Most innovator companies started working with Indian companies on pure sourcing or outsourcing deals to source analogs, libraries,
informatics work, advanced intermediates, custom synthesis, and simple clinical trials or even rescue trials. These projects
provided low risk and less of a bureaucratic hurdle than more intricate risk- and reward-sharing deals, which came during
the past two years (see Figure 1).
Increased outsourcing to India
Today, major biotech, pharmaceutical, and fine chemicals companies are leveraging India in the form of outsourcing, offshoring,
or licensing and collaborations deals (see Figure 2). Companies such as Wyeth and Bristol-Myers Squibb (BMS)are entering India
with build-operate-and transfer deals as evidenced by Wyeth's outsourcing pact for synthetic chemistry research with GVK Bio
and BMS's deal with Syngene under which Syngene will build and operate a 400-scientist research and development center for
Two other deals showcase the increasing comfort level of global companies with India. Under a 2007 deal with Eli Lilly, NPILwill
develop and, in certain regions, commercialize a select group of Lilly's preclinical drug candidates in multiple therapeutic
areas. The companies will equally share risks and rewards, and NPIL is responsible for designing and executing the global
clinical development program, including investigational new drug-enabling nonclinical studies and human clinical trials up
to Phase III. NPIL will receive a call-back payment and potential milestone payments of up to $100 million, plus royalties
on sales upon successful launch of the first compound.
Advinus Therapeutics and Merck and Co. formed a pact in 2006 for the discovery and development of metabolic drugs. Under
the deal, Advinus receives an upfront payment, milestone payments up to $74.5 million for each drug target, and potential
royalties on sales from products of the collaboration.
Several factors account for the increased comfort level and interest of global companies:
- Scientists of Indian origin with drug-discovery and clinical-trial experience at global firms are moving back to India to
work at Indian companies or to start their own ventures
- Ability of Indian companies to prove that they can create value in a time and cost-effective manner
- Emergence of pure-service providers
- State-of-the-art infrastructure and a wide range of services
- Ability of Indian companies to offer a complex and broad spectrum of services and products in a transparent manner
- Opportunities in India's healthcare market based on the emergence of a 300-million-people-strong middle class
- Most global companies have or are setting up local offices to manage relationships and projects in India
- Creative deal-structuring by Indian executives for sharing risks and rewards.