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China outshines India as pharma base: Report

An overwhelming majority of int'l CEOs rate China better than India as a manufacturing base for low-cost drugs.

india Updated: Aug 04, 2006 10:14 IST

An overwhelming majority of international executives rate China better than India as a manufacturing base for low-cost drugs though many were keen to do business in India in future, according to a new study by a global business consulting firm.

"Nearly 90 per cent of pharmaceutical executives consider China a better choice than India for low-cost drug manufacturing," a study by Bain & Company released in New Delhi on Thursday said.

"Furthermore, only 17 per cent of the respondents cite innovation as a key asset of Indian drug makers."

Bain's sampling of 179 international executives with headquarters in North America, Europe, Asia and India also expressed concerns about intellectual property protection (56 per cent), parallel trade or grey market imports (52 per cent) and regulatory uncertainty (46 per cent) affecting the Indian industry.

"The Indian pharmaceutical industry now stands at the crossroads," said Ashish Singh, managing director of Bain & Company India and leader of the consulting firm's Indian Pharma Survey.

"If India is looking to be the home for quality generic drugs, it needs to step up its innovation game."

Despite the concerns, international executives increasingly expect greater collaboration with India in the future.

While only 38 per cent of the respondents now consider doing business in India to be "extremely important", that number jumps to 62 per cent when survey participants were asked to project the marketplace five years from now.

Similarly, 35 per cent characterised India as an "attractive" market in 2006 (as a domestic market for drug purchase and consumption), while 58 per cent expected the market to look up by 2011.

"If Indian pharma is effective in shoring up its operating and cost structure, promoting innovation and gaining more regulatory credibility, the challenges both from mature markets and from developing countries like China should substantially lessen," Singh said.

The study rates Ranbaxy Laboratories, Dr Reddy's Laboratories, and Cipla as best those positioned for leadership in the Indian market in five years.