Mumbai attacks could hurt India’s outsourcing sector

December 2, 2008

Mumbai terror attacks on the country’s outsourcing industry, according to PwC’s life sciences head Sujay Shetty.

On Wednesday last week, militants armed with machine guns and hand grenades took control of multiple locations across the city, including several hotels and restaurants. Although full details are yet to emerge, it is widely reported that up to 172 people lost their lives.

Speaking with India’s Business Standard, Shetty said that, in addition to the obvious human tragedy, there may be considerable damage to the country’s reputation as a place for international firms to do business.

He suggested that: “The drug industry could see short-term setbacks, especially in the field of outsourcing,’’ adding that ”executives of global companies may be asked to refrain from coming to India and many planned visits have been cancelled.’’

The Indian outsourcing market, which has over 80 US Food and Drug Administration (FDA) approved facilities, was worth $1.27bn last year and, prior to the attacks, was expected to generate revenue of $3.33bn by 2010.

While it is too early to say if international drugmakers will turn to the country’s main outsourcing rival China long-term following the attacks, for 2008 at least Indian firms have lost out on contracts that would otherwise have been won at the shelved tradeshows.

Furthermore, although the main impetus for outsourcing is the reduction of costs, supply chain stability is also a major factor in the selection of outsourcing partners. As a result, long-term political strife and social unrest may be enough to tip the scales in favour of a contractor operating in a country where such concerns are not a factor.

Meanwhile, the European Union and China are also looking at working more closely in the future.

Source: Outsourcing Pharma


$2.5B in outsourcing headed India’s way

November 18, 2008

A new report on India’s pharmaceuticals industry predicts it will take over about $2.5 billion in drug makers’ outsourcing by 2012. As companies in the EU and U.S. look for lower-cost manufacturing and R&D, India will get an influx of new work, according to the report from Zinnov Management Consulting.

The country has certainly done a lot to encourage that growth. Besides a rich talent pool and a number of pharma-educational institutes, the Indian government has also started offering tax incentives to drug makers and set up some necessary legal infrastructure, the report says. “India has the potential to become one of the key global pharmaceutical players and also become the backbone of off-shored services in Pharmaceuticals,” Zinnov’s CEO said.

The success of pharmaceutical offshoring / outsourcing is aided by the rich pharma talent pool and the spread of pharma-educational institutes. The Government has also provided tax incentives to the pharmaceutical industry and has taken necessary steps to enact tough laws on data security and IP related issues to mitigate certain offshoring challenges. Development of Pharma Special Economic Zones SEZs is a key step by the Government to enable the growth of pharma industry, finds the study.

Read the story at India Infoline

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