The Indian pharmaceutical industry is benefiting from greatly increased investment by overseas drugmakers but its research capabilities are not being tapped enough.

That is the conclusion of a report from the Boston Consulting Group which was commissioned by the USA-India Chamber of Commerce and is based on interviews with "over 40 R&D decision makers". Some 70% of them say they are satisfied with their alliances in India, and three out of four expect to increase their activities in the country.

The report says that over the past ten years, India has made a concerted effort to capitalise on the globalisation of R&D investments and notes that US biopharma companies spent 24% of their research budgets in foreign countries in 2009, up from 17% in 2002. Over the same period, India’s share of this increased tenfold to about $500 million.

India just 1% of US biopharma R&D overseas spend

Despite this trend, India still accounts for only about 1% of the overseas R&D investments made by the aforementioned US companies - similar to China’s share, but much smaller than Eastern Europe (8%) and Latin America (4%). The report argues that companies and Indian stakeholders should "move beyond the prevailing model, which revolves around low-cost sourcing".

Kim Wagner, a BCG senior partner and coauthor of the report, acknowledges that “costs are critical, and India can play a significant role in increasing R&D efficiency over the short to medium term.”  However, "collaborative partnerships, compared to traditional vendor relationships, can have a much more substantial impact on a company’s ability to create new and innovative products.”

The analysis also speaks about establishing clinical hubs, noting that some 1,300 clinical trials have been conducted in India since 2005 and the cost per patient is half of what it is in Western countries. Also the process of recruiting patients is four times faster and companies can conduct twice as many proof-of-concept trials in India as they could for the same cost in Western countries. The report also suggests that India can play a key role in developing "niche-busters" in orphan diseases, thanks to its 60% cost advantage relative to the traditional R&D model.

Bioinformatics powerhouse

The BCG study argues that foreign drugmakers should look for opportunities "to capitalise on India’s growing interest and expertise in specific research areas". It was one of the first countries in the world to establish a nationwide bioinformatics network and its Biotechnology Information System Network (BTIS) now connects 57 key research centres across the country.

The study concludes by noting that the Indian government is "fostering a research ecosystem to support the development of nano biotechnology" and is coordinating its own efforts to advance stem cell research.