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Home » Stock market » Market Report » India will take larger share of outsourcing market: report

India will take larger share of outsourcing market; report

India’s outsourcing sector is growing at 43 per cent, according to a new report that predicts the country will take a bigger share of the global market as concerns about operating there diminish.

The predictions are made by Ernst & Young and the Organisation of Pharmaceutical Producers of India (Oppi) in a report that focuses on the maturation of the country’s outsourcing sector.

Outsourcing is now a “strategic imperative”, according to the report, and this creates a big opportunity for India, which is well positioned to capture a proportion of future growth.

Respondents in the report ranked India highest among its outsourcing peers for cost efficiency attractiveness, with all those questioned rating it as “above average”.

Furthermore, India’s technical capabilities were highly regarded by respondents. This is underpinned by the country’s expertise in active pharmaceutical ingredients (APIs), formulation and the end-to-end services it can provide.

The report covers these end-to-end services under the term contract research and manufacturing services (CRAMS) and then breaks this down into two segments. These cover Phase IIb and onwards manufacturing and drug discovery and development.

Overall CRAMS in India has a compound annual growth rate (CAGR) of 51 per cent, according to the report, and this will result in it generating revenues of $3.8bn (€2.7bn) and capturing 5.5 per cent of the market by 2010.

Growth in the manufacturing sector is underpinned by big pharma’s closure of underutilised facilities, the trend for emerging companies not to build in-house capacity and the rise of biologics, which require more infrastructure investment.

Discovery & innovation

The report claims that India’s discovery and development market has a CAGR of 65 per cent, more than three times the global average. Companies are attracted to India’s chemistry capabilities, skilled manpower and the cost savings that are possible.

This growing expertise in drug discovery is predicted to result in India becoming one of the top five innovator countries by 2020, according to Ashok Kumar, Secretary, Department of Pharmaceuticals.

Kumar added that by 2020 one out of every five to 10 drugs discovered worldwide will come from India. However, the report acknowledges that for this to be achieved the country has to alter some of its practices.

The legacy of India’s intellectual property regime and its image as a generics manufacturer are part of the problem but the report states that peoples’ mindsets are changing.

A change in people’s perceptions is predicted to help India capture more than its current three per cent share of the global outsourcing market and also achieve its innovation goals.

However, the report warns that a cultural shift within India is also needed to boost innovation. Currently India spends a much lower percentage of its gross domestic product (GDP) on innovation than established pharma countries.

Furthermore, there is little movement between academia and industry and many Indian graduates emigrate. However, the government is working to build an environment that is conducive for innovation.

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Keywords:

Market Report, Report, Market, India, Indian Market Report, Indian outsourcing market

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