Indian pharmaceutical companies are making inroads in the global industry, not just in generic drugs (although that is a large part of their current success). There moving into other parts of the value network, according to Pankaj Ghemawat in > Global Economy” href=”http://www.theglobalist.com/DBWeb/StoryId.aspx?StoryId=6570″>Big Pharma’s Eastern Sunset:
In addition they engage in a variety of related activities other than drugs manufacturing:
&bull Contract R&D: Instead of simply engaging in contract manufacturing, a number of Indian firms are also undertaking contract R&D for Western manufacturers. Such an approach focuses on the largest arbitrage differentials in the sector. Pfizer estimates that Indian chemists make about $5 an hour, versus more than $50 an hour for U.S. scientists. Thus, in early 2007, Nicholas Piramal and Eli Lilly signed an agreement under which the former will be responsible for the global design and execution of pre-clinical and early-stage clinical work for some of the latter’s new drugs.
&bull Clinical trials: A new medicine must go through clinical trials — the final and most expensive stage of trials — on a carefully selected sample of patients. These trials have also attracted great attention — from drug-industry arbitrageurs. Forty percent of all clinical trials are now conducted in poor countries. India attracts particular attention because of a large supply of patients and of English-speaking doctors.
&bull IT-enabled services: India has also been successful as a destination for IT-enabled services, accounting for nearly half of total off-shoring activity in 2005. As a result, the pharmaceutical sector has shown great interest in exploiting its potential to contain the surging costs of data management and informatics support during the drug development process in areas such as data entry, database management and trial study design, customer support services and data analytics.
As I’m mentioned before, India is attempting to move toward becoming a Knowledge Economy. The pharma companies are certainly headed that way. The nation itself has a long way to go — much of the country is still poor and agricultural. But the part of India that is competitive in the modern economy is huge — and will continue to present both challenges and opportunities for the US.