India's position in pharmaceutical outsourcing
Global biotechnology and pharmaceutical companies are attracted to India for several reasons:
From the early 1990s to 2005, India's main attraction was from generics companies or fine chemicals companies, especially to source advanced intermediates and active pharmaceutical ingredients (APIs) or to carry out contract development of abbreviated new drug applications. India did not register on the radars of decision-makers at global biotechnology and pharmaceutical companies for innovation, collaboration, drug discovery, manufacturing of complex finished dosages, and licensing. During this period, the relationships between Indian and global companies can be categorized as lower-level procurement and nonstrategic. This situation was mainly attributed to the huge concern over the protection of intellectual property that loomed in the minds of executives at multinational biotechnology and pharmaceutical companies. Even though India was a signatory to the GATT/TRIPS patent regime, the actual implementation would not occur until Jan. 1, 2005, leading to a wait-and-see approach.
There also were relatively few options for partnering with India-based companies. Options included:
In anticipating the implementation of the patent regime, Indian companies such as Nicholas Piramal (NPIL), Glenmark, Ranbaxy, Zydus Healthcare, and Dr. Reddy's Laboratories ramped up their capabilities in drug discovery for new chemical entities (NCEs) in a more significant and faster manner than anticipated. These companies followed various business models, including setting up wholly owned subsidiaries or divisions or investing in a new entity.
A new crop of companies focused solely on contract-research and manufacturing services also emerged. Examples included Syngene (a subsidiary of Biocon), Hikal, GVK Bio, Jubilant Organosys, Siro Clinpharm, Acunova Life Sciences, Chembiotek, Dishman Pharmaceuticals & Chemicals, and Research Support International Limited. These firms were pure-play service providers. Because they provided low or no conflict of interest with their own generics programs, they became lower-risk partnering options for global buyers. Global buyers had a choice in working with companies that could provide an individual set of products or services, such as Syngene's drug-discovery services, Siro Clinpharm's clinical trials, or Hikal's synthesis of APIs.