Big Pharma Companies Join Outsourcing Queue

Business Standard (India) (8/17, Jayakumar) – [Ernst & Young] estimates the Indian drug production outsourcing industry to grow over 43 per cent annually, thrice the global growth rate. Research agency Frost & Sullivan estimated this segment for the Indian industry to reach over $6.5 billion by 2013...Diminishing numbers of new drugs, as against existing drugs going off-patent, high research and development costs, and pressure to reduce healthcare costs are forcing Big Pharma to rope in strategic partners to contain manufacturing and drug development expenses.

India offers a significant cost-quality proposition in end-to-end research and development, with potential savings of over 60 per cent as compared to the US, coupled with a strong supply of skilled manpower and capital efficiency…India has close to 100 manufacturing facilities approved by the US Food and Drug Administration (FDA), the largest after the US. About 40-50 new plants, in addition to the plants of major Indian pharmaceutical companies, were commissioned in the past two-three years, conforming to the quality standards suggested by the US FDA and the UK Medicines and Healthcare Regulatory Agency (MHRA).

With the emergence of so many players, margins have shrunk from up to 200 per cent four-five years earlier to just about 15-20 per cent. “Still, it is highly lucrative and all players are doing reasonably well,” T S Jaishankar, chairman, Confederation of Indian Pharmaceutical Industries, said.