The pharmaceutical giant's planned expansion of outsourcing investments in India over the past few years has fallen in line with a wider trend that has seen leading international contract research organisations including multinationals such as Eli Lilly, Wyeth and Novo Nordisk outsource clinical trial activities to India as a means of slashing research costs.
Novartis has also said it intends to introduce new cardiovascular and cancer drugs now that the patent bill is passed.
Drug sales in India were $4.7 billion (€3.6 billion) in 2004 and have grown at a 20 per cent compound annual growth rate since 2000. India is the 4th largest drug market by volume, but only 13th largest by value.
India's low wage costs/operating expenditure currently ranks as one of the lowest worldwide. Other advantages include wide disease profiles and considerable genetic diversity.
Added to the country's traditional strength in IT, India is swiftly being recognised by leading pharmaceutical and biotechnology companies as a key cost-cutting benefit to be harnessed through outsourcing to India.
The US-based pharmaceutical company intend to use India's IT strength to complement Pfizer's current activities in the country. The move boosts India's profile as a key destination for pharmaceutical-related IT and bio-informatics outsourcing by leading drug multinationals, who are coming under increasing pressure to bring innovative new drugs to the market at a faster pace.
The emergence of a bio-informatics specialty in India is set to help lure the relocation of R&D activities on a piecemeal basis. However, end-to-end proprietary drug discovery and development in India is unlikely to emerge for several more years.
The Indian government has been touting drug discovery as the country's 'next big thing', and is effecting strategies to promote bio-informatics as a cornerstone of the country's drug development activities.
The practice of bio-informatics is set to lead a new wave of outsourcing and foreign direct investment (FDI) to the pharmaceutical, biotechnology and life sciences sectors, and the government has announced plans to launch a national bio-informatics policy this year. The aim is to harness the country's well-honed IT capabilities and apply them to drug discovery and development.
Pfizer's decision to outsource some of its IT work to India highlights the country's offerings in this regard, and Global Insight believes that the emergence of a bio-informatics specialty in India will help to spearhead a heavier flow of R&D outsourcing to the country.
In 2004, India's 10 largest drug firms spent over $170 million on R&D, a figure that is expected to exceed $200 million by 2006. One of India's largest pharmaceutical drug companies Ranbaxy, has spent a cumulative $166 million on R&D since the beginning of its research efforts in 1994 and expects to spend 10 per cent of sales on R&D going forward.