Indian and Chinese scientists are rapidly developing the ability to innovate and create their own intellectual property as a result of the movement of research and development (R&D) to their countries, according to this study. Several firms in these countries are performing advanced R&D and are moving into the highest-value segments of the pharmaceutical global value chain.
In 2006, 5.5 percent of all global pharmaceutical patent applications (WIPO PCT applications) named one inventor or more located in India, and 8.4 percent named one or more located in China. This had increased fourfold from 1995.
Through interviews with executives of 16 pharmaceutical firms in China and India on their business models, value-chain activities, partnerships and technology capabilities, the researchers found that:
- Indian and Chinese companies are making strides in the most lucrative segments of global value chains. In less lucrative segments, such as preclinical testing, animal experimentation and manufacturing, Chinese firms appear to be more prevalent.
- India is regarded as a more mature venue for chemistry and drug-discovery activities than China.
- Domestic Indian and Chinese firms rarely have the capital and the regulatory expertise to develop a drug beyond phase II clinical trials. Their commercial development of new intellectual property therefore necessitates relationships with major multinational corporations.
According to the study, because Indian drug companies have the most experience in selling generic drugs that meet FDA standards, India is playing a more strategic role in early discovery. Companies such as Ranbaxy, Aurigene, Advinus, Nicholas Piramal and Jubilant have negotiated long-term deals with Western pharmaceutical companies to discover and develop new chemical entities.
In a growing number of cases, the Indian companies share the financial risk in discovery as well as the potential financial rewards. One Chinese company, Hutchison MediPharma, has formed a similar partnership with Eli Lilly. Others are likely to follow suit as Chinese contract research organizations gain experience and Western companies come to trust in China‘s ability to protect intellectual property, said the researchers.
According to the findings, it is too early to tell whether China and India will become important sources of new drugs. In contrast to industries such as software and electronics, in which there has been substantial growth in offshore R&D, the pharmaceutical industry takes many years for a new product to emerge from R&D and regulatory approval. Most of the new risk-sharing arrangements date from 2005, so it could be another decade before there are concrete results.
The early progress, however, is promising, say researchers. Several companies have reached significant development milestones with new chemical entities. Several drugs from these partnerships are going into clinical testing. As a result, the trend of R&D moving to these countries is likely to gain further momentum, according to the study.