India’s Pharmaceutical Strength: Are We Ready to Outsource all Pharma?

by Brandi Moore on July 9, 2010

India is becoming a “base for manufacturing for the global market,” said Ajay G. Piramal, the chairman of Piramal Healthcare, a drug maker with headquarters in Mumbai. Eventually, in Mr. 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. Words of reality or lossy predictions?  The full New York Times Article is here.

picture of pillsIn the past year just about every large pharamaceutical company in the world has taken a strong investement in India.  Abbot Labs, GlaxoSmithKline, Bristol-Meyers Squibb, SanofiAventis, and Pfizer just to name a few of the companies that have purchased firms in India outright or invested in existing operations.

According to Sujay Shetty, an associate director with PricewaterhouseCoopers in Mumbai pharmaceuticals has been “an incredibly arrogant industry that has never outsourced,” But over the next several years, he predicts, “everything in the value chain will move to different parts of the world that are cheaper,” with India a major beneficiary. (quotes from the NYTimes)

India has two major strengths when it comes to the pharamacy vertical.  First, there are fears about China’s ability to produce consistent safe product.  In the past China has run into issues related to plastic, milk and other materials that were deemed harmful.  Second, India has a long history of being part of the medicinal marketplace.  It is the home of Homeopathic and Ayurvedic medicine.  For centuries India has maintained a long standing tradition of chemists who mix herbs into supplants.  It is thought that the traditional Indian diet keeps Indians from having diabetes, heart disease and thyroid conditions.  Doctors in the US recommend many things from the typical India diet such as Turmeric and Cinnamon to curb these problems in Americans.

This history has created schools that produce top chemists and pharmacists that have training beyond older prescriptions for health.  These workers, combined with India’s laws previous to the 2005 patent law change, created a breeding ground for generic drugs copying.  Facilities were built and approved by many countries and India was seen as a salvation to countries seeking cheaper AIDs medications like Africa.  The entire industry is now in transition.  They have strong skills to offer but need to transition into either making generic drugs in conjunction with the patent holder or turn to pure development.  Both is happening…but you see that the merger/acquisition strategy is working very well for Western firms who are seeking talent and capacity.

The story at this point is not all positive: India has also had its share of quality problems at multiple labs that have sparked the US FDA offices to create an office on Indian soil to monitor and track product being exported to the US. Time will reveal how things will grow and shape — its an exciting time to be part of the pharmaceutical industry in India.

You may also like:

Leave a Comment

Previous post:

Next post: