premium and margins in this business can vary from 50-75% In order to understand fully the potential of setting up an Animal House facility in a Biotech Park a detailed analysis on the tenants and their R&D program is required.

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Case Study- Animal House: Raj Biotech Pvt. Ltd.

Company Profile: Raj Biotech

Raj Biotech Pvt. Ltd.

Since 2000 Raj Biotech has successfully

completed over 200 studies for more than 60 satisfied customers. The animal facility is distributed in an area of nearly 4200 sq ft.(500 sq meters). supported with qualified skilled animal care staff The facility meets the requirements as per the guidelines of Committee for the Purpose of Control CPCSEA. (Registration 449/01/bc/CPCSEA) An Institutional Animal Ethics Committee number is & Supervision of Experiments on Animals (CPCSEA) and is registered with the and is and Preclinical Pharmacology (Efficacy studies / Acute & Chronic Models) Pre-clinical safety Pharmacology Pharmacokinetic Studies In vivo Toxicology In vitro Toxicology (Microarray based predictive toxicology) Biological Testing Animal studies Custom-made Polyclonal Antibody Services Tissue Culture based veterinarians

Services

(IAEC) has been constituted as per CPCSEA guidelines and reviews the scientific projects of the institute quarterly. The facility undertakes animal breeding, management, care and husbandry practices. The facility houses small laboratory animals viz. mice, rats, rabbits. The facility is engaged in the production of quality animals by undertaking various quality control programs and preventive measures.

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Animal Strains Available at the facility

Mice Rabbits

Swiss albino BALB/c C57BL/6 NUDE mice B6D2f1 DBA2 C3Hej SCID mice

New Zealand White Sandy Half Lop

Rat

Guinea Pigs

Sprague Dawley Wistar

Hartley

Figure15: Clientele

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Figure16: Business procedure of getting orders and supplying animals

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Contacts maintained with CPCSEA

registered clients (mostly Indian clients)

Pre-Orders are taken from clients 2-3 months in advance Prefer the orders which will continue for
more than 6 months

Breeding is started by using standard

breeding pairs which are already maintained by us at any point of time

Order is supplied as and when needed once

the breeding is started

Strains of mice, rats, rabbits and guinea pigs

are maintained

Transportation facilities available throughout

India

Actual sales: nearly 2000 mice per month. Monthly sales: nearly 15 to 20 lakhs per month YoY growth observed for animal sales: 10-12%

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Registrations, Recognitions and Accreditations with Raj Biotech

IAEC Institutional Animal Care and Use Ethics Committee is recognized by CPCSEA (Committee for the Purpose of Control and Supervision of Experiments on Animals, Govt. of India) for conducting any study involving lab animals and for sales of lab animals

Recognition by Department of Scientific and Industrial Research, Govt. of India

Recognition by Department of Biotechnology for Institutional Biosafety Committee for conducting studies involving r-DNA

Under process
NABL (ISO 17025) main assessment due GLP implementation underway

Area requirements:
Facility has nearly 26 animal rooms. Each animal room is roughly 350 ft2 Total animal room area : 26*350ft2 = 9100 ft2 Central labs: Three. Each Cental lab is nearly 500 ft2 Total lab area: 3*500ft2 = 1500 ft2 In the facility, the labs are shared for animal studies as well as routine monitoring and other procedures. Labs are for multipurpose use.

Other type of requirements present in the facility:

Storage rooms (Cage & Feed)

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Washing room (Cage washing and Autoclaving equipments) Personnel area (1 room) Temperature Control vehicles and facility for vehicle disinfection Fumigation facility

Therapeutic areas in which studies are performed:

Toxicology Cancer Diabetes (Diabetes model nSTZ costs nearly 10,000 INR) Obesity Glaucoma studies Antibody production Pharmacology studies Histopathological experiments Pancreatis models

Future plans:
Adding four more animal rooms to the existing facility: Cost will be around 25 lakhs INR

Overall perception of the respondent towards Animal house market:

Low

High
1 2 3 4 5

Untapped potential

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Key reasons for growth:

Not much quality concern shown by Indian companies towards acquiring animals for studies Big companies prefer having their own animal houses rather than getting animal from outside. They come to private animal houses only when needed. Being in SEZ, doesnt seem to improve the situation, since too many local small farms also giving tough cost competition Maintenance costs are pretty high

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Type of projects that can be sourced in India but are not there presently
Presently, the animal house preclinical trending is at a growing/Sprouting stage in India. With India, nowadays been seen as a preferred site for doing clinical trials studies which include preclinical and Phase I-IV studies, there resides a lot of potential in the usage of a broad spectrum of animal models for different types of studies.
Figure17: Clinical trials in India, 2008-2015 (e)
1200 1100 1000 900 800 700 600 500 400 300 200 100 0

Total number of Trials

1005 874 728 583 350 420 466

1106

2008

2009

2010

2011

2012

2013

2014

2015

The number of clinical trials in India are expected to grow at a CAGR of about 18% till 2015. This increase will be fuelled by the fact that India is a preferred destination for companies due to low cost and large patient pool for broad spectrum of diseases. This is turn is going to fuel the usage of animal models for the preclinical testing and evaluation studies. The demand that is going to be there for animals will be pretty high in years to come, and that will increase the dependency of organizations on private animal house setups.

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Figure18: Clinical trials by phases in India, 2008-2015 (e)

1200 1100 1000 900 Number of Trials 800 700 600 500 400 300 200 100 0 42 189 81 39 2008 223 84 59 2009 55

Clinical Trials by Phase in India 133 121 105 87 543 76 65 315 252 111 82 2011 146 102 2012 175 122 2013 201 221 393 472 597

89 61 2010

141 2014

155 2015

Phase I

Phase II

Phase III

Phrase IV

Its clearly visible that the number of phase-I activities are on wave in coming few years and hence the preclinical activities will take a giant leap. The more number of clinical trials again will need the CROs and the big Pharma companies to look into the available options for sourcing the animals from outside their facility depending upon the type of study being done and the quality of outcome that is expected by the sponsor

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Figure19: Therapeutic split (Phase-wise) for the clinical trials in India

Opportunity Areas Projects in oncology and CNS areas are witnessing a growing trend and are presently occupying a significant proportion of revenues at an overall level in Clinical trials market.

62% of the Phase I revenue is generated from oncology trials in India, with only 3% contribution to Phase I from Diabetes due to the fact that most of the diabetes drugs are in phase II/III/IV Phase 2 revenues are dominated by CNS segment with 19% share, diabetes segment with 18% share, Immunology/Vaccines with 16% share , Bone disorders and pain management with 16% share followed by Cardiovascular segment with 15% share Diabetes remains as a predominant revenue contributor in Phase III with 23% revenue contribution followed by Cardiovascular with 17%

Revenue contribution in Phase IV is again dominated by diabetes and cardiovascular with

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PART II Financial Viability Assessment comprising of CAPEX requirements and revenue estimation

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The cost of an animal house is dependant upon a number of factors. The most important of them being the land/ area apportioned for the setup, followed closely by the type of facility planned. A facility which is planned for international approvals requires higher quality infrastructural requirements as compared to a GLP approvable facility. Since animal houses are service models, the accreditations of the facility also impact the clients which are serviced by the facility, as well as the pricing commanded by the organisation.

Type of Animal House Targeted

The typical animal house in India caters to small animal requirements, consisting of mice, rats, guinea pigs and also rabbits. However, the demand is seen to be highest for mice and rats. Facilities for large animals like stud farms require a captive client base for which the facility is created eg. A serum manufacturing company. Thus, such facilities are few in number. Also, for such facilities the regulatory requirements and animal rights requirements are stricter, leading to higher supervision costs. Animal houses with canines or primates like monkeys are gaining acceptance in India, but still are under the strict supervision of animal rights as well as regulatory requirements. Such facilities also have a higher margin, but a lower demand since India is still not cost competitive or experienced on this front. Frost & Sullivan estimates this market to grow as companies continue research on their molecules and need tests to be performed on canines. However, primate facilities are extremely rare in India and also have a low demand. Canine facilities are comparatively easier to maintain and comply with regulations and hence are seeing an increasing preference in India as compared to other large animals. However, dog breeding for animal testing is still now allowed in India restricting the cost benefit for any such animal house. For this report, Frost & Sullivan has concentrated on small animal houses and animal houses with canines.

Built-up Infrastructure Requirements

From our analysis of independent animal houses in the country which perform tests either for their internal study requirements or breed animals for supply to other animal houses for tests, the typical profitable animal house contains 5,000+ small animals.

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To keep an animal house of 5000 animals, the animal house needs to have sufficient rooms, with adequate service corridors, ventilation, as well as supply of fresh air, water and feed. It has been found from our study, that a typical animal house which can accommodate 5000+ animals, including breeding rooms as well as separate rooms for animals, needs an investment ranging from INR 1 crore to INR 10 crores. This cost includes the cost of the facility building, complying with the regulatory requirements, the air-conditioning, water flow mechanism, paintwork and specialized doors as per the animal house requirements. The facilities are typically 2 storied, with rooms distributed equally between the two floors.

AAALAC certifiable facility

For a GLP certified facility which is also looking for an AAALAC certification, the basic requirements of an animal house infrastructure increase, since it then has to comply with the requirements of the US administration and animal rights. Also, the area required by such a facility is higher, since AAALAC also specifies the room sizes, corridor and empty space area requirements. An animal house for rodents, with ~5,000 rats and mice, including a breeding room apart from storage and study rooms, complying to AAALAC requirements will need 35,000 square feet area. The infrastructural cost for such a facility will be approximately INR 10 Cr. A canine facility which houses 40 beagle dogs will require 500 sq ft area for housing the dogs. In addition to this, there should be a run area as well as lab area. The total area for an independent canine facility should be 30,000 sq ft. the infrastructural cost for such a facility will be approximately INR 3 Cr in addition to common areas like lab area, storeroom etc.

GLP certifiable facility

For a facility which is GLP certifiable, the requirements are much more relaxed with infrastructure meeting the needs of the CPCSEA guidelines. The minimum floor area for a GLP certifiable facility containing 5,000 rodents like mice and rats will be 15,000 square feet, thus bringing down the cost of built-up area significantly. Such a facility typically may need an investment of INR 1 cr. A canine facility housing 40 beagle dogs will require 500 sq ft housing area, plus run area for the dogs. The total area for a GLP certifiable independent canine facility will be 15,000 square feet. The infrastructural cost for such a facility will be INR 80 lacks.

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Lab Area
Animal houses also contain a lab area within their premises. This area is usually considered within the total floor space required in an animal house. However, when the focus of the animal house shifts from only breeding and supplying of animals to also conducting toxicology and pharmacology studies, there is a definite infrastructural requirement for the labs. The cost of setting up a serviceable lab infrastructure within an animal house to conduct the basis tests can range from INR 10-25 lacks depending upon the size of lab and the types of animals kept in the facility. However, it the lab is meant for complex toxicology tests, which can be NABL certified, the facility cost can range from INR 50 lacks.

Frost & Sullivan Suggestion

If an organization is planning to develop an animal house considering a long term business potential, Frost & Sullivan would suggest building a facility catering to AAALAC requirements. Most research and development of Pharma companies is based out of the USA, with primary research material being submitted to the USFDA or the equally stringent EMEA. Also, a typical infrastructural development when made well can be sustained for 10 years with minimal modifications. In such a scenario, if the animal house intends to have a sustained business model, with increased returns year on year, it is advisable to create infrastructure which satisfies the stringent AAALAC requirements. This also ensures that the company can look at increased profitability and higher revenue studies for the AAALAC certifiable facility. An animal house which wants to expand its business over the next few years should also look at the option of an expandable lab area where complex toxicology tests can be performed in the future, to increase the sales revenue from the operations of the facility. However, the animal house can also construct a facility where the lab is pre-equipped infrastructural to contain a lab with sufficient area to hold equipment for such studies in the future.

Equipments Requirement
A typical animal house has requirements of cages and service equipments for keeping the animals. These requirements also vary according to the certification of the animal house, as well

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as number of animals kept in the same. However, the costs of such equipment is not very high and does not exceed INR 35-40 lacks for a 5,000 rodent facility. Typically an animal house also has a lab area where the animals are dozed, or tested upon. This area requires equipment certified internationally, which can conduct tests on various types of animals. A typical lab facility adjoint to an animal house will require an investment of INR 25-30 lacks.

Land Area Requirement

Apart from the basic infrastructure, an animal house should have adjoining land, free of any development. This land can be used for the following purposes: 1. Future expansion of the animal house 2. Fresh feed production for the rodents (e.g. carrots for rabbits) 3. Waste water management 4. Garden area for reduction of noise pollution to adjoining areas 5. Shed area for generator 6. Air purification area if the facility recycles air 7. Safe area to ensure escaped animals remain within premises in case of accident Considering the above, it is advisable that the animal house is surrounded by gardens and has open area around it. Typically, after functioning of 5 years it is expected that the business of the animal house sees in increase, which may result in the animal house increasing its facility size. Also, if the new facility is to conform to the new requirements, it typically is built ground up instead of expansion on the existing premises. Thus, for a small animal facility, the total land requirement of an animal house is 15,000 sq ft built up area, plus 20,000 sq ft vacant land. The minimum advisable area for an animal house thus becomes 35,000 sq ft.

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Operational Costs of an Animal House

The costs of an animal house can broadly be classified into: 1. Recurring Variable Monthly Costs 2. Fixed Upkeep Costs (annual recurring costs) 3. Cost of acquiring Animals 4. Other Variable Costs

Recurring Variable Monthly Costs

These costs include outflows that remain more or less constant on a yearly basis and are the basic requirements for running of an animal house. The most important monthly costs are as mentioned below: 1. Material Costs 2. Personnel Costs 3. Transportation Costs Material costs include the cost of feed and bedding of the animals. This is the most crucial cost and depends directly on the number and type of animals kept in the facility. This also includes medication and other lab requirements for maintaining healthy animal. For a small animal facility the cost of feed, bedding and other animal upkeep expenses can range from 20-25% of the total monthly costs. Personnel costs are the human resource costs. Typically this can vary from upwards of INR 45 lacks. A small animal facility with 5,000 rodents requires at least 2 veterinarians, 5-10 animal attendants who can work on a rotational basis, and 8-10 caretaking staff who handle the daily requirements of the facility. The renumeration of the staff varies widely as per location of the animal house (and hence accessibility of labour) and prior experience of the staff. Since animal houses do not have specified training schedules in India at education level, veterinarians who have worked in animal houses are considered the most equipped to work in such a facility.

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Transportation costs are operational expenses incurred by the animal house for transport of animal supply or of the materials related to animal health and welfare. This cost remains upto 6% of the net revenue. Fixed Upkeep Costs These are the costs that can occur monthly or yearly, but remain constant on a year to year basis. These costs do not depend upon the number of animals of the facility, but rather the infrastructure of the facility. This includes the cost of air-conditioning, the water treatment, electricity, etc. This cost is again locational dependant since the electricity and water costs are dependant on the state infrastructure. However, for a typical animal house it varies between 2030% of the total operational costs. Cost of Acquiring Animals An animal house has to continually renew its breeding pair. This can be done either from its existing supply or externally from another animal house. Also, new strains of animals need to be typically acquired from other animal houses which develop those strains. Acquired animals are either sourced from within the country or from international reputed labs like Charles River Labs or Jackson Labs, etc. Acquisition of canines needs to be done on a periodic basis since canine breeding is not allowed in India. The cost of a beagle dog (the most common dog variety for studies) is usually INR 1 lac/ dog. The cost of small animals varies according to the strain of the animal. A BalbC white mice can be acquired from within India for as low as INR500 per pair, while the same can be acquired from Jackson Labs for INR 1500 per breeding pair. However, for a running animal house the initial investment on animal acquisition remains high, but reduces over the next years as it supplies its own breeding pairs. Other Variable Costs This includes heads like diagnostic testing, autoclaving expenses, and typical unprecedented expenses. For a small animal facility this is expected to range from INR 2lacks to higher, depending on the type of expense. Changes in the air filtration system, for e.g. can be upto INR 30 lacks.

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Capital Requirement and Cash Flow Estimation for an Animal House

Based upon the interaction of Frost & Sullivan with a number of independent animal houses across India, Frost & Sullivan have developed two cash flow statements for animal houses one for a GLP accredited AAALAC approvable facility and another for a GLP approvable facility. While the AAALAC approvable facility due to its infrastructure and higher customer confidence gains revenues to higher value-add services like performing toxicology tests and not only supply of animals, the GLP approvable facility due to lack of accreditations is used by most customers as a source of animals which can be used for further tests in the clients own animal houses.

Case Study 1: AAALAC Approvable Small Animal House

This section uses an example of a GLP certified facility which houses 5,000 small animals (rodents). The facility is AAALAC approvable, or else has a AAALAC approval.
Example 1: AAALAC Approvable Animal House, with 5,000 small animals

All values in INR lacs

2009 360 120.0 240.0 259 70.0 37.5 131 90.0 7.2 33.9 20.0 101 133.5 235 1,023

2010 420 132.0 288.0 253 70.0 41.3 140 94.5 7.9 37.3 2.0 167 133.5 301

2011 491 145.2 345.6 266 70.0 45.4 149 99.2 8.7 41.0 2.0 224 133.5 358

2011 574 159.7 414.7 281 70.0 49.9 159 104.2 9.6 45.1 2.0 294 133.5 427

Net Sales Animal Supply (Breeding business) Toxicology Tests Operational Cost Fixed Upkeep Costs Cost of acquiring animals Recurring Variable Costs Personnel Cost Transportation cost Material cost (feed, bedding, etc.) Other Variable Cost Profit (EBIT) Depreciation Operating Cash Flow (incl Tax) NPV#

# estimated considering a growth rate of 10% for the capital

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Typically, such a facility will source its animals regularly from an international reputed lab and hence have a higher animal acquisition cost. Also, the personnel will have to be trained better, thereby ensuring adherence to the norms as required by AAALAC. As seen in the cash flow statement above, the facility has high revenue from toxicology studies than from sale of animals. This is because the animals are typically sourced from international labs and bred for a short period in the lab. A lab animal is typically bred for 5 generations to preserve its strain. Therefore, Pharma companies and CROs who source the animals for conducting tests prefer to source the animals from the international labs, and would approach a AAALAC approvable facility when in need of animals on a short notice. The animal house thus earns a revenue of INR1.2 cr from animal breeding and supplying business. However, the animal house has forward integrated and also performs toxicology tests for specified strains, as per client requirements. Since AAALAC approvable animal houses are few in number, and their facilities are at par with the facilities in Pharma companies; also since Pharma companies can use the results form these facilities for international submissions, they outsource some of their studies to such animal houses. This is a higher valued business with lesser competition, and though the animal house may perform lower number of studies, it will have a better topline from this business. In this case the animal house earns twice the revenue from toxicology studies than from animal supplies. The business for animal supplies is increasing on a 10% basis YoY, however, the toxicology studies business is increasing on a 20% yoy growth rate. This is mainly because of the increasing number of pre-clinical molecules, as well as increased trust of Pharma companies in the animal houses. The infrastructural investment made by the animal house for the facility are as follows:
One-Time Investments Infrastructure cost Building cost Animal House GLP Animal House non-GLP Lab facility GLP Lab facility non-GLP Equipment Cost Animal House equipment Lab equipment (for studies) 1,335 1,050 1,000.0 50.0 285 35.0 250.0

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Excluding the land cost, which will be dependant upon the location of the facility, the one-time investment made on the infrastructure of the facility is INR 13 Cr. For this exercise we have considered a straight line depreciation for the infrastructural costs, at 10% depreciation. It is expected that with ageing of the facility as well as changes in the regulations, there will be a renovation/ change in facility at the end of 10 years. The net operating cash flow value for this animal house which is AAALAC approvable, over a period of 4 years is estimate to be INR 10.2 Cr.

Case Study 2: GLP Approvable Small Animal House

This section uses an example of an animal house which houses 5,000 small animals (rodents). The facility is GLP approvable, or else has a GLP approval.
Example 2: GLP Approvable Animal House, with 5,000 small animals

All values in INR lacs

2009 236 200.0 36.0 150 46.0 10.0 74 45.0 12.0 17.0 20.0 86 16.2 102 513

2010 261 220.0 41.4 124 46.0 5.0 71 47.3 13.2 10.6 2.0 137 16.2 154

2011 290 242.0 47.6 128 46.0 5.0 75 49.6 14.5 10.6 2.0 162 16.2 178

2011 321 266.2 54.8 132 46.0 5.0 79 52.1 16.0 10.6 2.0 189 16.2 205

Net Sales Animal Supply (Breeding business) Toxicology Tests Operational Cost Cost of Upkeep (recurring) Cost of acquiring animals Other Costs People cost Transportation cost Material cost (feed, bedding, etc.) Other Variable Cost Profit (EBIT) Depreciation Operating Cash Flow (incl Tax) NPV#

# estimated considering a growth rate of 10% for the capital

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acquisition is comparatively lower here. Also, the personnel can have lower experience and thus can be sourced at a lower cost. As seen in the cash flow statement above, the facility has high revenue from sale of animals than from toxicology studies. This is because the animals are typically sourced from international labs and bred for a long period in the lab. While a lab animal is typically bred for 5 generations to preserve its strain, here the animals can be bred multiple times, and its strain tested every few generations. Thus, the animals are cheaper to source from such an animal house than from international labs. However, since the labs are not accredited, Pharma companies and CROs typically do not want to outsource their toxicology tests which they would like to submit with NCE papers to these labs. The animal house thus earns a revenue of INR 2 Cr from animal breeding and supplying business. However, the toxicology test business in this case is much lower, with revenue of INR 36 lacks only. This business is an adjacent revenue earner due to the sale of animals, where some clients may prefer the animal house to conduct the toxicology tests in some cases. The business for animal supplies is increasing on a 10% basis yoy, however, the toxicology studies business is increasing on a 15% yoy growth rate. This is mainly because of the increasing number of pre-clinical molecules, but a limited trust of Pharma companies. The infrastructural investment made by the animal house for the facility are as follows:
One-Time Investments Infrastructure cost Building cost Animal House GLP Animal House non-GLP Lab facility GLP Lab facility non-GLP Equipment Cost Animal House equipment 10lks Lab equipment (for studies)

162 97 72.0 25.0 65 40.0 25.0

Excluding the land cost, which will be dependant upon the location of the facility, the one-time investment made on the infrastructure of the facility is INR 1.6 Cr.

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For this exercise we have considered straight line depreciation for the infrastructural costs, at 10% depreciation. It is expected that with ageing of the facility as well as changes in the regulations, there will be a renovation/ change in facility at the end of 10 years. The net operating cash flow value for this animal house which is GLP approvable, over a period of 4 years is estimate to be INR 5.13 Cr.

Conclusion
Though a GLP approvable animal requires lower investments, its revenue earning potential is limited. The profitability of a GLP approvable animal house may also be higher in the short term due to the lesser cost of animal acquisition and animal care, however, considering the values earned, an AAALAC approvable facility has a higher net present value.

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PART III Land Requirement and Site Suitability Assessment for Setting up of an Animal House

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Estimation of Land Estimation for setting up of Envisaged Project

On the basis of the existing models for animal houses, Frost & Sullivan recommends a small animal house housing 5,000 animals. The animal house is also recommended to be AAALAC approvable so as to ensure long term revenues and potential for growth. Over the course of years, the animal house can also expand its scope of operations and contain a canine facility. Thus, the minimum land requirement for the animal house should be as follows:
Table 1: Land requirements for Animal House

Land Requirement Criteria Land for small animal facility Additional land for expansion of small animal facility Additional land for canine facility Gardening and surrounding land Total Land Requirement

Land (sq ft) 35,000 15,000 2,000 20,000 72,000

Thus, for a facility which plans to expand in the future over the next 5 years, the land requirement is 1.65 acres (72,000 sq ft). The land required for an AAALAC approvable small animal facility is 35,000 sq ft. However, this can also be built over two levels than flat on the ground. We have still considered this area as a net land requirement since an animal house building will also need a surrounding area for various administration and regulatory purposes. The given land area also gives the facility the flexibility to plan the animal house as per the best suitable option during construction. Also, since this area includes the lab area for the facility, it gives the animal house to have a large lab area which can be state-of-art and also cater to canine requirements over the next few years. Though the animal house may initially have 5,000 small animals, the demand may increase over a period of years, as the market reputation of the facility increases and demand for studies increases, the facility may need to increase the number and strains of animals kept within. For the same purpose, an additional housing area may be needed, which can then be constructed adjacent to the existing facility. The land requirement for such a facility will be lower since this

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new facility can share the common lab areas, storage, washing areas, etc. with the original premises. As demand and reputation of the animal house increases, and also as studies on large animals within India increase, the animal house may expand to have a small canine facility. The facility can initially house 40 canines. The minimum requirement for the same would be 2,000 sq ft. This is also low since this facility can share the common areas like storage and labs with the original animal house facility. To ensure compliance to pollution requirements as well as any plans for waste water management, it is suggested to keep a minimum gardening area of 20,000 sq ft. Thus, the minimum land requirement of an animal house which plans to grow and increase its service offerings over the next 5-10 years is estimated to be 1.65 acres. However, Frost & Sullivan recommends the total land area allocated for an animal house to be 2 acres. This additional land may initially be the gardening area, however, it can be utilized as per the demand and market dynamics. If the canine facility needs further expansion, or if the requirements of the storage and lab areas of the canine facility are not fulfilled by the main animal house due to high inflow of projects, the facility can then create additional labs and storage areas in the free land. If required, the animal house can also create its own power generation and waste management shed area in the free land.

Key Parameters for selection of a site for project

To select a site for an animal house it is necessary to identify the key parameters that determine the The parameters can be classified into three aspects: 1. Cost based 2. Non-cost based 3. Miscellaneous

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Cost Based Factors

These include factors which directly influence the cost of the project. This is apart from the actual operational cost of the facility. Some of the cost based factors identified by Frost & Sullivan are: a) Land Cost this is the cost incurred by the company to set up the facility. Since this can vary widely between states as well as within states, this is an important consideration for setting up a facility b) Raw Material Cost this does not only include cost of acquiring the animals, but also the cost of feed and bedding for the animals as well as associated costs c) Site Certification Investments cost of GLP / NABL/ AAALAC certifications d) Labour Costs cost of human resources in the location e) Basic Utilities cost of electricity, water supply, waste disposal, etc. f)

Transportation Cost includes the cost of transportation of sacrificed animals, as well as

cost of transport of animals for a study supply, transport cost of feed or bedding acquired from a distance, etc.

Non-cost based Factors

This section includes softer factors which influence the decision of setting up a facility. However these factors are not directly tangible and do not contribute to the cost of establishing or running a facility directly. The factors considered within this section are: a) Availability of land Land for a new facility can only be bought if the land is freely available b) Availability of skilled professionals human resources like veterinarians should be available and wiling to work with the animal house, at its location c) Availability of transportation the facility should be well connected by road/ rail or air to the main client locations as well as to locations from where raw materials are to be sourced. Transportation to incineration facilities should also be available.

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d) Availability of raw materials the facility should be located close to a source to ensure availability of feed and bedding for the facility through the year e) Demand from companies an animal house cannot be profitable unless there is a demand for its services. The facility should be set up close to its clients, where their requirements can be met. This may be close to biotech or Pharma company clusters, or parks f)

Competition the animal house should not be in a location with very high competition
and other successful established animal houses in the vicinity. This can impact the business from future clients

Miscellaneous Factors
Apart from the above mentioned factors, some other factors also determine the selection of a site for an animal house. These are listed below: a) Regulatory requirements for site approvals the animal house should be able to satisfy the requirements of the regulatory authorities for setting up of an animal house b) Pollution norms the animal house should comply to the pollution norms, and the location should enable it to comply with the norms satisfactorily. This can include waste water management facility availability, waste matter management, etc. c) Animal Rights Compliance the facility should be located in an area which will ensure that the animals are comfortable d) Miscellaneous local reasons there can be many other miscellaneous factors which can impact the decision of setting up an animal house in a location

Each of the above mentioned parameters have been prioritized and rated by Frost & Sullivan as per their importance on a scale of 0-10. The most important factors have been rated 10.

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Parameters

Rating 10 3 5 8 7 2

Cost-based Land cost Raw material cost Site certification Investments (for GLP/ NABL etc.) Labour Costs - Compensation of Vets, Animal Caretakers etc. Basic utilities (Electricity, water supply) cost Transportation cost Non-cost based Availability of land Availability of skilled professionals Availability of transportation Availability of Raw materials Demand to Biotech/Pharma companies/CROs Competition in nearby surroundings Others Regulatory Requirements for Site approvals, etc. Pollution norms Animal right activities Miscellaneous local reasons

10 5 2 3 8 7

10 5 8 3

As seen in figure above, among the cost based factors, Land cost is the most important factor while setting up of a facility. This is the highest investment. However, it is also a long term onetime investment. Labour cost is a recurring cost and is the next important factor, with a rating of 7/10. Amongst non-cost based factors, land still remains a factor, since availability of the desired land is crucial for setting up of a facility. Also important is the demand from biotech/ Pharma companies to ensure revenue flows into the company. Regulatory requirements are the most important feature when an Animal house starts business, since this determines the type of clients and the business potential from the animal house.

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Broad Sensitivities for selection of Land

The choice of land for an animal house is, as seen from locational analysis, the most important factor while setting up an animal house. Some of the factors to be considered while selecting land for an animal house are: a) Land cost the cost of land is one of the crucial factors while deciding on the land to be bought for setting up an animal house b) Availability of Land the selected, suitable land should be available for purchase c) Stamp duty etc. costs the cost of stamp duty and other legal costs associated with acquiring the land should be competitive d) Legal requirements the land should be usable for setting up an animal house, and should not have legal hinderances for the same e) Approval from neighbours the neighbouring dwellers or facilities should not have objections to an animal house. The location of the land should be f)

Land attractiveness for the project the land should be suitable for setting up of an animal
house and the location should also fulfill the key parameters as listed in the section above

On the basis of our interactions with various animal houses within India, Frost & Sullivan have rated each of these key features from 0-10, where 10 is the highest score for the most important factor.

Land Parameters Land Cost Availability of Land Stamp Duties etc Legal Requirements (before setting up Animal House on Land) Approval from neighbouring dwellers/ companies Land Attractiveness for the project

Rating
8 7 2 5 3 10

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As can be seen in the figure, Land Cost remains an important factor; however, the suitability of the land for the project, on the basis of the predetermined parameters becomes the most important factor. Availability of land and the legal requirements to use that land for an animal house the next factors which need to be kept in mind while selecting land for an animal house.

Assessment of classification of project by pollution control board and bye laws / pre-requisites for setting up animal houses
The management of animal and experimental waste is a subject of considerable concern to public health and infection-control specialists, as well as the general public. It is a well known fact that in several types of health care activities, various types of hazardous and contagious materials are generated. Even though the consequences of discarding such waste carelessly are well known, it is only recently that adequate initiatives to manage this waste in a scientific manner are being taken in India. Unscientific disposal of such waste may lead to the transmission of communicable diseases such as gastro-enteric infections, respiratory infections, spreading through air water and direct human contact with the blood and infectious body fluids. These could be responsible for transmission of Hepatitis B, C, E and AIDS within the community. Health care professionals and the general public are at risk due to this. Diseases are spread by improper treatment and disposal of waste. Rag pickers expose themselves to diseases like Hepatitis B, Tetanus, Staphylococci, etc. while handling items like needles, surgical gloves, blood bags etc. The Bio-Medical Waste (Management and Handling) Rules; 1998 are conferred by section 6,8, 25 of the Environment (Protection) Act, 1986 (29 of 1986). Application: These rules apply to all persons who generate, collect, receive, store, transport, treat, dispose or handle bio-medical waste in any form. Biomedical waste means any waste, which is generated during the diagnosis, treatment or immunization of human beings or animals or in research activities pertaining thereto or in the production or testing of biologicals, means

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any preparation made from organisms or micro-organisms or product of metabolism and biochemical reactions intended for use in the diagnosis, immunization or the treatment of human beings or animals or in research activities pertaining thereto These Rules will apply to all institutions generating biomedical waste which includes hospitals, nursing homes, clinics, dispensaries, veterinary hospital, animal house, research and pathological lab, and Blood Bank etc., generating biomedical waste. The Biomedical Waste (Management and Handling) Rules 1998, explicitly state that waste handling and treatment facilities shall have to be established within stipulated deadlines or earlier, for all waste generating establishments.

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Frost & Sullivan Recommendations

Go/ No-Go Decision

Through the course of the study it has been found that an animal house is a profitable venture in India, with scope of expansion and increased revenue opportunities in the future. As research activities increase within the country, and as India emerges as a preferred destination for outsourced research from international companies, the market for animal houses is expected to increase. On the basis of the findings in the study, Frost & Sullivan recommends the setting up of an animal house in Bangalore, Karnataka.

Proposed Animal House Model

Frost & Sullivan recommends a three phase approach to the set-up of the animal house: Phase I: Small Animal Facility of 5,000 animals Phase II: Expansion of small animal facility to 6,000 or 7,000 animals, as per demand Phase III: Set-up of Canine facility, as per demand

Animal house setup Future

Rats/Mice 5000

Guinea Pigs (80); Rabbits (30)

Canines 40

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Phase I The highest demand in the present Indian market for studies is for rats and mice. We recommend the animal house to concentrate on a rats and mice facility housing 5,000 animals. The facility can also house rabbits and guinea pigs, which are higher revenue earning, though lower in demand. Thus a facility housing 60 guinea pics and 30 rabbits can also be considered. Phase II The facility can be expanded to accommodate additional animals and strains, as per the demand from existing customers. Phase III Typically, as molecules are proven effective, their safety needs to be tested on large animals. Indian companies who are conducting tests on small animals will need to do so on large animals as well. Since outsouring such studies to international market may not always be feasible, a trusted Indian organization will be the next choice. Thus, as per demand the facility can expand to contain canines. Note: Primate Facilities are still rare in India, and need a higher regulatory compliance, as well as suffer from low demand. Hence, it is not suggested to set up a primate facility within 5 years from initiation of the animal house.

Facility Infrastructure
To ensure a continual revenue stream over a period of 10 years or more, we recommend the animal house to be AAALAC approvable. The facility may not immediately undergo a AAALAC accreditation, which is expensive and has stringent requirements. However, after a few years and a stable revenue source, the animal house can undertake a AAALAC accreditation, which will then enable it to source projects for US FDA or EMEA submissions. This will impact the revenues of the animal house.

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Business Model
The suggested business model for the animal house will be to: a. supply animals to other animal houses across the country b. act as a center for toxicology studies on animals

Most Pharma companies have their own animal houses which are used for studies and in which they breed animals for their own requirements. However, they do not always have enough animals to service their requirements. Also, many companies prefer to buy animals for studies from independent animal houses, as this reduced their operational costs.

As the number of preclinical molecules increase, the number of toxicology tests to be performed also increase. The private animal houses of Pharma companies may not be able to handle the increased load, and it will be unfeasible for them to expand their facilities to cater to this requirement. In this phase it is expected by Frost & Sullivan that they will outsource their studies to CROs and animal houses who they feel are competent.

Frost & Sullivan strongly feels that over time it will be more feasible for companies to outsource their study requirements to animal houses than CROs because of the following factors: a. availability of animals within the same premises b. business focus on animal supply and studies, thus ensuring competence in the field c. cost competitiveness as compared to a CRO, where overheads for managing an animal house will be higher

Secondary Business Model (optional)

Apart from the other factors, since the animal house will be set up by the government of Karnataka, it is also suggested that the Government can study the option of setting up the animal house with a research center in the adjoining premises. This will help the business model in the following factors: a) Increased Captive requirement

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b) Development of own strains which can then be sold to animal houses across the country and also outside the country c) Increased shared area, and hence reduced land wastage (common areas like gardening can be shared) d) Forward integration of an animal house into research and development The research center should act independently from the animal house, and not b e involved in the day to day activities of the animal house. This will ensure that Pharma companies and CROs continue to use the animal house for their studies without fear of their material being shared with another research center. The research center will act only as a leverage to develop new strains of animals as well as a regular (captive) client for the animals from the animal house. In case of high demand, the labs of the research centre can be used by the animal house for conducting some of its studies, on a prior notice and confidential basis. Thus, Frost & Sullivan recommends an animal house in Bangalore, Karnataka with the following business model: 1. Animal Supply Animal House 2. Animal House which conducts toxicology studies for Pharma companies and CROs 3. Animal House which has an independent research facility in the adjoining premises, ensuring a captive requirement and a source for new strain development (Optional) Frost & Sullivan suggests a further study to test a business model which also has an adjoining research center, and also analyse its effect on the business from Pharma company and CROs towards conducting of studies.

Suggested Ownership Model

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The animal house should be operated by personnel experienced in the animal house business. Since the animal house is recommended to be AAALAC complaint, the administration should also be well versed in the requirements of international regulations for Pharma and Biotech. It is suggested that the animal house be managed by a private entity, with associations in the Pharma and Biotech industry. This will ensure a regular flow of revenues from the initial year of setting up of the animal house. Since the land is owned by the Government of Karnataka, this will assist in compliance with the factors outlined for site selection. However, the government is not expected to have the prior experience and dedicated capability to ensure revenues from the animal house. It is therefore recommended that the government set up the animal house and hand over its operational activity to a bottom line generating private enterprise. Thus, a public-private-partnership (PPP) model is suggested.

Land Requirement
The suggested facility should be allocated 2 acres of land, keeping in mind scope of further expansion. If the option of research centre is also considered, land estimations will have to be re-considered.

Expenditure
The setting up of a AAALAC compliant animal house which houses 5,000 small animals is expected to cost at least INR 14cr apart from the cost of land. Apart from the above, a yearly running cost of INR 2.5 cr will be needed. This cost may be recovered within the second year of operations and thereafter be funded by the animal house itself.

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Annexure 1: Animal Types for an Animal House

Different strains of animals need to be kept in the animal house. Apart from the commonly used strains, some of the particular strains that might have use in a new animal house concentrating on diabetes, glaucoma and cancer are mentioned below Based on the upcoming waves in various therapeutic domains, animal houses are recommended to keep below mentioned animals in their animal houses: Diabetes models Glaucoma models Cancer models Hepsin overexpression: this transgenic model may be employed to investigate the function of hepsin in prostate cancer progression and serve as a system for testing novel antagonists or inhibitors. Delta-N-ERG: This prostate cancer model may be used to further delineate the roles that Delta-N-ERG plays in cancer progression and test the efficacy of anti-cancer therapies. Smo/Smo: Sonic Hedge Hog (Shh) and notch signaling is implicated in early hyperproliferation in medulloblastoma. This genetically faithful system may be employed for brain tumor therapy and/or drug screening for brain cancer prgression from early to late stages. P27S10A: This knock-in models may be used to examine the mechanisms underlying tumorgenesis for the development of novel therapies. This model provides a system with a S10A substutition mutation introduced into p27 is a useful tool for studying the mechanisms and signaling pathways involved in tumor resistance of various types of human cancers. P27CK-: The p27 CK- knock-in model has imparied p27, cyclin binding. This model may be used to examine the mechanisms underlying tumorgenesis for the development of novel therapies. These models provide a system to study the mechanisms and signaling pathways involved in tumor resistance of various types of human cancers. nSTZ DBA/2

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ErbB2: In addition to ErbB2 role in breast cancer and cardiomyopathy, these mice also provide a model for the study of treatments for the loss of motor and sensory neurons. VgEcR-RXR: A modified ecdysone receptor (VgEcR) and the retinoid X receptor (RXR) transgenic mouse serves as a system for examiing ecdysone-regulated gene expression in mammalian cells with implications for neuronal function, lipid metabolism, signaling, cell cycle regulation, embryonic development, cancer and apoptosis. GIST: This gastro-intestinal stromal tumor knock-in model with a mutation in the kit gene initially identified in sporadic gastrointestinal stromal tumors. This model may be used to examine the functional significance of Kit and for pre-clinical validation of novel gastrointestinal stromal tumor therapies. PMS-2: Mutations in the Pms2 DNA repair gene are responsible for many hereditary nonpolyposis colorectal cancers. Mice deficient in Pms-2 may be used for drug screening of tumorcidal drugs, in particular for lymphoma and colorectal cancers. Model system for effect of diet in a cancer predisposing background. SK3 transgenic: The SK3 overexpression model may be used to investigate mechanisms that influence cardiomyopathy that may result from current cancer terapies. Sk3 is involved in the regulation of vaascular tone and blood pressue; thus modulation of its activity may help prevent cardiac dysfunction.

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Annexure 2: Products Offered by Animal Houses

Small Animals

Mice

Breed Swiss (I.B)

Strain Weaning

Type PostWeaning Retired Blood

Animal Products Plasma/Se Monoclonal ra antibody

Inbred & recombinant inbred strains

129P2

Blood

Plasma/Se ra

A/J BiozziABH C3H FVB/N(I.B) Weaning PostWeaning Retired Blood Plasma/Se ra

SJL Outbred Mice ICR NDA Swiss

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Webstar NSA OF1 NMRI Hybrid Strains B6129S2F1 /OlaHsd Blood Plasma/Se ra

B6C3F1/Ola Hsd

Blood

Plasma/Se ra

B6F1/OlaHs d

Blood

Plasma/Se ra

NZBNZWF1 /OlaHsd Mutant Strains Albino C57BL/6 Weaning PostWeaning Retired Blood Plasma/Se ra

Beige Nude XID Fox Chase SCID Lyst^bg

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Wallerian Degenerati on

Tnfrsf6^Lpr

Congenic mouse

B10.A-H2^h4 C.B10-H2^b BALB/C An.N (I.B) Weaning PostWeaning Retired Blood Plasma/Se ra

Lactating Mouse with litter

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Rat
Breed Strain CFY/NIN (I.B) Weaning Type PostWeaning Retired Blood Animal Products Plasma/Sera

Fischer 344 Weaning N (I.B)

PostWeaning

Retired Blood

Plasma/Sera

Inbred Rats

ACI

BDIX

Lewis LUDW PVG Winstar Furth Wistar Weaning Kyoto (I.B) PostWeaning Retired Blood Plasma/Sera

Wistar/NIN Weaning (I.B)

PostWeaning

Retired Blood

Plasma/Sera Monoclonal antibody

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Outbred Rats

Lister Hooded ORGA Sprague Dawley (O.B) Weaning PostWeaning Retired Blood Plasma/Sera

Holtzman (O.B)

Weaning

PostWeaning

Retired Blood

Plasma/Sera

SABRA-R Hybrid Rats FBNF1/Hsd LBNF1/Hsd B612SF2/J Blood Plasma/Sera

B6SJLF1/J

Blood

Plasma/Sera

NZBWF1/J

Blood

Plasma/Sera

Mutant and Trangenic rats

Athymic Nude

Blood

Plasma/Sera

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DPP4 HIV-1 Zucker Congenic rats Lactating rat with litter

Rabbits and Guinea Pigs

Species Guinea Pig

Breed NIH: Hartly (O.B) Weaning

Type PostWeaning Retired Blood

Animal Products Plasma/Sera Antibody

NIH: Coloured Weaning (O.B)

PostWeaning

Retired

Blood

Plasma/Sera

IAF Hairless Guinea Pig

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Species Rabbit

Breed New Zeeland (O.B) Weanin g

Type PostWeanin g Retire d Bloo d

Animal Products Plasma/Se Antibody ra

Dutch Flemish Giant Watanabe Hamster Golden (Syrian)(I.B) Weanin g PostWeanin g Retire d Bloo d Plasma/Se ra

Lactating Hamster With litter

Large Animals
Species Horse Breed Kathiawari Horses Type Animal Products whole serum, blood plasma

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Marwari Horses

Monkey

Rhesus Macaques

chimpanzee s

Macaca fascicularis Cat Dog Beagles CPB whole serum, blood plasma tissue samples

HFR RCC Gerbils Mongolian Gerbil whole serum, blood plasma tissue samples

Mixed breed mongrels and hounds Ferret Dark Stable

whole serum, blood plasma whole serum, blood plasma

tissue samples tissue samples

Albino

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Sable mitt

whole serum, blood plasma whole serum, blood plasma

tissue samples tissue samples

Black eyed white

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Annexure 3: India Pharmaceutical & Biotechnology Industry Overview

India Pharmaceutical Industry Overview

The Indian Pharmaceutical Industry (formulations and bulk) grew at a CAGR of around 20% to around US$ 17 bn in 2007-2008

Current In the last 6 years period, exports which account for 47% of the total industry, grew at a CAGR of 27%; while the domestic market grew at a CAGR of 14% The formulation segment, which constitutes 17% of the total industry reported a CAGR of 17% while bulk drugs aided by exports grew at a CAGR of 28% Contract research a nascent industry in India 5 years ago grew at a significant rate Bulk drug production: $2.10 billion, with over 400 bulk drugs produced. Over 60,000 Formulations produced, in 60 therapeutic categories Capital investment: up 14.8% to $1.16 billion Employment: 5 million direct, 24 million indirect

Future The upward growth trend is expected to continue Expected CAGR for the Indian Pharmaceutical Industry (formulations and bulk) is expected to be 1415% and the industry is anticipated to reach US$ 50 bn by 2015-2016 Exports driven by contract research are expected to grow at a CAGR of 16.2% while the domestic market is expected to grow at 12.5%

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India Biotechnology Industry Overview

INDIA BIOTECHNOLOGY INDUSTRY OVERVIEW

2003 - Total industry size US$ 442 million, ~ 1% of global market

2006 - Total industry size US$ 1.45 billion, 50% of which was exports

India was #11 in the world and # 3 in APAC in terms of number of biotech companies

The CAGR for the period of 2002-2006 was 49% for the industry as a whole, 50.5% for domestic sales and ~46% for exports

While Bio-Pharma is the biggest segment in terms of value and volume, the Bio-Agri and BioServices are the fastest growing segments

In Bio-Pharma the growth primarily stems from the manufacturing of biogenerics and vaccines

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India BioClusters

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Glossary of Terms Used

CAGR FDA GLP GoI MNC NABL NIMHANS R&D WHO SEZ ACTREC PPP CRO NCE PK CMC AIIMS NTC IISc BWM CPCSEA PCA IBSC DSTGLP AAALAC FELASA IAEC NCBS NIH JNCASR ABLE FTZ EPZ SPBP INR USD YoY Compound annual growth rate Food and Drug Administration (U.S.) Good Laboratory Practices Government of India Multi National Company National Accreditation Board for Testing and Calibration Laboratories National Institute of Mental Health and Neuro Sciences, Bangalore Research and Development World Health Organization Special Economic Zone Advanced Centre for Treatment, Research and Education in Cancer Public Private partnership Clinical Research Organisation New Chemical Entity Pharmacokinetics Christian Medical College, Vellore All India Institute of Medical Sciences National toxicology Centre Indian Institute of Science, Bangalore Biomedical Waste management Committee for the Purpose of Control and Supervision of Experiment on Animals Prevention of Cruelty to Animals Act Institutional Bio Safety Committee Department of Science and Technology Good Lab Practices Association for Assessment and Accreditation of Laboratory Animal Care Federation of Laboratory Animal Science Associations Institutional Animal Ethics committee National Centre for Biological Sciences, Bangalore National Institute of Health Jawaharlal Nehru Centre for Advanced Scientific Research, Bangalore Association of Biotechnology Led Enterprises Free Trade Zone Export Processing Zone Shapoorji Pallonji Biotech Park Indian Rupee United States Dollar Year on Year

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