Pharma outsourcing biz to cross $2.5 bn

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Driven by the cost advantage and a better availability of talent pool, the total Indian pharmaceutical outsourcing industry in the country is expected to cross 2.5 billion-dollar mark by 2012.

"Indian pharmaceutical offshoring industry is set to become a 2.5 billion opportunity by 2012,"a study titled 'Indian Pharmaceutical offshoring industry' done by the management consulting firm Zinnov said.

One of the key factors driving the offshoring wave is increasing research and development(R&D) costs incurred in both development and manufacturing of new drugs, which in-turn is compelling global pharmaceutical organisations in the US and EU to look for new low cost R&D destinations such as India and China, it added.

Basic production cost of medicines in India is up to 50 per cent lower than in the US. A US Food and Drug Authority (FDA) approved plant can be constructed in India at 30-50 per cent lower costs, compared with established markets, the study pointed out.

Out of the projected 2.5 billion-dollar market by 2012, contract manufacturing accounts for the maximum share as the total manufacturing outsourcing business in India will cross 900 million dollars by 2010 followed by clinical trials which are growing at the compound annual growth rate of 31 per cent and are set to become 608 million-dollar industry by 2012.