Leading Indian pharmaceutical majors are altering their business strategies by placing greater focus on R&D and the discovery of new chemical entities.

The Technology absorption, adaptation and innovation is a continuous process in the pharmaceutical segment to ensure the competitive advantage in the market.

Traditionally, pharmaceutical company’s R&D spending was concentrated on reverse engineering and the adaptation of patented foreign drugs to the Indian market. Most of the industry’s funding went to research rather than to new drug discovery and development.

Low levels of industry productivity and the relatively small size of companies limited funding for R&D as they dedicated only less than 2 percent of their annual turnover to R&D compared with between 15 percent and 20 percent allocated by Western innovator companies.

To overcome the problems of new patent regime , the Indian pharma sector geared its resource towards R & D. India’s leading drug companies recognized that they could not survive as global players without significant R&D capabilities. Pharmaceutical companies have started making huge investment in R & D during last couple of year focusing  on development of innovative, environment friendly and cost – effective technologies for high value APIs and it is playing crucial role in establishing its brand image for partnership with other world leaders.

Majority of the industry’s R&D expenditures on new drug discovery and development is conducted by a limited number of companies like Dr. Reddy’s Ranbaxy Nicholas Piramal, Aurobindo Pharma, Glenmark Pharma to name few.


 India’s pharmaceutical R&D expenditures ($million)
 F Year  Value  Percent Change
 2000-01  97.8  
 2001-02  130.5  33
 2002-03  175.3  34
 2003-04  280.0  60
 2004-05  392.4  40
 2005-06  495.2  26
 Source: Assocham.

MNCs have been attracted by India’s low costsfor new drug discovery and many of these firms have founded state-of-the-art research facilities in India. Whereas new drug discovery costs between $100 million and $200 million in the West, the same process in India only costs approximately $10 million. Likewise, clinical trials in India cost approximately $20 million while the cost abroad would ranges between $300 million and $350 million.

Investment in R & D will give upper hand to Indian companies in the long term. The industry has further accelerated the progress on developing new chemical entities as well as development of safe effective patentable and sciences based herbal drugs. With the help of excellent talent pool, cost – effective manufacturing base and easy availability of cheap raw materials, the Indian pharma industry is set to tap new opportunities in the field of contract manufacturing, contract research, clinical trials and biotechnology.