Merck tests India's outsourcing capabilities
preclinical trial work to an Indian-based company, marking the
first time the pharma giant has used an Indian company to conduct
drug research.
The deal comes at a time when western pharmaceutical companies are increasingly shifting drug research and clinical trials to India to cut costs. India's heterogeneous population and new patent laws have added to the trend. While pharma majors Roche, Pfizer and Eli Lilly have all announced plans recently to set up research units in China, Merck's agreement could be seen as a first step in testing the waters of the Asian outsourcing industry, currently experiencing major growth. The terms of the agreement see the collaboration start off with two projects relating to research and development of drugs that could be used in the treatment of metabolic disorders such as diabetes, obesity and hypertension. Advinus will do research and preclinical trials on the drugs with Merck retaining the right to advance the most promising of these candidates into late stage clinical trials and commercial development. Advinus will also be eligible for royalties on sales if any of the drugs developed go on the market. Financially, Advinus, which is owned by the Tata Group, will receive payment of up to $74.5m (€58m) for every project it gets from Merck. "This collaboration provides an avenue for Advinus to gain access to cutting-edge technologies from Merck while leveraging its India-based discovery and development capabilities," said Rashmi Barbhaiya, managing director of Advinus. According to a recent report by industry analyst firm Research and Markets, India is suddenly a safer place to research and manufacture pharmaceuticals, thanks to legal reform, raised manufacturing standards and reduced bureaucracy As a result, India's pharma market now ranks fourth in the world after decades in oblivion and momentum is growing in its global competitiveness and profitability for both contract services and as a place to set up operations. However, risk still lurks in legislation loopholes, niggling intellectual property concerns and poor infrastructure and companies venturing back to do business in the region still need to tread carefully. Novartis recently reached a provisional agreement to buy land in Hyderabad, while Teva Pharmaceutical plans to double the number of scientists it employs in India and Watson Pharmaceutical has acquired a facility in Goa.
