Sunday, June 15, 2008
The Globalization of Pharma
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India, China Becoming Centers of Pharmaceutical R&D, Study Finds
Big pharmaceutical companies such as Merck, Eli Lilly, and Johnson & Johnson are increasingly relying on China and India for advanced research and development, a new study funded by the Ewing Marion Kauffman Foundation finds.
According to the study, The Globalization of Innovation: Pharmaceuticals; Can India and China Cure the Global Pharmaceutical Market? (67 pages, PDF), Indian and Chinese scientists are rapidly developing the ability to innovate and create their own intellectual property as a result of multinational pharmaceutical companies moving R&D operations to their countries. The symbiotic relationships have enabled multinational firms to cut costs and broaden capacity while pharmaceutical firms in China and India gain revenue and develop expertise. In 2006, 5.5 percent of all global pharmaceutical patent applications named one or more inventors located in India, while 8.4 percent named one or more located in China — a fourfold increase from 1995.
In the study, the authors analyzed the business models, value-chain activities, partnerships, and technology capabilities of more than a hundred Chinese and Indian pharmaceutical firms. They found Indian and Chinese companies were making strides in the most lucrative segments of global value chains, while also prevailing in less lucrative segments, such as preclinical testing, animal experimentation, and manufacturing. However, since firms in those countries rarely have the capital and the regulatory expertise to develop a drug beyond phase II clinical trials, the commercial development of new intellectual property necessitates relationships with major multinational corporations.