Financial Daily from THE HINDU group of publications
Friday, Feb 27, 2004
Industry & Economy
Corporate - Outsourcing
Drugs: Outsourcing gains highlighted
Hyderabad , Feb. 26
IN the backdrop of prohibitive costs of over $800 million per each new drug in the global market and the huge opportunity of over $53 billion in drugs going off-patent in the next five-six years, the US pharmaceutical and biotechnology industry finds big scope for outpartnering with the Indian industry and outsourcing the R&D and clinical trial services.
The General Counsel of the 1,500-company strong, US-based Biotechnology Industry Organisation (BIO), Mr Stephan E. Lawton, was of the view that the Indian biotechnology industry could outsource in the areas of chemistry, biogenerics and clinical trials.
Mr Stephan said the backlash in the US against outsourcing was only a short-term phenomenon, he said referring to what was happening in the IT sector.
Addressing newspersons at the global bio business forum - BioAsia - here on Thursday, he said the cost of clinical trials in the US was estimated at around $150 million per drug. It could be reduced by up to 60 per cent through cooperation with the Indian companies.
"Outsourcing in the area of drug discovery will not only reduce the cost of drugs being developed but also reduce the time to develop those drugs," he said.
However, he said the intellectual property (IP) protection and data efficacy protection were the key areas that need to be immediately addressed by India.
Stating that the existing patent regulations in India were not so strong to attract multinationals to outsource R&D activities, Mr Stephan expected the Indian authorities to act fast to address the issue.
The Managing Director of the US-based REDMONT Venture Partners, Mr Michael Alder, said, "Having law is not enough. It needs to be enforced in timely fashion to protect the IPR."
Stating that the drug discovery costs have to be brought down from the existing $800 million per drug to as low as $100 million, the President and Chief Executive Officer of the US-based Tranzyme Pharma, Mr Vipin K. Garg, said the Indian pharmaceutical and biotechnology industry has the opportunity of grabbing up to 20 per cent of this market space.
According to Mr Garg, the cost of clinical trials alone was accounting for nearly $150 million per drug in the US now.
Through outsourcing these services from the Indian industry, the cost could be reduced by 60 per cent.
Indian pharmaceutical industry, especially the Hyderabad industry, has the potential for grabbing the outsourcing opportunities in the areas of chemical synthesis, he said.
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