Bangalore, Sept 29, 2008: A new report says western drug manufacturers will outsource $2.5 billion worth of R&D work to India by 2012. India gains as western companies cut costs, said a new study by Bangalore-based consulting company Zinnov.
Zinnov Management Consulting said in its report ‘Indian Pharmaceutical Offshoring Landscape’ one of the key factors driving the offshoring wave is increasing R&D costs, which in-turn is compelling Pharmaceutical organizations in the US and EU to look for new low cost R&D destinations such as India and China.
According to the study, the Indian pharma sector is also growing robustly and is expected to move from being domestic led to exports driven by 2010. A transition is also being observed in the growth of pharmaceutical markets from the top seven established pharmaceutical markets to emerging markets like India, China, Brazil, Mexico, South Korea, and Russia – which will grow at 12-13 % in 2008, and become an $85-90 billion market, the study said.
Indian Pharma Facts
• India’s rich talent pool of nearly 13.5 million science graduates growing at the rate of 36% plays a major role in the growth of outsourcing of drug development processes.
• Pharmaceutical Translation market has also seen growth due to frequent clinical trials conducted in India by pharmaceutical companies; demand of around 160,000 translators likely by 2010.
• Basic production cost in India is up to 50% lower than in the US; FDA approved plants can be constructed in India at 30 – 50% lower costs than the established markets.
• Clinical Data Management & Bio-Statistics is a growing market in India driven largely by the robust IT talent.
• Pharma Contract Manufacturing in India was $590 million in the year 2007 and is expected to grow at a CAGR of 15%.
Talking about the study, Mr Pari Natarajan, CEO, Zinnov Management Consulting says, “Influx of outsourced work from global pharmaceutical companies has given the necessary impetus for the creation of pharma Special Economic Zones (SEZ), which would be one of the key drivers of outsourced pharmaceutical services growth in the coming future.”
“Indian pharmaceutical companies need to penetrate further in generics market in regulated countries and also increase their investment in R&D to move to gain expertise in higher value chain processes. Today, pharmaceutical is one of the most happening industries globally, and India has the potential to become one of the key global pharmaceutical players and also become the backbone of offshored services in Pharmaceuticals,” he added.
The success of pharmaceutical offshoring / outsourcing is aided by the rich pharma talent pool and the spread of pharma-educational institutes. The government has also provided tax incentives to the pharmaceutical industry and has taken necessary steps to enact tough laws on data security and IP related issues to mitigate certain offshoring challenges. Development of Pharma Special Economic Zones SEZs is a key step by the government to enable the growth of pharma industry, the study says.
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