Major pharmaceuticals firms are still reluctant to expand in China and India, due to fears over counterfeit products and poorly enforced intellectual property legislation, according to a recent industry survey.
The study claims that 60% of drug executives polled described their companies' investment in China or India as being under US$50mn. Although investment levels are expected to increase, the report forecasts that this will only reach an average level of US$150mn in the next five years. This figure is relatively low compared to the value of FDI being witnessed in other industries in China.
However, foreign drugmakers may begin to change their strategies for China and India and other emerging markets. Currently, most concentrate on promoting the blockbuster drugs but remain hesitant about expanding research capabilities and this is a potential growth area.
A case in point is China due to lower wages and cheaper costs, the basic price of developing a drug can be as little as EUR5mn (US$6.03mn). This compares to the average figure of US$800mn that Western multinationals claim it costs to bring a drug to market.
Substantial cost-savings can also be generated in India. The government is
introducing significant new provisions against counterfeiting and is further
strengthening patent rights in a bid to make the country a leading location
for clinical trials.