LONDON : Commerce and Industry Minister Kamal Nath has urged Western pharmaceutical firms to outsource their research and development work to India, saying such a move would net higher profits.

Portraying a win-win situation for all concerned, Kamal Nath told a meeting at the Royal Institute of International Affairs (RIIA) here on Jan. 31 that profitability in the 21st century will depend on the ability of pharmaceutical companies to make the technological shift necessary to maintain their competitive edge.

“The time is ripe for a quantum leap in India,” the minister told his audience at the RIIA, a well-known policy think tank also known as Chatham House.

“The question before pharma company CEOs the world over today is not ‘should my company go to India?’ but ‘can my company afford not to go to India?’” he added.

Kamal Nath, who was here on his way back from the five-day annual meeting of the World Economic Forum (WEF) at Davos, Switzerland, said it takes a billion dollars and 10-15 years of research to get a new drug into the market in the U.S. –– and even more in Europe.

He said research and development –– including clinical research –– could be done in India for a fraction of that cost.

“India provides not just the possibility but the unique and tangible opportunity for international pharma firms to make that desired technological shift –– in process and in location.”

India, he said, presents five conditions that are ideal for pharma relocation: Low cost of manufacturing; a well-developed chemical industry infrastructure; strong “vertical integration” from bulk to formulations to packing; abundant scientific talent and technical skills; and a “unique synergy” in the fields of information technology, biotechnology and medicine.

Kamal Nath admitted that while India has a huge drug industry, earnings are “not commensurate with the size” because most Indian companies are involved in producing generic copies of branded drugs.

And in the pharmaceutical industry it is the intellectual property value that constitutes the largest profit margins.

Nevertheless, Indian companies have been scaling up and a large number of laboratories have been set up with state-of-the-art R&D equipment. As a result, Indian companies are “poised and fully geared” to take advantage of the $50 billion worth of drugs set to go off-patent in the next five years, the minister said, adding: “We’ll grab a major share.”

Kamal Nath also launched the Commonwealth’s India Trade and Investment Forum at Marlboro House –– a historic venue which is the international headquarters of the Commonwealth.

Post-launch, the Commonwealth Business Council, in collaboration with the Ministry of Commerce and Industry and the Confederation of Indian Industry (CII) will organize a meeting of the India Trade and Investment Forum in New Delhi from March 9 to 11.

The launch, which was organized in tandem with the High Commission here, was attended by over 100 top British businessmen.

As part of the initiative, five Commonwealth countries have been identified as “Global Gateways to India” in terms of foreign direct investment (FDI). They are: Britain, Malaysia, Australia, Canada and South Africa.

The forum is aimed specifically at encouraging investment in India from other Commonwealth countries. Different commonwealth countries are selected for investment focus from time to time and this year it is India.