Hyderabad - Outsourcing in biotechnology offers India a billion-dollar opportunity but the country needs an effective intellectual property rights (IPR) regime to tap its potential, U.S. experts say.

Steve Lawton, vice president of the U.S. Biotechnology Industry Organization (BIO) that represents 1,000 of 1,500 American biotech companies, said on Feb. 25 that with strengths like immense talent, strong chemical technology and research and development, India could become a hub of outsourcing in biotechnology. He, however, added that the lack of legislation to protect IPR was keeping American companies away.

Michael Alder, a U.S. venture capitalist and managing director of Redmont Venture Partners, as also Indian Americans Vipin Garg, president and CEO of Tranzyme, and Jai Nagarkatti, president of Sigma-Aldrich Scientific Research, supported Lawton’s views.

They, along with heads of some other American biotech companies, were in Hyderabad to participate in BioAsia 2004, a biotech summit of the Asian countries.

They said India could benefit by having a strong IPR regime, as this would enable biotech companies, especially pharmaceutical firms, to release their products in the Indian market and help the vast patient population. They pointed out that even Indian companies like Ranbaxy and Dr. Reddy’s Laboratories were coming out with new compounds and making money in the U.S. but were afraid to launch their products in India.

They said the pharmaceutical industry, which is another name for the biotechnology industry, is estimated at $1.5 trillion and is looking at ways to reduce the cost and time cycle of drug development.

“On an average, the development of each drug costs $500 million to $800 million and takes seven to 10 years. There are thousands of ideas for drug development but there is not enough money to translate these ideas into drugs. If the cost is reduced to $100 to $200 million, for more ideas can be developed into drugs in the same money now being spent on one drug,” said Garg. “If 20 percent of the $500 million spent on a drug development in the U.S. is outsourced to India, it would amount to $100 million. Every year, U.S. companies work on 1,000 drug developments and thus the opportunity will be a billion plus and several billions in years to come.”

Garg said besides chemical technology, India’s other strength was clinical research. “Clinical trials of a new drug costs $150 million in the U.S. and if done in India the costs can be reduced by 60 percent," he said.

Lawton pointed out that many multinational pharmaceutical companies were doing clinical research in India for approval of their drugs in the U.S. and the European Union.