Financial Daily from THE HINDU group of publications
Tuesday, Jun 17, 2003
Financial Daily from THE HINDU group of publications Tuesday, Jun 17, 2003 |
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Industry & Economy
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Pharmaceuticals `Pharma cos must tap outsourcing potential' Aparna Krishnan
Dr J.M. Khanna, ED & President, Life Sciences (left), Mr.Mahesh Chhabria, COO, Enam Financial Consultants, and Mr Manish Chokhani, Director, Enam Securities Pvt Ltd, at a news conference in Mumbai on Monday.
MUMBAI, June 16 AFTER scripting several success stories for Indian IT companies, `outsourcing' is now expected to be the next big opportunity for the pharmaceutical industry. The statistics are overwhelming in favour of the pharma industry that has been under pressure in the past three to four quarters. According to Enam Securities, which hosted a seminar on `New frontiers for Indian pharma — Outsourcing', the market for outsourcing globally will be about $40 billion post 2005. India had the capability to capture at least 20 per cent of that market very easily, said Dr J.M. Khanna, Executive Director & President-Life Sciences, Jubilant Organosys Ltd. However, the domestic potential seems to be by far untapped. Mr Manish Chokhani, Director, Enam Securities Pvt. Ltd, said that currently, the outsourcing market in India was quite limited as overseas companies still perceived Indian companies as competition as the latter was quite active lately on the global generics scene. "Also, the valuations of Indian companies that do take up outsourcing assignments for overseas companies are lower as the financial community has not fully understood the technology or the business model,'' he added. The many areas in outsourcing that mid-size pharma companies in India are likely to tap are custom synthesis, clinical development and bioinformatics. According to Dr Khanna, the largest part in outsourcing will be in clinical development. "For Indian companies, clinical development in the form of conducting pre-clinical and clinical trials and setting up of contract research organisations will be a huge opportunity,'' he added. India's proven skills are mostly in the area of process synthesis. "Indian drug companies have proven skills in providing compounds. However, we need to build our strengths in screening and optimisation which is currently being done at a very limited scale,'' Dr Khanna said. One of the main reasons for overseas companies to outsource manufacturing or research and development to Indian companies will be the cost factor. According to Mr Mahesh Chhabria, Chief Operating Officer, Enam Financial Consultants Pvt. Ltd, "Global generic companies are currently identifying acquisition targets in India. They wish to shift their production bases to the country and leverage the Indian skill sets to ensure success in "time to market''. This will enable them capture the burgeoning opportunities in Para IV filings.''
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