Global pharma eyes India as BPO hub

India has been emerging as a potential outsourcing hub for multinational pharamceutical companies. The country's highly skilled chemists, microbiologists and medical professionals have now started to make a mark.

According to industry sources, multi-national pharma firms are scouting around India for suppliers of quality ingredients, clinical development services and the complicated chemical synthesis work for early drug development. They are also looking for new treatments that may emerge from India's own drug discovery efforts.

Many big Indian companies have entered the contract manufacturing field. Ranbaxy-Eli Lilly and Lupin-Cynamid were the first major contract manufacturing agreements entered. Nicholas Piramal too has taken aggressive steps for becoming an outsourcing base. Wockhardt and Dr Reddy's have also built plants which could be used as contract-manufacturing facilities.

Dr V.V.L.N Sastry, country head, Firstcall India Equity advisors, said, "With product patents being introduced in India from 2005, Indian contract manufacturing companies are also likely to get contracts for the production of patented drugs."

The MNCs have realised that research and development and marketing of drugs are going to be the key drivers of growth. By going for outsourcing, they can concentrate on these two crucial growth drivers and let others do the manufacturing activity, and that too at extremely low costs. Another benefit is that they can isolate themselves from issues like labour disputes etc, he added.

"Low cost skilled labour is the greatest advantage that India has, says Sameer Narayanan, pharma analyst with Enam Securities, and adds, “ The local companies have been successfully reverse engineering patented drugs since the seventies and have developed excellent skills in drug manufacturing. Customs synthesis work has picked up because of the sheer chemistry skills available in India," Citing Russia and Israel as competitors, India's scientific community of three to four million is the second largest in the English-speaking world after the US.According to Sastry, another factor working in India's favour is the liberal environmental norms.

This has also prompted many MNCs to choose India for manufacturing drugs as it would have been difficult for them to get environmental clearance from their own countries.

India's half a million doctors, 171 medical colleges, 16,000 hospitals and an abundance of 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 Kalyana Sundaram, head of the drug giant's Indian operations.

Drug firms also crunch data in India. A Pfizer unit collects and analyses data from clinical trials world-wide, while Novartis processes drug safety data and recently started designing clinical development software in India.

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