MONDAY, JULY 12, 2004
Biotech outsourcing - the next big wave
DARLINGTON JOSE HECTOR
TIMES NEWS NETWORK
BANGALORE: The Indian industry is planning an outsourcing encore. This time, it is slated to happen in the biotech sector.
Currently valued at $120 million, biotech outsourcing in India is quickly turning into a major money spinner for companies involved in contract and clinical research activities. Out of this, $50 million is raised from contract research and the rest from clinical research. Added to that a new concept - research process outsourcing (RPO) - is finding its feet as well.
Five years back, outsourcing was a word alien for the industry but how things have changed. Biotech outsourcing from India is growing at a rate of 75 per cent and experts are predicting that the business would touch $1 billion in the next five years.
Globally $40 billion is the R&D outsourcing spend in the pharmaceutical industry on annual basis. In comparison India's contribution at this stage would seem minimal, but taking into consideration India's scientific talent pool, it may not be that tough for it to break into the $1 billion club.
India's most successful contract research house, Syngene (a subsidiary of Biocon), registered a turnover of Rs 35 crore last year. Other CROs like Quintiles have created a strong impact in the market, and many others are waiting to enter the market. Now the key question is can contract research organisations (CROs) do for BT, what BPOs did for IT?
Indian BPOs have snared a three per cent share of the global IT outsourcing market, and the biotech industry is aiming for exactly that. According to Syngene COO, Goutam Das, a gold mine is "waiting to be tapped" here.
"India along with Russia and the East European block will become the outsourcing destinations of the world," says Das. "Even among these countries India holds the edge due to superior communication skills and IT talent."
Advanced markets are keen to shave off costs as developmental expenses there, especially in the early stages, can be quite high. Says Avestha Gengraine CEO, Villoo Morawala Patell, "Finally it has dawned on them (the West) that India is a tremendous destination to outsource research from. That's why we pioneered the concept of research process outsourcing."
According to her, biotech companies from US and UK are extremely keen on taking on loan, a few researchers from Indian companies, to do collaborative research.
Ernst & Young director Utkarsh Palnitkar, while admitting it is difficult to predict the future, said once India's intellectual property laws are solidified the Western markets would show greater interest. "Currently, there are a few misgivings about them," he said.
A new IPR regime is scheduled to come into effect from 2005, and the industry is predicting a smoother ride from then on. As Goutam Das puts it, "IPR laws will infuse greater confidence in advanced markets."
And that for sure will break the shackles further.
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