Pharmaceutical offshoring to grow to Rs2,500 crore by 2012

One of the key factors driving offshoring in the pharmaceuticalos sector is rising R&D costs, which in-turn is compelling pharmaceutical firms in the US and EU to look for newer, low cost R&D destinations such as India and China.

According to a new study, 'Indian Pharmaceutical Offshoring Landscape' by Bangalore-based Zinnov Management Consulting, the Indian pharma sector is growing at a robust pace and is expected to move from being domestic-led to exports-driven by 2010.

A transition is also being observed in the growth of pharmaceutical markets from the top seven established pharmaceutical markets to emerging markets like India, China, Brazil, Mexico, South Korea, and Russia – which will grow at 12 per cent  - 13 per cent in 2008, and become a $85-$90 billion market, captures the study.

''Influx of outsourced work from global pharmaceutical companies has given the necessary impetus for the creation of pharma Special Economic Zones (SEZ), which would be one of the key drivers of outsourced pharmaceutical services growth in the coming future,'' says Pari Natarajan, CEO, Zinnov Management Consulting.

''Indian pharmaceutical companies need to penetrate further in generics market in regulated countries and also increase their investment in R&D to move to gain expertise in higher value chain processes. Today, pharmaceutical is one of the most happening industries globally, and India has the potential to become one of the key global pharmaceutical players and also become the backbone of offshored services in Pharmaceuticals'', he added.

The success of pharmaceutical offshoring / outsourcing is aided by the rich pharma talent pool and the spread of pharma-educational institutes.

The government has also provided tax incentives to the pharmaceutical industry and has taken steps to enact tough laws on data security and IP-related issues to mitigate certain offshoring challenges. Development of pharma special economic zones SEZs is an important step by the government to enable the growth of pharma industry, the study says.

 ''Clinical trials today dominate the development offshoring market landscape followed by clinical data management. Marketing and sales is another key component of pharmaceutical drug development value chain and is currently a $100 million market, which is expected to grow at a CAGR of 36 per cetn till 2012,''said Rishikesh Mandilwar, director, Zinnov Management Consulting Pvt Ltd.