The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&DThe location in Cambridge was chosen because company Y wanted to be close toresearch centers and leading hospital researchers. The pace of clinical trials iscritical because they are very expensive and with a good infrastructure it is possibleto save time at this phase, something that is not as easy in the earlier phasesof research. It is important to be close to hospitals and clinical researchers (IndustryExpert I).In short, locations that feature both high-quality research and an efficient infrastructurefor clinical trials become very attractive R&D locations for pharmaceutical companies.One of those factors alone may not be sufficient.6.4.3 R&D Alignment with Market NeedsThe importance of keeping the development of new products close to particularmedical needs in certain markets is highlighted by the interviewees. All intervieweespointed to India as a region that is becoming more and more interesting, partly due tothe market and partly for economic reasons, since R&D can be performed at lowercost there. This does not include front-line research however, as Executive III explains:When you contract with an Indian or Chinese company you have to provide a lotof supervision, as opposed to an independent researcher in Cambridge. Theircommunities are not quite to the point that they are truly independent. They domore routine activities, operated by standard operating procedures (SOP). Theyare changing rapidly, learning from every SOP you send, but that is where theyare by 2004: things that can be done by SOP.The Indian pharmaceutical industry accounts for a market of 2.5 billion dollars (14thlargest in the world). The Indian companies produce and export generic drugs, whichmean that they have expertise in reverse engineering processes and good knowledgein synthetic and organic chemistry. The domestic market has, however, been tooweak to motivate innovative activities, and there is limited cutting-edge knowledgein medicinal chemistry and biology.On December 26, 2004, a new patent law was passed in India. In becoming part of apatent regime, Indian companies have been challenged to develop R&D expertise inorder to deliver patentable innovations. Some companies have started this processand are acquiring the expertise needed by recruiting Indian scientists working inpharmaceutical companies overseas. Moreover, the proactive Indian companies areinitiating collaborations with Indian and overseas research institutes and universities(Kale 2005).160