Drug firms bullish on investing prospects in China

Mumbai, Oct 9 (UNI) International drug companies are increasingly bullish on investment prospects in India and China who believe that their levels of investment would reach in excess of US$ 150 million in both countries by 2010, according to Ernst&Young's report titled Progressions 2006.

Releasing the Report here today, Ms Carolyn Buck Luce, leader of Ernst&Young's Global Pharmaceutical practice said, ''It is our first-ever launch of the report from India, which clearly underscores the growing significance of the country in the global pharma business.'' She also announced the setting up of a Global Pharmaceutical Centre to align with the evolving around industry-specific technical knowledge and insights.

A Survey of global pharma executives was exclusively undertaken by the Economist Intelligence Unit as a part of the Progressions 2006 Report on the most pressing issue of the interplay of global and local dynamics impacting the industry's ability to manage global risk.

Explaining, Ms Buck Luce said,''The survey results show the complexity that executives face in building a global pharma operation and remaining compliant at a local level. Today, the decisions these leaders make about risk are as important as the decisions they make about product or market. I am sure that Indian companies who are increasingly going global would resonate those concerns.'' A third of respondents perceived a risk of conflict between local and global strategic growth plans, while 39 per cent expressed concenr over regulatory riskin certain areas of their global operations, she added.

R&D credit in India has emeged as the most appealing amongst financial instruments to attract foreign investment, as highlighted by over 62 per cent of respondents. But better tax incentives are needed. Lesser number of pharma companies as compared to non-pharma companies, i.e., less than 1/3rd of respondents believed that the two companies' favourable tax terms were appealing or beneficial.

The report highlights the continued importance of the generics industry. India will remain a market dominated by branded generics, as patented drugs that account for less than 2 per cent will grow to only about 7 per cent by 2015, while the global generics market is expected to grow at a healthy pace to estimated US$ 70 billion, doubling its size by 2010-2011' ''Indian pharma companies stand to benefit significantly as they have taken on an integral role in shaping the future of global generics market by entering multiple markets internationally,'' said Mr Utkarsh Palnitkar, national health science industry leader Ernst&Young.

According to him, ''Focus on R&D of innovative drugs and delivery systems as well as consolidation through a significant increase in M&A (merger&acquisition) initiatives in the global generics market will define the growth and future of Indian companies.'' Currently, the top 5 og the 150 international generics players account for 50 per cent of the market and further consolidation is expected, said Mr Palnitkar.

Indian companies' experience, the survey report pointed out, spannign over two decades, of launching generic products in the highly competitive Indian market has created a competitive edge, resulting in development and manufacturing drugs in a highly cost efficient way -- and constantly improving processes in one of the lowest priced markets.

Pure-play generic businesses in India have realigned themselves for a life in the product patent regime by shifting their mindset from a confrontational approach to a more collaborative business model, the report said adding: ''Indian companies are positioning themselves as partners for manufacture of authorised generics.'' Emerging growth areas for India include offshore clinical trials and chronic segment, the report added.

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