India and China Attract R&D Outsourcing

Besieged by cost pressures, shorter product life cycles, and regulatory challenges, the international pharmaceutical industry is increasingly shifting research and development (R&D) to India and China, according to a new report from Frost & Sullivan (Palo Alto, CA, USA).

This shift can minimize the expense, time, and risk involved in R&D. Industry sources estimate that the cost of bringing one new molecule to market costs U.S.$800 million. Furthermore, the European Federation of Pharmaceutical Industries and Associations (EEPIA) estimates that out of 10,000 molecules developed in laboratories, an average of only one or two will pass all stages of drug development and be commercialized. Pharmaceutical companies looking for effective but less-costly solutions therefore prefer outsourcing to developing countries, where costs are lower.

"Contract research organizations (CROs) are a popular option, and they carry out medical and scientific studies on a contractual basis for multiple clients,” observed Himanshu Parmar, a Frost & Sullivan analyst. "They provide part or all of the processes of clinical research, including clinical trial management, data management, statistical analysis, protocol design, and final report development.”

Outsourcing activities in developing countries currently amounts to 20-30% of total global clinical trials. Access to specialized skills in both India and China on a 24/7 basis adds to their competitive advantage, while better management from the start reduces development risks.

Despite these benefits, there has been little utilization of such opportunities in both countries because of concerns about quality and infrastructure. Proper management is needed to keep control and to protect proprietary knowledge in third-party relationships. This has motivated companies and governments in these countries to implement necessary changes to improve research facilities.



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