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Changing the Innovation Equation in India

Delivering Affordable Innovation Through Global Partnerships
October 19, 2011 by Simon Goodall, Rahul Guha, Sarwar Islam, Bart Janssens, and Kim Wagner
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In This Article
  • Global biopharma firms have ramped up their R&D investments in India, but the country remains a minor player in the development of new drugs.

  • Most multinationals still see India’s research sector primarily as a lever to curb costs, rather than as a source of new capabilities or insight.

  • Recently, however, global biopharma companies have been transforming their vendor-based relationships into strategic partnerships based on a broader scope of work.

 

More than 70 percent of the 40 global biopharma executives surveyed by The Boston Consulting Group said that they are satisfied with their R&D alliances in India, and three out of four expect to increase their R&D activities in India. Despite such positive appraisals—and the growing prominence of emerging markets as a destination for biopharma R&D funding—India remains a relatively minor player in the development of new drugs, according to the BCG study. (For more on the study, see “Methodology,” below.)

Methodology

The BCG study, which was commissioned by the USA–India Chamber of Commerce (USAIC), was based on proprietary research and in-depth discussions with more than 40 key R&D decision makers in India, Europe, and the United States. It was complemented by a survey of Western biopharma companies and Indian research companies; the survey focused on the measures used to enhance R&D activity in India and to increase local innovation. The study was released in June 2011 during the annual US–India BioPharma & Healthcare Summit in Cambridge, Massachusetts.

Yet clear signs are emerging that India is poised to play a more substantial role. Several multinationals—having recognized the potential for India’s research sector not only to lower costs but also to spur innovation—are transforming their vendor-based relationships into strategic partnerships. They are broadening the scope of work, bolstering their partners’ capabilities, and ramping up their investments in India. By laying the groundwork for more effective partnerships, these companies will be able to improve their R&D productivity through a combination of higher output and lower costs, thereby gaining an edge over companies that hold fast to a one-dimensional view of India.

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