[lbo-talk] Global pharma catches Indian outsourcing bug

uvj at vsnl.com uvj at vsnl.com
Mon Mar 22 15:58:53 PST 2004


HindustanTimes.com

Thursday, March 18, 2004

Now, global pharma catches Indian outsourcing bug

Reuters Mumbai, March 18

For Indian pharmaceutical firms looking abroad for growth, a trend towards global drug makers buying materials and employing in the sub-continent to save money has brought the world closer to home.

Low-cost software engineers and smart-talking graduates in back offices may be India's better-known pools of outsourced manpower, but its skilled chemists, microbiologists and medical professionals are also making a mark.

No wonder then that a company selling technology-intensive bulk drugs and research services to overseas firms is popular with investors. The initial public offering of shares in Indian biotechnology firm Biocon Ltd had been more than 20 times subscribed before its close on Thursday.

Drug companies are currently scouting around India for suppliers of quality ingredients, clinical development services and the painstaking chemical synthesis work for early drug development. The are also shopping for promising new treatments that may emerge from India's own drug discovery efforts.

Industry officials say India's scientific community of three to four million is the second largest in the English-speaking world after the United States. "The pharmaceutical industry is definitely going to gain from the outsourcing drive," said Vikas Dawra, with the mergers and acquisitions team at Rabo India Finance, who advises drug firms.

"Customs synthesis work has picked up because of the sheer chemistry skills available in India," he said, citing Russia and Israel as competitors. "There is explosive growth happening in contract manufacturing of bulk drugs. Europe is more or less finished as the powerhouse of active pharmaceutical ingredients."

European regulatory hurdles made places such as India and China more attractive places to manufacture the bulk ingredients used to make medicines.

Faced with India's impending recognition of international patents from 2005 -- part of its commitments to the World Trade Organisation -- Indian copycat drug firms are now targeting the growing overseas generic market.

"There are many more Indian companies with plants approved by the US FDA and other regulatory authorities than before, their manufacturing standards have improved dramatically, and they are keeping timely delivery schedules," said G L Telang, managing director of Roche Scientific Company (India) Pvt Ltd, who oversees the Swiss parent's Indian ingredient buying.

Thomas Ebeling, head of pharmaceutical operations at Novartis, was also impressed by India's more than 70 US Food and Drug Administration-approved plants and 200 units certified as following good international manufacturing practices.

"It is a universe which is certainly interesting for us to source from," he said on a visit to India earlier this month.

TESTING DRUGS

India's half a million doctors, 171 medical colleges, 16,000 hospitals and an abundance of many diseases make it ideal for clinical trials that eat up 70 per cent of drug development costs.

Pfizer Inc does trials in India for osteoporosis, psychiatric and cardiovascular treatments.

GlaxoSmithKline Pharmaceuticals has secured two clinical trials for vaccines and expects another this year, said head of the drug giant's Indian operations, Kal Sundaram.

But China, Mexico, Canada, Europe and the United States are all competing for such business, he added.

Drug firms also crunch data in India. A Pfizer unit collates and analyses data from clinical trials worldwide, while Novartis processes drug safety data and recently started designing clinical development software in the country.

Many are looking for partners. Top Indian firms such as Ranbaxy Laboratories and Dr Reddy's Laboratories have already licensed out molecules to larger rivals.

© Hindustan Times Ltd. 2004.



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