Cost pressures, the need to tap global talent, and growth opportunities in emerging markets has led Western pharmaceutical companies to shift substantial manufacturing and clinical-trial works to India and China, according to a new study. Big pharmaceutical companies like Merck, Eli Lilly and Johnson and Johnson are now counting these two countries for advanced research and development, the study sponsored by the Ewing Marion Foundation said. Indian and Chinese scientists are rapidly innovating and creating their own intellectual property as a result of Research and Development activities, the report entitled 'The globalization of innovation: Pharmaceuticals. Can India and China Cure the Global Pharmaceutical Market".
In 2006, 5.5% of all global pharmaceutical patent applications (WIPO PCT applications) named one inventor or more were located in India, and 8.4% in China. This had increased fourfold from that in 1995. Through detailed interviews with executives of 16 pharmaceutical firms in China and India on their business models, value-chain activities, partnerships and technology capabilities, the researchers concluded that Indian and Chinese companies are making strides in most of the lucrative segments of global value chains. In less lucrative segments such as preclinical testing, animal experimentation and manufacturing, Chinese firms appear to be more prevalent while India is a more mature venue for chemistry and drug-discovery activities. Domestic Indian and Chinese firms rarely have the capital and the regulatory expertise to develop a drug beyond phase II clinical trials. Their commercial development of new intellectual property therefore necessitates relationships with major multinational corporations.
The study found that India is playing a more strategic role in early discovery and its drug companies have the most experience in selling generic drugs that meet FDA standards. Companies such as Ranbaxy, Aurigene, Advinus, Nicholas Piramal and Jubilant have negotiated long-term deals with Western pharmaceutical companies to discover and develop new chemical entities. In a growing number of cases, the Indian companies share the financial risk in discovery as well as the potential financial rewards. One Chinese company, Hutchison MediPharma, has formed a similar partnership with Eli Lilly. Others are likely to follow suit as Chinese contract research organizations gain experience and Western companies trust in China's ability to protect intellectual property, said the researchers.