New drug discovery and contract research have taken a back seat as global drug majors have slowed down their research and development offshoring to India.

The domestic players could only manage three small deals in January since September last year. These three are between Intas Biopharma and Canadian generic major Apotex, Biocon subsidiary Syngene International and US biotech firm Sapient Discovery, and Jubilant Biosys’ drug discovery partnership with US-based BioLeap.

Experts and analysts attribute the slowdown to global recession causing multinational players to reserve cash and cut down R&D expenses in the wake of dwindling profits. Further, the inability of more domestic companies to win the confidence of MNCs is limiting the growth of drug discovery offshoring to India.

“I don’t think there is a stalemate and you cannot expect deals to happen every now and then in the field of new drug research, which involves multi-billion investment and time. More deals will happen soon,” said Swati Piramal, vice-chairperson of Piramal Life Sciences and director, Piramal Healthcare.The country’s contract research industry is estimated to grow to $1.3 billion by 2011-12 and to $3 billion by 2015 from $400 million in 2007-08, according to an Yes Bank and Organisation of Pharmaceutical Producers of India (OPPI) analysis.

India has cost advantages such as vast patient and talent pool besides a revamped patent system, which protects the intellectual property rights of innovator firms.

In September, the Tatas-funded pure drug discovery company Advinus Therapeutics joined hands with US-based multinational Ortho-McNeil-Janssen Pharmaceuticals, a unit of Johnson and Johnson, to develop two targets with a potential to receive milestone payments of up to $247 million upon successful development.

Earlier, major deals such as Orchid’s tie-up with Merck to develop an anit-coagulant drug and Jubilant Biosys’ agreement with biotech multinational Amgen Inc to develop novel drugs took place. Similarly, GlaxoSmithKline (GSK)-Wyeth collaboration and Eli Lilly teaming up with Suven Life Sciences in the area of central nervous system disorders (CNS) were other impotant deals.

“The number of domestic players with proven credentials are less in this field and thus the choice is limited for multinationals. I think things will improve in the next six to nine months and more deals should come to India as many multinationals are closing their R&D shops,” said Venkat Jasti, chief executive and promoter of Hyderabad-based Suven Life Sciences, which employs over 300 scientists.
 

Suven expects the next deal to take place only by the second quarter of this year, and may recruit another 100 scientists by that time, Jasti said.

Pfizer, the world’s largest drug company, recently said it would axe 800 jobs in its R&D department, while Merck will cut 7,200 jobs and Novartis 2,500.

Europe’s largest drug maker GlaxoSmithKline also plans to cut about 10 per cent of its workforce to save £1.7 billion by 2011. Similarly, other majors such as Sanofi-Aventis are planning to trim costs by 1 billion euros.

Last week, Glenmark Pharmaceuticals MD & CEO Glen Saldanha said his company was finding it difficult to find suitable partners who may pay justified valuations because of the difficult financial environment.

This was the reason Glenmark was not able to conclude deals in the expected timeframe. Glenmark has three to four potential in-house developed drug candidates that can be outlicensed to interested MNCs.

New Ipad Application :Business Standard's all new IPad App Click here to download for free Other Stories      - Markets end flat - Turbulence ahead for airlines despite oil price drop - Weak rupee may bring cheer to NRIs, expats - LIC buys PSU stocks, sells pvt sector blue-chips in Q4 - Banks may lower deposit rates as inflation eases: Report

Tags : Intas Biopharma and Canadian generic major Apotex | Biocon subsidiary Syngene Piramal Healthcare Organisation of Pharmaceutical Producers of India (OPPI)   Read Business news in  Advertisements -  Journey on, We are by Your Side. Click here to know more -  2 Lac Apartments, 1 Lac House / Plots. Click here -  Benefits Upto Rs. 2.36 Lakhs on the Fully Loaded TJet Petrol. -  The Best Seller is Also the No. 1 in Mileage. Click here -  Watch The Film Here. Click here to know more.. -  Leader in Passenger Car & Automobile Tyres. Click here -  1 billion in saving for Unilever without any tangles. -  A Brand New Server at a Price That Fits Your Budget. Click here -  Learn How One City is Running on FOOD SCRAPS. -  One Partnership Endless Possibilities. Click here to know more -  Helping doctors detect diseases earlier, saving costs & extending lives. -  36 Lakhs can get you a pool of Luxuries. Click here -  Which is the best plan for your daughter -  Check out the TRUE COLOURS of your Stocks, Now for FREE! -  One of the leading business schools in the world.Know More