The Internationalization of Corporate R&D

THE INTERNATIONALIZATION OF CORPORATE R&Daccounting for 811 million dollars. The biotechnology-pharmaceuticals industriescould emerge as one of the country’s major industries in the country, but it is still inan early stage of development. Revenues are projected to reach 5 billion dollars by2010. As of 2004–05, the sector employed nearly 9,000 scientists and engineers andattracted an estimated 216 million dollars new investment 2005 (BioSpectrum 2005).Recognizing the potential of biotechnology-pharmaceuticals, the government and privateindustry have focused on developing the sector by strengthening legal andregulatory systems, harmonizing international standards, providing financial supportto early-stage development, developing bio-tech industrial parks and providing taxincentives for Indian and foreign companies.The domestic sales and manufacturing operations of the pharmaceutical industry haveexpanded rapidly, and recently there has been significant growth in exports and R&Dinvestments. Both new drug discovery research and novel drug delivery system programscan be conducted in India at a significantly lower cost than in developed countries.Products based on molecular biology, including software packages, DNA-sequencingand molecular modeling are candidates for offshoring R&D to India.Multinational companies have been partnering with Indian companies to carry outR&D in the entire value chain, from drug discovery to clinical trails, with an emphasison the later part of the R&D process. Their primary focus has included custom synthesis,medicinal chemistry clinical studies.Much of the research in India have traditionally focused on re-engineering of bulkdrugs. While Indian and foreign companies gradually are expanding pharmaceuticalR&D in India, the country still has limited capabilities in terms of research focused onthe early stages of drug discovery. Research on the early stages of drug discovery continuesto be dominated by work carried out in the U.S. and Europe. Among the factorsconstraining research in India is the local availability to top-level scientists and experiencedmanagers in specialized fields. In addition, while India has enacted new laws oncompliance and intellectual property rights, there are concerns about the need tostrengthen compliance with legal and regulatory frameworks (ICRA 2005).The bioinformatics market in India is expected to reach 2 billion dollars by 2008, whilethe Indian biotechnology R&D products and services market is expected to reach 3billion dollars by 2010 (FICCI 2005). Multinational companies have become increasinglyactive in offshoring IT functions across the pharmaceutical industry value chainin areas including IT systems for clinical trials, manufacturing, sales, distribution andproduct management (Singh, S. 2006).288