A recent study of PricewaterCoopers representing 185 senior representatives from both local and MNCs in Asia found that 58 per cent of participating companies believe Asia will soon outdo North America and Europe as a major R&D market for pharmaceutical. The pharma market is a $7.3 billion market growing at 17.5 per cent. India is purported to be a major benefactor in this paradigmatic shift to Asia.

About half of the MNCs and 62 per cent of domestic companies said that the centre of the global pharmaceutical market would be in Asia rather than North America or Europe in the near future. China, India and Singapore will be the key countries. A third of the MNCs in the region have plans to immediately expand within the next year and China and India head the list of target countries for expansion.

The large number of patent expirations, decreasing R&D productivity and high-cost of operations are forcing the big majors to outsource their R&D operations to other locations. Availability of a vast patient population, low costs, R&D workforce and a favorable regulatory environment are the main driving forces to transform Asia into the hub of R&D activities. A number of Contract Research Organisations (CROs) have set up shop in Asia to provide trial monitoring, project management, safety reporting, data management, drug distribution and central laboratory services. Many giant western multinational companies including GlaxoSmithKline, Pfizer and Novartis have already moved their R&D operations to Asian countries.

India is also one of the most preferred Asian countries for R&D activities. Easy availability of patient pool, diverse disease profiles in the patient population, an estimated cost savings of 50 per cent in Phase I studies and 60 per cent in Phase II & III studies and well-equipped institutions with skilled professionals are the major driving forces behind this trend. Additionally, India has regulations that provide fiscal incentives for R&D activities. Consider this - India has the largest number of FDA approved plants after the US.

Globally, around 30-35 per cent of total drug discovery and development costs are for clinical research. According to experts, such costs are reduced to half when clinical research activities are outsourced from low-cost economies such as India. The clinical research market in India is estimated to be $100 million and is likely to grow to $300 million by 2010.

India is the fourth largest pool of scientific manpower in the world and with 150,000 chemistry graduates per year, the country is filling a gaping hole being left in the EU and US, where graduates are abandoning science field for more lucrative careers in business. The country also boasts of a robust IT industry offering IT solutions to help pharmaceutical companies decrease time-to-market.

The Chinese pharma market is one of the fastest growing in the world. It is expected to be the fifth largest by 2010 and third largest by 2020. The country offers many advantages like economical costs and huge patient population. As compared to the West, the cost of carrying out clinical trials in China is 15 per cent lesser for Phase I and 20 per cent cheaper for Phase II/III. China also has the advantage of a cheap and educated R&D workforce. According to estimates, 100,000 undergraduate/graduate students are enrolled for Chemistry, 120,000 for Medical Sciences and 60,000 for Biological Sciences.

India and China have also emerged as prominent suppliers of various bulk drugs, producing them at lower prices compared to the formulation producers worldwide. In fact, there are 85 US-FDA approved API and formulation plants located in India, the highest such number after the US. Other Asian countries like Malaysia, South Korea and Taiwan are also tempting a large number of global pharmaceutical companies to outsource their R&D activities. These countries provide a regulatory environment conducive to clinical trials and are gradually moving towards e-submissions too.

At least a third of the multinational companies participating in the study have plans to expand business in the region, either through acquisitions or by developing their own Greenfield sites within the next 12 months. And a third of Asian companies are looking to acquire pharmaceutical companies. However, capital constraints could come in the way of global ambition. There are concerns galore like lack of adequate skills and infrastructure in many areas of R&D, imprecise documentation systems, ambiguities in the interpretation and implementation of global regulatory and intellectual property (IP) protection standards and issues on maintenance of confidentiality. While the region is known for its economical costs, there are concerns about the quality aspects. Hence, Asia needs to strike the right balance between quality and economics in cost.