OUTSOURCING IN BIOPHARMACEUTICAL INDUSTRY – THE INDIAN PERSPECTIVE

 

 

 

Author: Srilakshmi Kakumanu

EMail: laxmi_sreenivas@rediffmail.com

 

 

 

 

 

 

Summary:

In recent years, cost pressures in the pharmaceutical industry have led to a rapid expansion of the market for outsourcing skills like manufacturing, R & D processes and sales functions. Contract Research Organizations (CROs) are of particular interest as their work relates to the discovery of compounds and their subsequent development into marketable products. The benefits and pitfalls of outsourcing have been topics of debate in the pharmaceutical industry for some decade’s now. However, it is evident that the CRO market is growing and that more strategic partnership are being forged. This article deals with the Clinical Research Outsourcing Overview, and the part played by India in near future.

 

 

 

A brief history of outsourcing in the Biopharmaceutical industry:

 

Outsourcing is often defined as the delegation of non-core operations or jobs from internal production with in a business to an external entity (such as sub-contractor) that specializes in that operation. Outsourcing is a business decision that is often made to lower costs or focus on competencies. The pressure to reduce costs and increase productivity has been a strong driving force for the growth of the biopharma outsourcing sector. The increasing market and R&D costs are forcing the industry to evaluate outsourcing as a cost reducing option.

 

Outsourcing in biopharma industry began in 1980s and exploded in the 1990s in these core areas: Clinical trials, contact manufacturing and sales force solutions.  Cost effectiveness is the leading reason companies initially choose to outsource, but it is certainly not the only important function served. Speed, flexibility, expertise, innovation and efficiency are all important drives in the decision to outsource.

 

Outsourcing is not a new concept to pharmaceutical companies; however, its use increased dramatically in the mid-1990s, and it is expected to continue to increase going forward. It is estimated by 2004 nearly 42% of all pharmaceutical drug development expenditures will be committed to outsourcing, as compared to the 4% that was outsourced in the early-1990s. Some estimate that there are currently over 1,200 organizations involved in the clinical research, including pharmaceutical and biotechnology in-house clinical research, site management organizations (SMOs), academic medical centers, private research sites, and contract research organizations (CROs).

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Greater complexity in drug discovery, development and regulatory processes is encouraging the view that outsourcing is the means to easily and cost-effectively gain access to specialized resources, technology and expertise.  The need to reach the global market will also encourage partnering the international CROs local presence in new markets such as India and China.

 

Drug Discovery: Service providers can screen through and test compounds against the large number of targets now available. These service providers are able to better master new discovery techniques and tools.

Discovery work can be conducted faster and cheaper through such outsourcing service providers.

 

Contact Manufacturing: Outsourcing partnerships can include the use of contract manufactures to conduct all activities from preclinical development to commercial manufacturing.

 

Regulation: FDA & ICH have created challenges for pharma companies in keeping up with federal regulations and guidelines regarding drug regulation and submission. These challenges are encouraging pharma companies to seek partners that can assist them with regulatory submissions.

 

Marketing: The pharmaceutical industry has both a private responsibility to generate profits for its own shareholders and a social responsibility to patients. To address these challenges pharma companies may opt to partner with industry marketing experts.

 

OUTSOURCING MARKET SIZE & GROWTH:

 

Pharma clients have increased their outsourcing expenditure with an anticipated 40% of drug discovery expenditure presently committed to outsourcing. The pharma outsourcing industry was estimated at $48 billion US in 2002 and will rise to over $60 billions US in 2005.

 

Outsourcing enables biopharma companies to focus on their core capabilities. The biopharma industry utilizes a combination of outsourcing models from outsourcing aspects of drug discovery research, the clinical trial process or development and manufacturing process.  Applying external skills and expertise directly when and where they are required avoids dependence on fixed resources. This flexibility reduces the need to reallocate or recruit additional personnel with a corresponding reduction in overhead costs. The early stage requirements for services can be categorized by phases as follows:

 

  • Target validation with access to targets and target information critical.

 

  • Lead identification including access to chemically diverse libraries.

 

  • Lead optimization with medical chemistry and lead optimization services key to ensuring that successful leads enter the clinical phase.

 

According to Frost & Sullivan, the contact research industry will obtain revenues in the range of $14.4 billion by 2007

 

NEW MARKETS:

 

In recent years, areas such as Eastern Europe, Latin America and Asia have become lucrative to sponsors to access large untreated patient’s populations. Center watch reports 20-30% of clinical trails are being conducted in developing countries. China is the fastest growing pharma market in Asia.  Phase II – IV studies are being conducted in China.

 

India the second largest pharma market in Asia boasts an enormous untreated patient population, a strong technological infrastructure IP regime and regulatory environment that will become increasingly aligned with the developed world. 

 

The cost of drug development has soared during the past ten years compelling pharmaceutical and biotechnology companies to look for new, smarter ways of conducting clinical research. Driven by mounting market pressures, companies are increasingly implementing outsourcing strategies to increase revenues through faster drug development. By decreasing their in-house facilities and staff, and outsourcing more of their R&D functions, pharmaceutical and biotechnology companies are reshaping the drug development services industry 

Contract research has evolved from providing limited preclinical and clinical trial services in the 1970s to a full-service industry today that encompasses broader relationships with clients, covering the entire drug development process, including preclinical safety evaluation, pharmacology, study design, clinical trial management, data collection, statistical analysis, product support, and regulatory services. Pharmaceutical companies are now using drug development services companies not only to cover gaps in capacity, but also to increase their skills base, help to control costs, and reduce drug development timelines. CROs were first organized as outsourcing service companies that provided only clinical trial management. Today, many CROs have expanded their scope of services to provide comprehensive management of the complex drug trial processes for their client companies, as well as providing access to vast areas of expertise.

 

OUTSOURCING TO INDIA:

 

Pharmaceutical industry in India

The Indian pharmaceutical industry is one of the world's largest, ranking4th in terms of volume and 13th in terms of value in the global pharmaceutical market.

  • In 2002, pharmaceutical sales were US$4.5 billion, growing at 8-9% per year. However, the pharmaceutical market in India is small when seen in relationship to its population, a fact reflected in the per capita pharmaceutical expenditure in this country - about US$4.50 per person per year in 2002.
  • The mix of pharmaceutical consumption is skewed towards anti-infectives and vaccines, with medications for 'lifestyle' chronic diseases comprising a smaller (25% in 2002), but fast growing, segment in the industry (Ranbaxy website).
  • The biggest sales in the domestic pharmaceutical industry are in the antibiotics market. While drugs for lifestyle diseases and chronic conditions comprise a smaller proportion of sales, they are the fastest growing area of medications.
  • There were over 20,000 registered manufacturers in 2003. These are predominantly small manufacturers, focusing on either active pharmaceutical ingredients (APIs) or formulations.
  • In the absence of a comprehensive intellectual property regulation regime*, Indian companies have focused their energies on process chemistry and manufacturing. As a result, the leading Indian pharmaceutical companies have become some of the most efficient manufacturing units in the world. Their expertise in process chemistry and manufacturing have allowed them to position themselves as the lowest cost provider of quality pharmaceuticals, and they have exploited this advantage to make forays in the global generic market. *Note: Indian Patent laws from January 2005 are TRIPS compliant, offering greater protection of intellectual property in India.
    (source: India - The Emerging R&D Collaborative Opportunity - Bridgehead International)

 

Biotechnology in India

 

  • The Indian biotechnology industry is at an early stage of development compared to Europe and the US. However, the sector is growing rapidly, as evidenced by the increase in the number of companies and the number of initiatives by State governments to grow their respective biotechnology industries.
  • There are approximately 200 biotech companies in India with combined revenues of $500 million employing 25,000 scientists in R&D programs.
  • There are 40 National Research Laboratories employing 15,000 scientists.
  • The top 10 players in terms of revenue currently in the Indian biotech marketplace are: Biocon, Serum Institute of India, Panacea Biotec, Nicholas Piramal, Novo N, Venkateshwara Hatcheries, Wockhardt, GSK, Bharat Serums & Vaccines and Eli Lilly & Company.
  • Biocon and Serum are ranked in the top 20 biotechs globally by revenue (Source: Biospectrum industry Overview 2004).
  • Investment within the sector is also on the rise with a 25.99% increase in 2004 to $136million during 2004. In 2005 this is forecast to grow by a further 33% to $183million.
  • Partnering has also played a major role in the biotech industries growth. Biocon is leading the way forming partnerships with North American companies Nobex and Bristol Myers Squib. This in part has resulted in the need for Biocon to build a new 50,000 sq ft R&D facility to house a further 200 scientists.

 

Table 1 Outsourcing opportunities in India

 

CONTRACT R&D

Intermediates, commodity chemicals, specialty chemicals, fine chemicals

Bulk active synthesis / bulk biologics

Formulation , manufacturing-excipients, formulation oral solids, formulation steriles, formulation inhalers

International clinical trials

Technical services

Turn key projects

Plant machinery and pharmaceutical equipment

Primary packaging materials/secondary packaging

Bioinformatics, biostatistics, software development

Herbals and neutraceutical development

 

 

 


Economic

  • Strong R&D capabilities, stemming from the largest generic drugs exporting industry in the world
  • Existing backwards engineering expertise is now being re-directed toward innovation, with generic companies moving into novel drug discovery
  • World class IT industry reflected in skills in bioinformatics
  • R&D costs 1/8 of western countries
  • Manufacturing costs 1/5 to 2/5 of western countries
  • Clinical trials development 50-60% lower than in western countries
    (Source - Burrell & Co India 2nd quarter 2005)

Political

  • Government encourages 100% foreign direct investment in special economic zones such as the Hyderabad, Bangalore and Pune bioclusters
  • Proposed exemption of import duties on key R&D equipment
  • Indian patent laws from January 2005 are TRIPS Compliant, offering greater protection of intellectual property in India
  • Simplified regulatory system

The Indian biotech sector is growing at 37.42 per cent and inched closer to US$ 1.5 billion in revenues during 2005-06. The bio-pharma segment still dominates this sector with US$ 1 billion in revenues.

Following the bio-pharma segment is bio-services growing at 69.29 per cent with revenues of Rs 720 crore (approx: US$ 160 million) during 2005-06. Bio-services clocked revenues of Rs 425 crore in 2004-05 and Rs 275 crore in 2003-04.

Agri-bio with a lot of buzz around introduction of transgenic crop varieties grew at 81.21 per cent to touch revenue of Rs 598 crore in 2005-06. This segment clocked revenues of Rs 330 crore in 2004-05 and Rs 130 crore in 2003-04.

With demand for organic industrial inputs growing, industrial biotech grew by 17.19 per cent to touch 375 crore in 2005-06. This segment clocked revenues of Rs 320 crore in 2004-05 and Rs 238 crore in 2003-04. The bio-informatics segment grew by 20 per cent to touch Rs 120 crore in 2005-06.

ADVANTAGES

Indian companies can offer an attractive option with both strong API cash flows with more than 75 US FDA approved plants. The industry is on the threshold of strong growth, driven by consolidation in the global generics market, untapped potential in the domestic market, if distribution-led reforms take place in the country, says the report highlighting the issues and opportunities in Indian pharmaceuticals, biotech and healthcare sectors.

US biopharmaceutical companies prefer India to China for their immediate expansion plans through outsourcing to get a foothold into the market. Though lack of knowledge of the market and the Indian regulatory issues are an issue, the US companies are; however, keen to strike alliances with Indian companies.

The domestic pharmaceutical sector has the potential to double its existing market size by the year 2010 and thereby become the second major manufacturing base in the world next to China provided it is supported by the right regulatory framework.

With patent protection in place and foreign investors eagerly eyeing India's wealth of human resources, and its massive domestic market, significant growth opportunities abound for Indian companies.

The patent change regime in 2007-08 would open a huge international market worth $65 billion for the Indian pharma industry, the report said. 

The Indian government's decision to allow 100 percent foreign direct investment into the drugs and pharmaceutical industry has steadily aided the growth of contract research in the country. Of course, fearing the dishonoring of patents in the country, technology transfer to 100 percent Indian subsidiaries of MNCs was not done on a comprehensive basis so far; the new regime should aid this. The Indian pharmaceutical industry is also getting increasingly US FDA compliant to harness the growth opportunities in areas of contract manufacturing and research.

The Cost Advantage:

 The Ernst & Young 2004 Global pharma report notes that India has a pool of trained chemists, companies with an excellent track record of innovation and US PDA approved manufacturing facilities with cost savings of up to 30-50%. Labor costs in India are typically in the range of 10-15% of similar costs in the US.  Clinical trails can also cost as little as 50% of those conducted in Western countries.

 

The Research Infrastructure:

 India has 3-4 million scientists, the 2nd largest concentration in the world following the US. Majority of these scientists are English speaking and are willing to work for less than a fifth of the salaries of their Western counterparts:

 

India boasts having more than 70 FDA approved plants and 200 manufacturing facilities certified as having good MP.  These plants use state of the art technology with cost competitiveness ensured during plant , development, maintenance and operating including labor, raw materials, sourcing and capital costs.  With hospitals treating a wide range of diseases, companies can efficiently access a range of therapeutic areas with a single hospital.

 

Drawbacks:

Much of this is attributed to short comings in the current Indian regulatory environment. India still offers no date protection. There is also the issue of domestic drug pricing.

Indian pharma sector has been marred by lack of product patent, which prevents global pharma companies to introduce new drugs in the country and discourages innovation and drug discovery.

Indian pharma sector has been marred by lack of product patent, which prevents global pharma companies to introduce new drugs in the country and discourages innovation and drug discovery. But this has provided an upper hand to the Indian pharma companies. These are the major weakness of the country that the government is addressing to.

In an attempt to develop a world-class pharmaceuticals industry, the Prime Minister's Office (PMO) is working on a policy for the sector.

The new drug policy is an all encompassing policy framework that is being drafted by an expert committee to provide guidelines to the pharma industry. The main objectives of this policy are: to ensure availability of essential pharma products at reasonable prices; to strengthen the indigenous capability to produce cost effective and quality products and export pharmaceuticals by reducing barriers to trade in the sector; to strengthen the system of quality control over production and distribution; to encourage R&D in the sector; and to create an incentive framework for the industry which promotes new investment into the industry.

The industry has been long expecting reforms in the numerous policies that govern the sector. One of the most crucial areas that the policy seeks to address is pricing of drugs, which has been a bone of contention between the industry and the authorities ever since the price control was instituted.

A healthy future

At an average growth rate of 9 per cent per year, the pharmaceutical industry in India is well set for rapid expansion. As a result of the expansion, the Indian pharmaceutical and healthcare market is undergoing a spurt of growth in its coverage, services, and spending in the public and private sectors. The healthcare market has opened a window of opportunities in the medical device field and has boosted clinical trials in India. Many multinational companies have penetrated into India with an aim to market drugs and conduct clinical trails.

Thus, Indian pharmaceutical research, manufacturing, and outsourcing have received an impetus, thereby, creating an image of a potential healthcare market and a land of opportunities in pharmaceuticals. The economic liberalization policies coming to force in the 1990s and the strong emergence of private sector in the Indian economy has heightened the pace of development of the pharmaceutical industry and will continue to do so. The Indian Pharmaceutical industry has shown tremendous progress in terms of infrastructure development, technology base and wide range of products. The industry produces bulk drugs belonging to all major therapeutic groups requiring complicated manufacturing process and has also developed excellent Good Manufacturing Practices (GMP) compliant facilities for the production of different dosage forms. The strength of the industry is developing cost effective technologies in the shortest possible time for drug intermediates and bulk actives without compromising on quality. This is realized through country's strengths in organic synthesis and process engineering.

 

Companies outsourcing manufacturing to India. Indian manufacturers have demonstrated the capability of developing quality drugs at a fraction of the developed world cost.

 

Table 2: Companies outsourcing manufacturing to India

 

COMPANY

OUTSOURCED ACTIVITY

AVENTIS

Manufacturing e.g., glibenclamide

ASTRAZENECA

Research & manufacturing facilities ;India to become center for TB research

BAYER

API and bulk supplies

BRISTOL MYERS SQUIBB

Manufacturing e.g. doxycycline, amoxicillin API

CHIRON

API and bulk supplies

ELI LILLY

Manufacturing e.g. APIs

GLAXO SMITHKLINE

Clinical data management and manufacturing

MERCK&Co

Manufacturing e.g. cephalosporins

NOVARTIS

Research & manufacturing

ROCHE

Research, clinical development, commercial operations

WYETH

Manufacturing e.g. intermediates

 

 

 

 

Companies outsourcing clinical services to India:

Increasingly companies are expanding their investments and leveraging the advantages India offers beyond manufacturing. This market is growing at a rate of 20% per annum.  The Indian Government has further aided this industry by approving an amendment to schedule Y of its drugs and cosmetics Act allowing international drug companies to conduct multi center Phase 1 and II trials through out the country. The amendment also permits for new DNA and other products, providing an incentive for global biotech companies to conduct clinical trails for biologicals in India.

 

Table 3: Companies outsourcing Clinical Services

 

Company

Non manufacturing outsourced activity

 

PFIZER

Exploratory studies – phase1,2,3;clinical training; biostatistics; clinical trial logistics

NOVARTIS

Novartis international clinical development center to support statistical needs

JOHNSON & JOHNSON

Janssen international stability center-analytical services

ELI LILLY

Clinical research

ASTRA  ZENECA

Clinical research

GLAXO SMITHKLINE

Clinical data management

 

 

Clinical Research Market Size & Growth in India:

 

Center watch estimated the size of the Indian Clinical Trail market in 2002 to be in the range of $30 - $35 million US.  The estimated number of GLP trained investigators was 200 – 250.  Center watch has predicted that by 2010, the industry will spend approx $250 - $300 million US on clinical trails in India. McKinsey estimates this number to be much higher in the range of $1 to $1.5 billion US. A US $10billion industry today, Indian pharma will grow to US $25 billion by 2010.

 

The India pharma exports have tremendous potential to grow at around 18% by 2007-08.  These are about 250 large and 8000 small units.  These units produce the complete range of pharma formulations.

 

The generics business remains at the heart of every thing India does well and so it should, considering that India accounts of 22% of the global generics market.  Bearing in mind that $65 billion of prescription medicines in Europe and the US are lose their patents in 2007-08, India is ideally positioned to sweep up much of that new business.

 

Home to some of the top technical universities in Asia, as well as a large community of entrepreneurial western trained graduates India teams with resourceful scientists and managers. The combination improved IP protection and local pharmaceutical companies embarking on innovative R&D projects of their own has changed the way MPCs that once denounced Indian pharma companies now partner with them and increasingly entrusts with vital R&D assignments. 

 

There are 3 primary advantages to shifting some proportion of bio-pharmaceutical R&D to India. 

 

1)      Alleviating bottlenecks in the R&D pipeline – Conducting R&D in India can ease backlogs and capacity shortages particularly in labor intensive phases of early stage chemistry and of data management during clinical study.

2)      Reducing R&D costs – Established Indian vendors pay wages that are typically less than 1/3rd and may be as little as 1/5th of those paid by their counterparts in US, Europe and Japan

3)      Accelerating clinical trails – India’s population provides MPCs with an ideal patient base for drug studies.

 

India’s strengths translate into attractive opportunities:

 

India’s greatest allure is its promise of near immediate gratification for MPCs that seek to enhance chemistry related activities and accelerate clinical trails.

 

Proven prowess in chemistry and Data management: Indian vendors in bio-pharma R&D have developed capabilities in scale-up, process optimization and manufacturing. The strong domestic capabilities in Data Management and Information Technology have long made India an attractive location for the labor intensive activities involved in clinical data management and biometrics.  India’s recent shift to drug discovery has triggered the domestic pharmaceutical industry to expand its repertoire in chemistry.  Indian vendors are offering services in Drug design, analytical chemistry and assay development.

 

Speed and agility in Clinical trails:  The biggest factor driving clinical studies to India today is the critical competitive advantage that the country holds over western locals.

 

Emerging skills in preclinical trails: Indian services in preclinical have evolved in response two moves by local companies. First many vendors have been upgrading labs and vivaria, the centers that manage and house research organisms and samples. Second, many have also been developing expertise in conducting pharmacokinetic, drug-metabolism and toxicity in rodents and to a lesser extent in dogs.

 

A long term option on Biology: Over the past 5 years the India’s department of biotechnology has spent more than $230 million US to advance the biotech space. The agency has spread its investments across local pharmaceutical companies, public projects establishing bio-tech parks and education institutions building or expanding graduate programs in biology. 

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Biopharmaceutical Contract Manufacturing: The Future Includes Asia

In the conclusion of the interview survey, both the contractors and the biomanufacturing directors at pharmaceutical and biotechnology companies were asked their opinions about the future of the industry. For both groups, outsourcing to Asia is an important trend, which will have a significant impact on the industry in the next five to 10 years. A CMO respondent summed up the majority opinion:
“Up until recently it was not a big factor, but now competition from developing regions cannot be ignored. This will have an impact on North American and European contract manufacturing organizations. The nature of the impact really depends on (1) the acceptance of the Asian market, (2) if the contractors there can meet strict quality standards, and (3) if it is possible to effectively manage projects in those countries. Within the next five years, I think this will have a significant impact on the CMO business.”
As the industry becomes more price-competitive, the possibility of outsourcing certain projects to lower-cost Asian regions, especially production of large-volume products, will become a valuable alternative. The biopharmaceutical contract manufacturing industry is growing into a truly global business.

Scenario after 2005 and beyond
Mushrooming of contract research organization in 2005 and beyond will be somewhat affected by the following, which also throws light on the shortcomings of India as major CRO hub unless addressed properly and adequately are the following:
Increasing lower cost differential & increasing salary structures in this area; Increasing difficulties of sourcing experienced people in comparison to the growing need of such people; Growing competitions from other Asian and East European countries competing for similar opportunities; Emerging of major corporate groups with deep pockets shying away small competitors; Opening of research labs by the multinational themselves acting as internal CROs like GE research centre at Bangalore; Conflicting business plans, i.e. generic companies getting into outsourcing service provider to its competitors.
Though the competitions amongst the custom synthesis and manufacturing companies are primarily based on cost, capacity, quality, and timing of production for the compound or molecule being considered, the factors such as long term relationships and proven track records, regulatory capabilities for DMF filing, past experience with FDA and other similar agencies etc. also plays an important role.

The preferences of most of the major sponsoring companies involved with outsourcing activities are not to share intellectual property rights with their outsourcing partners, however, this trend is bound to change in the near future, if these partnering companies start participating in adding value to the project as well. Indian companies’ role in this direction will play a crucial role in addressing the increasing global competitions. By providing proprietary novel enabling technology support to the outsourced projects that are crucial to the needs of drug discovery and development today, these CRAM space companies can soon be able to access revenues from the sponsor companies by participating in joint ownership in the form of royalties, milestone payments and enhanced service fees.
Conventional project wise outsourcing, project by project, is based on increasingly getting converted into long-term reliable partnering in order to achieve consistency and achieving value for money for the partnering companies as well as the competing CRO and CMOs. For these types of alliances to be successful, the outsourcing service providers also are getting involved in upgrading their skills and enhancing their technological capabilities. From simple outsourcing, the trend to slowly move towards building partnerships and alliances is being observed, where free flow of information exchange and active involvement is also feasible. Pharmaceutical companies soon will not just be expecting the outsourcing companies to apply newer innovative technologies to their projects and provide cutting-edge solutions to their overall problems in order to build long-term and lasting relationship. On a similar fashion the service providers are slowly gearing up to become solution provider, one stop centers etc and are putting considerable investments to enhance their capabilities and getting involved with in-house proprietary technology developments and developing niche, innovative areas of expertise to merge ahead with the emerging competitions rather than providing cost advantages alone.
With the starting of new patent regime with the beginning of 2005 and interesting changes happening in the global pharmaceutical sector, emergence of virtual pharmaceutical companies, drying up of the pipeline of blockbusters, CRO and CMOs of India are certainly poised for an interesting time in coming years.

 The study finds that the industry is valued at approximately $100 million, with an annual growth rate of approximately 40% to 50%.

 

References

 

 

1.      “Outsourcing opportunities in Indian pharmaceutical industry,” Monitor group, Sep 2003.

 

2.      “The Drug Research War,” Forbes.com 05/28/2004

 

3.      Center Watch, www.centerwatch.com

 

4.      “2010: Indian clinical research odyssey”, PharmaBiz.com, Feb. 26, 2004.

 

5.      “2010: Indian clinical research odyssey”, PharmaBiz.com, June. 21,2004.

 

6.      “Outsourcing Drug Work”, Scientific American, Aug.16, 2004.

 

7.      “Capability of Indian pharmaceutical industry to service world market”, Indian-chem 2002 International conference, Sep 20, 2002.

 

8.      “Center to announce biotech policy in Jan ’05,Bioinformatics policy in may”, PharmaBiz.com, October 26,2004

 

9.      “Rising to the productivity challenge: A strategic framework for biopharma”, BCG Focus, July 2004.