Emerging markets, even though full of challenges, have a lot of potential. Dr Richard Connell, vice-president and head of Asia Research, Pfizer, Shanghai, China, aptly explains the rapidly evolving challenges in drug development. "In the developed world, most of the fundamental diseases are already being treated. To develop a blockbuster drug is now way more tougher than before," he says.

The challenge now lies in establishing a strong foothold in the emerging markets, which is clearly illustrated by the big pharma' s expansion plans.

The advantage of getting there first has its advantages as is the case of Pfizer. In the 1980s, Pfizer was one of the first companies to start its operations in China. Today, more than 20 years later, after acquiring Wyeth, it has become the top R&D-based multinational biopharmaceutical company in China with a total investment of more than $1 billion to date in China.

In late 2009, Novartis committed to invest $1 billion in R&D in China and an additional $125 million to buy 85 percent stake in a privately held Chinese vaccine company.

Initially, such centers served as low-cost outsourcing models. However, the recent trend has been to specifically invest in building R&D capabilities, which puts to rest the claims that these centers are only for cheap labor in generics. The culture of innovation is slowly finding its place in this setting as the big pharma is now innovating with the emerging markets in mind.