By ANDREW POLLACK in the New York Times
Published: February 24, 2005
Bala S. Manian rarely looked back when he left India to attend graduate school in the United States. Since 1979, he has started one medical technology company after another in Silicon Valley.
But Dr. Manian is now rediscovering his native country. His newest medical venture, ReaMetrix, which makes test kits for pharmaceutical research, is still based in Silicon Valley. But 20 of its 28 employees are in India, where costs for everything from labor to rent are lower.
The exporting of jobs by ReaMetrix is telling evidence that the relentless shifting of employment to countries like India and China that has occurred in manufacturing, back-office work and computer programming is now spreading to a crown jewel of corporate America: the medical and drug industries.
It could be a worrisome sign. The life sciences industry, with its largely white-collar work force and its heavy reliance on scientific innovation, was long thought to be less vulnerable to the outsourcing trend. The industry, moreover, is viewed as an economic growth engine and the source of new jobs, particularly as growth slows in other sectors like information technology.
"What I see in India is the same kind of opportunity I saw in the Valley in 1979," said Dr. Manian. In the United States, he said, "a million dollars doesn't go more than three months." In India, by contrast, "I can run a group of 20 people for a whole year for half a million dollars."
While life sciences jobs may be less vulnerable to outsourcing than jobs in information technology, industry officials say many companies are looking at that option as pressures mount to control drug prices and cut development costs.
"First toys, clothes, those kind of things, then electronics and computers and now, finally, pharmaceuticals and biotech," said Jimmy Wei, a venture capitalist in San Francisco who helped start Bridge Pharmaceuticals, a company that is doing drug screening in Asia for American pharmaceutical companies.
The outsourcing of some life sciences jobs could be seen as evidence that American biotechnology companies, like their counterparts in other industries, are doing nothing more than building global connections that help make them more competitive around the world.
So far, the job movement has been small. According to the most recent data compiled by the Commerce Department, less than 6 percent of American companies with biotechnology operations employed contract workers abroad in 2002, but industry specialists say that percentage has increased in the last three years.
"It's a trend that's becoming more pronounced as people's budgets get tight," said Riccardo Pigliucci, chief executive of Discovery Partners International, a San Diego company that does chemistry work for drug companies. He said a chemist in India made $20,000 to $40,000 a year, in contrast to $80,000 to $100,000 in the United States.
Discovery Partners started a small operation in India to offer lower-cost services. In conjunction with that move it consolidated its American operations in San Diego and South San Francisco, closing a facility in Tucson and laying off 28 employees, according to its regulatory filings.
Clinical trials of new drugs, for instance, are already moving to countries in Asia, Eastern Europe and Latin America, because the costs of conducting the trials are lower and human subjects can be recruited more easily.
Drug manufacturing is another area that can move. India already has a thriving generic drug manufacturing sector and is moving into biotechnology. One biotechnology company, Biocon, went public in India last year. Its founder and chief executive, Kiran Mazumdar-Shaw, has been described in the news media as the richest woman in India.
With revenues of more than $100 million last year, Biocon is a leading producer of generic cholesterol-lowering drugs called statins. It has designs to become a major producer of insulin and monoclonal antibodies. It also has divisions that do contract research and run clinical trials for large American and European pharmaceutical companies.
Fueling the outsourcing trend are Indian and Chinese scientists who obtained graduate degrees and work experience in the United States and Europe and are now returning to their native countries.
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