Despite its unique strengths like expertise in process chemistry, availability of quality manpower and

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growing hospital infrastructure, India accounts, at present, for less than one per cent of the $130 billion in worldwide spending on pharmaceutical R&D.

But if one were to pose the question ‘What if India becomes the R&D development hub for the global pharma industry?,’ there is overwhelming response.

Explains president of corporate affairs at Ranbaxy Ramesh Adige, “India is already emerging as an exciting destination for global pharmaceutical firms. India offers opportunities in each element of the value chain, including R&D. It has inherent advantages — in terms of costs, a scientific talent pool and cutting edge research and innovation capabilities and is uniquely positioned to attract R&D investment.”

For this to happen, Adige says, public policy would have to play an important role and the government would have to offer greater long-term incentives to attract R&D investment. According to director general, Indian Pharmaceutical Alliance, DG Shaw, “investment in China is often quoted as a loss for India. But few realise that India already has requisite facilities, which obviates the need for new investment. Instead it generates recurring flow by way of ‘rent’ than one time investment.”

A 2006 Ewing Marion Kauffman Foundation-sponsored study placed India ahead of China. The study showed that big companies such as Merck and Eli Lilly were now counting on India and China for advanced R&D. An August 2009 Organisation of Pharmaceutical Producers of India (OPPI) and E&Y study placed India ahead of China, Eastern Europe, Puerto Rico, Singapore and Ireland, in terms of R&D potential.

But there are issues that have to be surmounted. “Re-rating of the Indian industry will come with the launch of its first original research molecule. That will bring significantly more investment in outsourcing R&D to India,” said Shaw.

President of GVK Biosci-ences Manni Kantipudi said, “We have seen significant and positive changes in the drug discovery landscape in India. MNC’s Merck, Pfizer, GSK and Johnson & Johnson have drug discovery alliances with Indian firms such as Piramal, GVK, Aurigene, etc.”

Another key trend validating India as the next pharma hub is the number of companies setting up captives in India, such as Novartis, AMRI, DuPont, Bayer and AstraZeneca.

Explains pharma practice head at Baring Equity, Amit Chander, “India has set the tone with the product patent regime.” He said when India would become the global hub it would send a strong message globally that the country was capable of delivering top end of the value chain.

Secretary of the department of pharmaceuticals, chemicals and fertilisers ministry, Ashok Kumar, said, “India is expected to become a pharma R&D hub in the next decade. We aim to make an annual expenditure of up to $20 billion every year until 2020.”