Asian pharma mart riding a booster shot

MUMBAI: Like in most other sectors, Asia’s growth rate in the global $2,202 billion pharmaceutical market appears to be outpacing its better known western rivals.

This is attributed to an ever increasing population; cardiovascular diseases and others like cancer and diabetes on the rise, high disposable incomes and government support.

In the last five years, Asia’s pharma sector saw a compounded annual growth rate (CAGR) of 20% compared with 17% for the US and 16% for Europe.

The Asian market size which doubled from $57 billion in 2000 to $100 billion last year is likely to jump four fold by the end of the decade, highlighted a pharma survey conducted by consulting firm Frost & Sullivan.

How do India and China compare on contract research? CROs in China are concentrated in Shanghai and Beijing. In India though, they are littered in the five metros.

In the $1 billion Asian pharma market, India is still in its infancy at $75 million. Its research & development (R&D) budget of $119 million this year is likely to grow to $129 million with a CAGR of 5.9%. "The R&D spend may be going up, but it is not enough. India has to pump in more to capitalise on its strengths," said Nitin Naik, principal consultant, healthcare Asia Pacific, at F&S.

With a market size of $90 million, China has crossed the first threshold. That’s because its R&D spend has been going up by leaps and bounds. A 12.1% CAGR will see its $159 million balloon to $213 million in two years.

"The sponsors in China are putting a lot of money to go up the value chain. And Japan is moving its sites to China for low cost operations," added Naik.

In both the countries the markets are fragmented with leading multinational players having barely a 5% market share. India is still a small market in contract research. "The Indian contract research market is valued at $75-100 million. We project a growth of 40-50%. Meanwhile, the drug discovery market, currently valued at $125 million, is expected to grow 50-75%," said Nailesh Bhatt, managing director, Proximaire, a consulting firm.

Considering that India’s share in the $7 billion drug outsourcing market is minuscule, there is huge scope for expansion. "The cost of clinical development in India is 45% lower compared to that in Europe and US. That for manufacturing is 30% lower and for research & development, 12.5%," said Jitendra Patel, director of AstraZeneca R&D, USA.

"However, concerns about protection of intellectual property rights and incentives by governments in the west for conducting local research and manufacturing could hinder the progress of outsourcing," added Patel.

GlaxoSmithkline, Lily and Roche are international players which are actively involved in Asia. They have fully operational research sites in the region. The moderately active ones, which either have a collaboration or a research site dedicated to diseases relevant to that region are Novartis, Johnson & Johnson, Merck and Pfizer.