Preclinical CRO Markets: China vs India

In many aspects China and India are very similar. Both are located in Asia and the most populated countries in the world. Both are still developing countries with low wages for most workers in most industries. However, there are also significant differences between these two countries in the areas related to pharmaceutical industry. Each country possesses its own features and characteristics.

In general, China is better equipped in industry infrastructure than India. Chinese pharmaceutical market is also much bigger than India’s. However, the business operation style and philosophy in Indian companies are closer to the Westerner than in Chinese companies. Indian companies are also more familiar with the Western regulations than Chinese companies. They also have broader global presences than Chinese companies.

China is better in education of biology than India. The biotechnology industry in China is also more advanced than in India. However, Indian pharmaceutical companies have invested more in R&D and have a much broader product scope than Chinese companies.

In traditional pharmaceutical sector, Chinese companies are still limited to manufacturing of traditional products which are marketed in the limited number of countries. But, in the biotech sector, Chinese companies possess much stronger capabilities in R&D and manufacturing of macro compounds than Indian companies.

In professional outsourcing service, the two countries provide close service scopes and possess close service capabilities. However, there are still differences in each service sector between these two countries. In discovery service, Chinese companies and Indian companies possess close skills and offer similar services and qualities. However, in target identification and validation as well as those related areas such as research in genomics and proteomics, Chinese companies possess stronger service capabilities than Indian companies; whereas in small molecule drug R&D, Indian companies are more capable than Chinese companies.

In preclinical research service, Chinese CROs possess better service capabilities than Indian CROs; whereas in clinical research service, it is just opposite. In process R&D and scale-up synthesis, both countries possess similar capabilities. However, Indian companies possess better skills and capabilities than Chinese companies in formulation, manufacturing and marketing of generic drugs.

Major pharma and biotech companies play different strategies in these two countries. In India, they more tend to form close collaborations such as risk-sharing outsourcing with an Indian company to co-develop drug candidates, but very few of them are willing to permanently set up a decent size of R&D center or manufacturing facility in the country. In stark contrast, almost all major pharma and biotech companies have invested hundreds of millions of dollars in China to establish their wholly-owned R&D centers and large scale manufacturing and marketing facilities. Many of their China R&D centers have already reached decent sizes and gained strong capabilities. They are ready to conduct full-scale research independently.

The outsourcing models between the Western companies and the Asian companies are also not limited to just straight outsourcing. Rather, it has extended to including all types of activities such as product marketing and drug candidate licensing. Also, the interesting outsourcing service providers are not just limited to those professional ones. Any pharma or biotech companies in any of these two countries could become outsourcing partners as long as they possess the desired capabilities.

The pharma outsourcing industries in both countries have grown rapidly in the recent few years. They are currently valued at about $1.42 B in China and $1.77 B in India, respectively; each occupying only about 2% share in the global pharma outsourcing market. On the other hand, both markets are posed to still grow rapidly in the future as they are driven by a number of positive factors. However, China appears to have higher future growth potential than India as it has fewer growth resistors. It will very likely catch and even surpass India after 2010.

At present, India is better than China in small molecule drug R&D and manufacturing. But China is superior over India in biotechnologies including the R&D and manufacturing of macro compounds. India offers better product quality but China has more cost reduction advantage. In terms of investment opportunities, China seems to present more attractions than India as its industry infrastructure and biotechnologies are more advanced.

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About the Author:

Mr. Chung edits the Chromosome (http://blog.gobalto.com) , a weblog dedicated to the discussion of news, industry trends and issues related to drug discovery, development and manufacturing.  In addition to editing the Chromosome, Mr. Chung founded and runs goBalto (www.gobalto.com). goBalto is an online resource, which allows users to efficiently find, evaluate and collaborate with drug Discovery & Development Partners. Prior to goBalto, Jae co-founded Celltrion, a contract biopharmaceutical group in Asia. As Celltrion’s vice president of business development, he secured deals with Bristol-Myers Squibb and , and has been credited with landing the largest biomanufacturing supply agreement in Asia to date. Before starting Celltrion in 2002, Mr. Chung was the co-founder of the venture capital firm J. Stephen & Company Ventures, a strategy consultant at McKinsey and Company.

Jae holds a B.S. in accounting and M.B.A. in finance and economics from the NYU, Stern School of Business.