Contract Manufacturing in India and China Backed by Government Policies

A report* by analysts GBI Research predicts steady growth for the worldwide Contract Manufacturing Organisations market sector due to the increased outsourcing of pharmaceutical production by Western pharmaceutical manufacturers to Asian countries. The availability of adequate numbers of current good manufacturing practices and compliant manufacturing sites in Asia make India and China popular outsourcing destinations, particularly as these countries have witnessed changes in their government and regulatory policies that encourage foreign investment.

Furthermore, the introduction of the new patent regime in India during January 2005 encouraged multinational pharmaceutical companies looking to outsource their manufacturing of branded drugs with the protection of Intellectual Property Rights (IPRs). The amendment of the Schedule Y article allows parallel phase clinical trials to be conducted along with reductions in custom duties for clinical trial samples being imported. However, GBI Research analysis suggests that many Eastern Europe countries may offer superior IPR protection compared to their Asian counterparts, which lack an effective enforcement framework and witness more instances of IPR violation.

The global CMO market was valued at $26 billion in 2010. Driven by increases in the sourcing of biologics and generic manufacturing, the market is forecast to reach approximate revenues of $59.9 billion by 2018.

*Contract Manufacturing Organizations to 2018 - Cost Advantages and Improving Quality Standards Build Confidence and Encourage Foreign Investment in Asian CMOs