Eastern opportunities for EU Pharma and Biotech
European pharmaceutical and biotechnology companies. Despite having
over a third of the world's population, Asia accounts for only one
fifth of global pharmaceutical drug consumption.
The two Asian powerhouses are set to increase in demand from this large population base opening up new growth opportunities and potentially casting an imposing shadow over other burgeoning markets such as Brazil, Mexico, Poland and Russia.
The decline drug outputs from pharmaceutical companies over the next few years and the rising need to contain spiralling healthcare costs are going to lend significant impetus to the growth of European pharmaceutical and biotechnology companies. The result is that companies are beginning to explore other emerging markets, which offer a low cost structure along with other potential benefits such as a sizeable domestic market and opportunities for clinical trial, licensing and outsourcing.
The growth in these countries is not without its problems. Bureaucratic delays, corruption and red tape are just some of the hurdles faced by companies seeking a breakthrough in the East. However, the challenges are being balanced by several encouraging trends.
"As a destination for foreign direct investment (FDI), both countries have proved themselves most popular among the emerging markets in the world," says industry analyst Himanshu Parmar from Frost & Sullivan.
Both India and China offer the benefits of low-cost R&D, a strong scientific base together with a large and skilled labour pool. While significant government involvement and well-developed research infrastructure offer added advantages in the Chinese context, India offers further inducements in the form of a strong IT industry, good natural resources and an expanding infrastructure
In China, opportunities in drug development for indigenous diseases - an area that has strong governmental support - and stem cell R&D also offer growth potential. In India, European Union (EU) companies are poised to capitalise on low-cost R&D and cost-effective clinical trials.
Partnerships, mergers and acquisitions (M&A) in addition to joint ventures with Chinese/Indian biotechnology/pharmaceutical and other technology companies such as IT offer opportunities for European companies to make their mark in China and India. There is also the prospect of technology transfer or strategic partnerships with institutes.
In India, such strategies are expected to minimise the investment risk on contract research even as patent reform is expected to clarify IP protection and bring it in line with globally accepted mandates.
"Patent reform will encourage investments while increasing funding opportunities," notes Parmar. "It is likely to encourage MNC entries via joint venture, collaborations and partnerships through technology transfer and licensing agreements. Innovation is likely to be promoted among Indian firms thus giving another incentive to European firms for entering into partnerships with Indian firms."
Underlining the growing appeal of these two regions, several European pharmaceutical/biotechnology companies are looking to expand their presence. At the start of last year, Switzerland's Roche set up an R&D centre in Shanghai in a move, which reflected the growing importance of the country as both a market for pharmaceutical products and a site for drug research.
Roche now intends making India one of its larger sourcing hubs for active ingredients and bulk intermediates. Novartis is investigating clinical trial opportunities in both countries while big pharmaceutical companies such as Eli Lilly, Pfizer and Roche have established their clinical trial programmes in India.
