India may not witness any surge in the investment by pharmaceutical multinational companies (MNCs) till the patent protection regime comes to effect in 2005, according to John Morris, head, pharmaceutical practice (Europe, Middle East, Africa), KPMG.
This is despite India's importance in the plans of MNCs in view of its manpower skills, the market size and long-term potential.
Making a presentation here on the global pharma industry and the road ahead for Indian companies, Morris said that the only thing that stops pharmaceutical MNCs from making investments in collaborative research is its slow progress on product patent law.
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Outlining the opportunities from changing patterns of bio-science-based research, Morris said that up to 30 per cent of research expenditure is now outside the corporate boundary, either through contract or a part investment basis spread across centres worldwide, and this itself provides an opportunity for India.
"Opportunities for Indian companies to participate in new product development lies in building the capability to carry out comprehensive international research and development (R&D) programmes," Morris said.
He said that R&D effectiveness, product life cycle management and consolidation, and globalisation are the key issues.
While shareholders expect continuous double-digit growth, apart from increasing costs, pharmaceutical companies' profits have come under pressure on the price front, Morris said. This is also resulting in capital market pressures.
According to Morris, pharmaceutical MNCs are facing a serious R&D challenge due to increasing spend, lesser approvals by the regulatory authority and increasing number of product failures.
"Over 6,000 compounds are in the pipeline for launch over the next eight years. One in 10 will reach the market and only 30-50 per cent of them will deliver economic return," Morris said. Though MNCs are increasingly outsourcing R&D activities, there are limits to that in view of the necessity to maintain in-house expertise, he said.
"Fundamental change has occurred in the product life cycle dynamics due to technological obsolescence leading to maximising early sales. This has increased the urgency for rapid worldwide launches," John said.