The Economist has a good (and free) article up on the Indian pharmaceutical industry:
India's strength in this area, as in information technology (IT), is its talent pool. Mahesh Sawant, of Frost & Sullivan, a consultancy, says that the country has 122,000 chemists and chemical engineers graduating each year. India's chemists are, by global standards, cheap. Goldman Sachs, an investment bank, estimates that India's overall research-and-development costs are one-eighth of western levels.
Even so, no Indian company yet has the clout to become a big drug innovator. It is a hit-and-miss business with far more misses than hits. The cost of developing a new drug to be marketed worldwide is usually put at about $1 billion. In 2005 Ranbaxy's total global sales were $1.2 billion. As a comparison, Pfizer's sales of Lipitor alone were worth $12.2 billion.
Many analysts, however, see a big opportunity for India as a place for the outsourcing of drug discovery. Frost & Sullivan reckons that in 2004 this market was worth $1.2 billion, with a further $1.6 billion spent on clinical development (testing on patients and so on).
Eventually, of course, India will be producing novel drugs of their own, which, since I assume they'll work on US patients as well, will be a great development.
If the Indian government proves easier to deal with than the FDA, the Indian companies could have a sustainable price advantage in getting their drugs to market, regardless of pay rates.
Posted by: Patrick | February 05, 2006 at 05:03 PM