India fix for Japan's drug firms

Companies line up Rs 4,000-crore investment over next two years.

After Japanese funds, it is now the turn of Japanese pharmaceutical companies to scout for opportunities in India. Most of these companies are planning to move out of the Chinese market and enter India. The total investment can run into over Rs 4,000 crore in the next two years.

Japanese pharmaceutical majors, including Esai Pharma, Hyoshipara, Takeda, Mitsubishi Pharmaceuticals, Sumitomo, Sankyo, Teisho and Shinogi, are eyeing the Indian drugs industry to float business relations for joint research, business process and product outsourcing, and marketing alliances.

The recent visit of Japanese Prime minister Junichiro Koizumi and the intellectual property protection in the product patents regime are the reasons for the Japanese companies to take a close look at India.

Hyosuke Yasui, Japan's Consulate-General in India, said both Japanese and Indian pharmaceutical industries had been growing rapidly in terms of drug discovery, manufacturing capability and market potential, but had not made any effort for a collaborative business approach.

"The trend is changing now. Many Japanese companies are going to come soon," he said on the sidelines of a function held on the proposed Indo-Japanese pharmaceutical conference.

"Japanese investment in research and process outsourcing in the pharma sector can exceed the total trade between the two countries soon," he added.

Indo-Japanese annual trade is now around Rs 4000 crore. Yasui said Japanese pharmaceutical firms were withdrawing from China.

At the same time, fierce competition from western drug majors and widespread penetration of generic drugs are keeping the margins of Japanese companies under tremendous pressure.

This is forcing them to find cheaper destinations for process outsourcing to rejuvenate their product offerings and strengthen their pipelines to drive growth.