China still choking India's drug making industry

By Kirsty Barnes

- Last updated on GMT

Related tags Generic drug India

Although India's star continues to rise, it pales in comparison to
China as a destination of choice for low-cost drug manufacturing -
for now.

Nearly 90 per cent of pharma executives consider China a better choice than India for low-cost drug manufacturing, according to a new survey of global pharmaceutical executives, conducted by global business consulting firm Bain & Company.

With only 17 per cent of the survey's respondents citing innovation as a key asset of Indian drug makers, "India needs to speed up innovation or risk being walled in,"​ warns the report.

Intellectual property (IP) protection was a concern of 56 per cent of those surveyed, while 52 per cent cited parallel trade and 24 per cent indicated regulatory uncertainty as problems currently plaguing the Indian drug manufacturing industry.

"The Indian pharma industry now stands at the crossroads,"​ said Ashish Singh, managing director of Bain in India and leader of the Indian Pharma Survey.

"If India is looking to be the international home for making quality drugs, it needs to move beyond a low-cost mindset."

The report recommends that Indian drug manufacturers now focus on gaining leadership in their core, low cost generic drug businesses through improving operating efficiencies, while at the same time beginning to invest in innovation.

Meanwhile, the Indian government has its role to play in creating the right investment climate for both multinational corporations (MNCs) and Indian companies by addressing key concerns over IP protection, parallel trade and regulatory uncertainty.

"If Indian pharma is effective in shoring up its operating and cost structure, promoting innovation and gaining more regulatory credibility, the challenges both from mature markets and from developing countries like China should substantially lessen,"​ Singh said.

If these things can be achieved, India can expect greater collaboration there in the future, with internationally recognised firms such as Ranbaxy Laboratories, Dr. Reddy's Laboratories, and Cipla poised to capitalise.

While only 38 per cent of pharma executives surveyed consider that doing business in India now is "extremely important," that number jumps to 62 per cent when survey participants were asked to project the marketplace five years from now.

Similarly, while only 35 per cent characterised India's domestic market as "attractive" in 2006, 58 per cent expect it will be "attractive" by 2011.

In order to take advantage, the report concludes that now is the time for MNCs to start investing in India - cautiously.

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