Mumbai, June 24:

Indian bio-pharmaceutical companies continue to play a relatively small role in innovation, says a report by The Boston Consulting Group (BCG). This, despite Indian companies signing research alliances with overseas companies, with plans afoot to expand such collaborations.

Of the 40 global bio-pharma executives surveyed recently, over 70 percent are satisfied with their research and development alliances in India, and three out of four expect to increase these activities, a BCG note said.

The report, commissioned by the USA-India Chamber of Commerce (USAIC) and based on interviews with over 40 research-related decision makers, will be released June 23 during the annual USA-India BioPharma & Healthcare Summit in Cambridge, Massachusetts.

Over the past ten years, India has made a concerted effort to capitalise on the globalisation of research investments. US BioPharma companies spent 24 percent of their research budgets in foreign countries in 2009, up from 17 percent in 2002. Over the same period, India’s share of these foreign expenditures increased ten-fold to about $500 million, the note said.

Emerging markets have benefited from the growth of overseas investments, while the share of US-funded bioPharma research conducted in Western Europe, Canada, and Japan declined from 2002 to 2009.

Despite this trend, India still accounts for only about one percent of the overseas research investments made by US BioPharma companies - similar to China’s share (also about one percent), but much smaller than the share of Eastern Europe (about 8 percent) and Latin America (about 4 percent).

“We feel that India’s research sector still has tremendous opportunities for growth, particularly with BioPharma companies struggling to resolve the crisis in R&D productivity,” said Mr Bart Janssens, a BCG partner and co-author of the report. “But lowering costs is only half of the solution.”

Over the past ten years, the global BioPharma industry has seen a steady decline in value generated, along with a steady rise in research costs - and hence value invested.

Up the value from collaborations

India can help companies improve both parts of this equation - but only if BioPharma companies and Indian stakeholders move beyond the prevailing model, which revolves around low-cost sourcing.

“Costs are critical, and India can play a significant role in increasing R&D efficiency over the short to medium term,” said Kim Wagner, a BCG senior partner and co-author of the report. “But collaborative partnerships, compared to traditional vendor relationships, can have a much more substantial impact on a company’s ability to create new and innovative products,” he added.

Indian research companies should work with overseas bio-pharma companies to generate greater value from collaborations - through expanding the scope of sourcing, establishing clinical hubs, developing niche-busters or drugs designed to combat diseases that affect a relatively small population, besides leverage research capabilities in emerging technologies, the note said.