90% of international pharmaceutical executives currently prefer China to India as a venue for low-cost drug manufacturing, and only 17% consider innovation to be a key asset of Indian drugmakers, reports a survey by consulting firm Bain & Co.

Just 38% of the 179 executives polled felt that doing business with India was “extremely important” to them now, although 62% believed it would be in 2011. Moreover, only 35% said the Indian pharma market was attractive at present, but, looking five years hence, the percentage holding this view rises to 58%.

The executives were also concerned about current intellectual property protection, parallel trade and regulatory uncertainty issues affecting the Indian industry, and the report urges the national government to take steps immediately in these areas, in order to create the right investment climate for both multinational and Indian companies.

However, a leading industry spokesman in India has this week warned that a major plank of the government’s draft National Pharmaceutical Policy, published in January, “will act as a barrier to our growing markets and lead to the destruction of Indian pharma companies.”

Ajit V Dangi, director general of the Organization of Pharmaceutical Producers of India, said the Policy’s plan to increase the number of price-controlled drugs from 74 to 354 will hit industry margins drastically, hampering sector growth.

Drug prices in India are already among the world’s lowest and, if the government wants to reduce them further, the easiest way is to cut taxes such as excise duty, which push prices up by 75%, said Dr Dangi.

Prescription drugs worth $40 billion in the USA and $25 billion in Europe are set to lose patent protection by 2007-8, and local observers expect Indian drugmakers to take around 30% of this increasing market for generic medicines, notes a new report from professional services provider KPMG.

Meantime, the combined net profit of India’s leading 75 drugmakers grew 27% in 2005-6 compared with the previous year, reports Pharmabiz, which adds that this “outstanding” performance is due to continued investment in current Good Manufacturing Practice facilities, emphasis on R&D and exports, plus merger & acquisition activity.

The top 75 firms’ combined net drug sales in India rose 18.4% in the period, although for ten multinationals – GlaxoSmithKline, Aventis Pharma, Pfizer, Novartis India, Abbott India, AstraZeneca Pharma, Fulford India, Merck, Wyeth and Solvay India - the combined increase was only 9.4%, it says.