The turnover of global pharma industry is estimated to be about $ 350-400 billion per annum. The profit margins of industry are about 18 to 20 percent, and the margins are the highest enjoyed by any major industry. The research and development fund in the industry had been roughly about $ 45-50 billion per annum, according to industry estimates.

The cost of discovering a new drug is nearly $ 800-1000 million. The interesting point is though the R & D spend is increasing year by year, the number of NCEs have remained the same.

India is emerging as an outsourcing hub for the entire world, including the US. There are various reasons for increasing opportunities for India to become an outsourcing destination in the US. The key are customer revolt in the US against rising cost of drugs, pressure to cut cost of drug discovery, pipelines of new drug candidates drying up, current methods of drug discovery in the West cannot lead to lower cost and faster the discovery activity, skill set of countries such as India catching up fast and greater willingness to outsource to India particularly after 2005.

Indian IT industry has made outsourcing an accepted and desired phenomenon. IT has built brand 'India'. India gets over 40 per cent of IT outsourcing work from the world.

Pharma companies spend about 15 per cent of their funds in discovery (target identification and validation, lead identification and optimization), 13 per cent of funds in pre-clinical studies and the remaining large amount offunds, 72 per cent, goes into clinical trials. Thus, India can really do great in this area. Many pharma clinical trials companies are doingstatistical analysis in India. Integration of diverse databases is necessary in clinical trials.

Challenges / obstacles for India to become a hub for outsourcing are -attempted short cuts to develop needed expertise, attempts to replicate IT experience in terms of outsourcing model, many small players, lack of IPR knowledge, regulatory lacunae in carrying out clinical trials. Very little incentive for developing outsourcing model, until recently.

It is very essential to evolve an appropriate outsourcing models. 'Risk-Reward' model may be one of the preferred models that companies can opt for in outsourcing.

India should declare to the world that it will adhere to treaties and is geared up to reap the opportunities in the new patent regime. In the area of animal trials, the country has lot of issues to tackle with.