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More biotechs should outsource to emerging markets; report

By Nick Taylor , 11-Sep-2009

Biotechs that partner or outsource in emerging markets are better equipped to innovate and prosper, according to research that warns “if you are not in Shanghai, Mumbai, or Dubai, watch out".

Restrictions in the availability of venture capital funding, the lifeblood of biotechs, has forced companies to find ways to innovate and perform drug development without spending as much.

According to research published in Nature Biotechnology 26 per cent of Canadian biotechs that responded to a survey work with companies in emerging markets. However, the researchers believe that this figure should be increased by changing policy in Canada.

Policies in Canada give priority to national programmes or partnerships with other developed countries, according to the researchers, and pay little attention to the benefits of operating in emerging markets.

In the research these benefits are divided into three categories. Firstly, companies can take advantage of the lower manufacturing, clinical trial and R&D costs. The report also believes that access to “the wealth of scientific and technical expertise” is a factor.

Finally, the growth of product sales in some emerging markets means that they represent a sizeable opportunity for biotechs. Establishing a relationship in the country represents the first step to tapping into the large populations, increasing spending power and demand for biologics.

Many companies have realised these benefits but the researchers believe governments have lagged behind. Monali Ray, co-author of the paper, explained: “Developed countries' governments need to realise that the innovation landscape is changing and innovation policies need to take that into account.”

Peter Singer, another co-author, added that developed countries that support their biotechs to engage with emerging markets “will prosper and gain comparative advantage”.

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