The cost-effective benefits and research standards set to become international has added to the attraction of outsourcing R&D to India and China - two developing nations that are set to ease the ever-increasing cost pressures, shorter product life cycles and numerous regulatory challenges in the West.
With current estimations of bringing one new molecule into the market amounting to at least $800 million, pharmaceutical companies looking for effective solutions are turning their attention to outsourcing to low-cost, developing countries rather than persisting with expensive R&D efforts.
The cost is certain to rise in the future. The European Federation of Pharmaceutical Industries and Associations (EFPIA) recently estimated that, on an average out of 10,000 molecules developed in laboratories, only one or two will successfully pass all stages of drug development and be commercialised.
Current business strategies include forming alliances with local companies, contractual outsourcing arrangements and establishing local subsidiaries.
Underlining the growing appeal of these two regions, several European pharmaceutical /biotechnology companies are looking to expand their presence. At the start of last year, Switzerland's Roche set up an R&D centre in Shanghai in a move, which reflected the growing importance of the country as both a market for pharmaceutical products and a site for drug research.
Roche now intends making India one of its larger sourcing hubs for active ingredients and bulk intermediates. Novartis is investigating clinical trial opportunities in both countries while big pharmaceutical companies such as Eli Lilly, Pfizer and Roche have established their clinical trial programmes in India.
Indeed, these outsourcing activities in developing countries amount to 20 to 30 per cent of total global clinical trials. Access to specialised skills in both countries and work hours on a 24/7 basis underpins their competitive advantage. In addition, better management from the start reduces development risks.
-- Frost.com