NEW REPORT HIGHLIGHTS ASIA'S POTENTIAL AS WESTERN R&D COSTS RISE

Foreign multinationals are increasingly outsourcing research and development to low-cost developing countries such as India and China in the face of growing pressures in their home markets.

R&D expenses are rising in the West as product lifecycles shorten and regulatory challenges increase. Industry sources estimate the cost of bringing one new molecule to the market as US$800mn. European trade association EFPIA claims that only one or two of every 10,000 new molecules currently reaches the market.

According to a report by Frost & Sullivan, emerging markets provide an excellent opportunity for cost-containment, whether through a joint venture with a local firm or a partnership with a contract research organisation. Outsourcing R&D to developing nations, claims the report, already accounts for 2030% of global clinical trials. However, multinationals can run into a number of problems concerning quality of infrastructure and weak patent-protection legislation.

India and China are both committed to developing high-tech domestic drug sectors and improving the regulatory environment for clinical research. India's recent amendment to the schedule year of the Drugs and Cosmetics Act, which governs clinical trials, and China's improved monitoring of research centres to ensure compliance with Good Clinical Practice standards, are two positive factors.

However, despite the two major Asian markets' potential, there remain serious obstacles. Technology transfer is a key objective of both the Indian and Chinese governments, and there remain doubts over whether India will be able to enforce its patent legislation -- and whether China has any desire to do so. A senior Indian generics industry source recently observed that the timeframe in which the country must develop its discovery capability is narrow, as China looks to enter the world generics markets and multinationals boost their presence on the Indian market.