India attracts Japan's number two pharma

The $8bn Daiichi Sankyo Company is establishing a subsidiary in India called Daiichi Sankyo India Pharm, which will eventually conduct manufacturing of drug products and formulations, primarily in the areas of cardiology and diabetes, for the domestic market. The project will initially comprise an investment of around $6.4m and the company also holds plans to set up an R&D operation at a future date. Until the new manufacturing unit is up and running, Daiichi Sankyo indicated it would be utilising the services of local contract manufacturers. The Japanese pharmaceutical industry has largely resisted the temptation to follow the lead of a number of western pharmaceutical companies who have been using India as a low-cost hub to conduct manufacturing and clinical trials. However, in recent times, Japanese firms are increasingly warming to the idea of using the country to either outsource various business functions or set up infrastructure and take advantage of India's burgeoning, low cost pharmaceutical industry. In other news, MSN Laboratories, an Indian active pharmaceutical ingredients (APIs) and formulations manufacturer, has announced an expansion programme to bolster its contract research and manufacturing (CRAM) capabilities - a business area that it has decided to focus on. Over the next 18 months the firm will invest $25.5m on its plans, part of which it hopes to raise through private equity. Around $9m of this will be directed towards building a new R&D centre near Pashamylaram that would house 350 scientists. Construction is expected to begin next month and it is due to be operational by 2009. Further down the line MSN Laboratories also intends to begin building a new contract manufacturing facility. The company already has three manufacturing plants in operation and one that is likely to become so in the next year. India is emerging as a competitive outsourcing hub and is playing a major role in the global pharmaceutical industry in manufacturing APIs and intermediates for drug makers. As a result, the global pharma majors are establishing long term relationships with Indian pharma companies and the contract manufacturing market in India is worth about $500m and has an annual growth rate of 25 per cent. There are around 150 dedicated contract manufacturing units in India that are contributing to 60 per cent of total contract manufacturing business, according to analysts.