The Annual Global Pharmaceutical Report released by the Ernst & Young shows that India was emerging as an integral part of the global supply chain and Indian pharmaceutical companies are tapping into world's global research networks through collaborations. The report identifies Indian pharma market to hold a competitive advantage in the new product patent regime. India is valued as a partner of choice in global off-shoring and pharma has accounted for the highest FDI inflow in FY04.

According to the report, the industry is elevating its focus on Global supply chain integrity, Regulatory Risk management and Industry Value. MNC's are stepping up their clinical research activities in India, given the overall lower cost, genetically diverse patient populations and a significant number of service providers with expertise in conducting and supervising clinical trials in accordance with global standards. They are also interested in launching innovative therapies in India encouraged by the new IPR regime.

Collaborations will provide an opportunity to the Indian companies to tap into the world's global research and to gain access to new technologies while providing a platform for big pharma to leverage talent available in India. R&D investments of top 5 pharma companies have crossed INR 10- billion mark in 2004.

"Over a long term, India is bound to have the larger impact on global pharma's Tax, regulatory and IT environment beyond the obvious impact on its innovation and manufacturing," said Utkarsh Palnitkar, Health sciences practice leader, Ernst and young India.

The partnering theme in Indian pharma is reaching a new crescendo. Illustrating this trend are some landmark deals struck by Glenmark with Forest Labs, US and more recently with Teijin Pharma, Japan, Torrent and AstraZeneca's R&D tie-up, Novartis and Syngene's contract research deal and Nicholas Piramal's flurry of in- licensing with several global biotech majors.

A business and regulatory environment conductive for innovation and research will lead to significant investments and interest in the years to come. GSK, for instance has announced its plans to expand its clinical research operations in a major way.

The report also notes that protecting the integrity of supply chain was important. Globalization, technology advancements and growing price disparities are making the supply chain harder for pharmaceutical companies to safeguard. The other challenge to the Indian pharma industry is control over the manufacture and sales of spurious drugs. 35 per cent of the world's spurious drugs are produced in India and at present, the fake drugs market is estimated to be worth Rs 4,000 crore. There are thousands of cases of spurious drugs pending in various state courts. Companies in India are managing their regulatory risks around issues like intellectual property protection, VAT, MRP based excise levy, drug safety and pharmacovigilance, says the report.