Employees at a GlaxoSmithKline Pharmaceuticals research and development facility in Nashik, India. A growing drug industry is part of a broader shift in the Indian economy, away from less sophisticated, outsourced services.
(Kuni Takahashi/ Bloomberg News/ File)
India gains bigger role in drug production
Cost pressures, new laws add to country’s appeal
Employees at a GlaxoSmithKline Pharmaceuticals research and development facility in Nashik, India. A growing drug industry is part of a broader shift in the Indian economy, away from less sophisticated, outsourced services.
(Kuni Takahashi/ Bloomberg News/ File)
HALOL, India — India’s drug industry — on track to grow about 13 percent this year, to just over $24 billion — was once notorious for making cheap knockoffs of Western medicines and selling them in developing countries. But India, seasoned in the basics of making medicine, is now starting to take on a more mainstream role in the global drug industry, as a result of recent strengthening of patent law here and cost pressures on name-brand drug makers in the West.
And while the Indian industry has had quality control problems, it nonetheless benefits from growing wariness about the reliability of ingredients from that other historically low-cost drug provider — China. The United States is India’s top export customer for drugs.
India is becoming a “base for manufacturing for the global market,’’ said Ajay G. Piramal, the chairman of Piramal Healthcare, a drug maker based in Mumbai. Eventually, in Piramal’s perhaps overly optimistic forecast, only the very first and very last steps of the business — molecular drug discovery and marketing — will be run by the West’s global drug giants.
Analysts, research groups, and consultants have been making similar predictions.
Big Pharma has come calling, too. Earlier this year Piramal sold his generic drug business to Abbott Laboratories for $3.7 billion, the latest in a string of takeovers and joint ventures here.
The shift to pharmaceuticals is part of a subtle, broader shift in the Indian economy. Moving beyond less sophisticated, outsourced services like telephone call centers, India has been advancing up the business value chain, particularly in law and medical diagnostics. Now it is showing a flair for manufacturing, too, particularly when it comes to goods demanding high-skill production and super low prices.
The next opportunities for India could come at the more sophisticated end of the drug-making spectrum, including research and development for the world’s drug giants and even development of proprietary medicines.
For all the potential, though, India’s drug industry has a long way to go to fulfill its promise.
Recent growth has been shadowed by quality problems. Intellectual property is also an open question. Trying to change its outlaw image as a maker of illegal knockoffs, India toughened its patent laws in 2005.
But dozens of intellectual property suits are still being fought between Indian and foreign firms in courts around the world. And big pharmaceutical companies still find securing protection of their intellectual property in India difficult. Meanwhile, outright counterfeit drug making remains rampant in India, executives and analysts here say.
The FDA, in response to India’s growing influence, has opened two offices in this country.
Indian companies have “a lot to offer and the cost advantage is huge,’’ said Swetha Shantikumar, a research analyst in Chennai with Frost & Sullivan. Chinese firms “don’t have the technical capacity to produce sophisticated drugs,’’ said Shantikumar.
© Copyright 2010 Globe Newspaper Company.
