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Cost-effective R&D in Asia

The emergence of China and India as major global economies has prompted pharma to be quick to recognise the potential gains by attracting consumers in the largest growing economies in the world

The emergence of China and India as major global economies has prompted pharma to be quick to recognise the potential gains offered by attracting consumers in the largest growing economies in the world, as well as the relatively cheap, yet highly skilled, labour force in its most populous lands.

The obvious attractions of the Asian giants has brought increased outsourcing of production and R&D to the region, according to business consulting firm, Frost & Sullivan, which notes that the reason for such moves is an attempt to, ìminimize the expenses, time and risk involved in R&Dî.

Many firms are outsourcing work to contract research organisations (CROs) which, said industry analyst Himanshu Parmar, ìprovide part, or all of the processes of clinical research including clinical trial management, data management, statistical analysis, protocol design and final report developmentî.

Historically, India has not recognised international patents choosing instead to produce and distribute drugs nationally pre-patent expiry, and then also internationally post-expiry. A recent amendment to its policies means that the country can no longer do this and so more Indian companies are looking to secure innovative R&D or CRO work.

ìThe regulatory environment is gradually changing in favour of clinical research,î Parmar noted.

As the changes continue to attract pharma business, the industry's major players are poised to benefit. In a report delivered by Dr Dong Yin of AstraZeneca late last year, it was stated that: `Emerging markets are a significant opportunity for AstraZeneca.' In its annual business review the firm also illustrated a desire to ì[invest] in R&D and innovative programmes to secure market access [in developing countries]î.

AstraZeneca has had research facilities in Bangalore, India, since 2003, and more recently has created R&D facilities in China. The Indian facility, which employs more than 70 scientists, is dedicated to finding a new treatment for tuberculosis, and while the company is geared to ìmaintain presenceî in India, it plans to ìinvest for accelerated growthî in China and also Mexico.

Given that Chinese spending on pharma consumption was below that in the Czech Repubic, the potential for growth is clearly potentially substantial.

30th September 2008

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