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» 23/07/2009 [Company watch]
China Aoxing Pharmaceutical Corp. Receives Renewal of GMP Certification for Capsule Dosage Form of Pharmaceutical Products
» 15/03/2010 [Industry news]
Recordati S.p.A And Lee Pharmaceutical Announce Partnership For Zanidip(R) In China
» 26/10/2009 [Finance]
China Growth to Remain Fast in Fourth Quarter, Official Says
» 17/08/2009 [Industry news]
Chindex Posts Profit on Product Sales, Health Services
» 07/05/2010 [Industry news]
Hong Kong: Recall of all products manufactured by Quality Pharmaceutical Lab Ltd
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»09/02/2010 [Industry news]
India Big pharma slashes R&D budget: A reason of concern?

Indian pharma companies have announced a major reduction in their R&D budgets in the coming years. What repercussions will it create on the pharma industry? Within a span of eight days, the pharma industry has seen three top notch companies cutting down on their R&D investments and downsizing its scientific workforce. Increasing R&D productivity was the unanimous reason given out by the heads of these companies.

 
Nayantara Som Indian pharma companies have announced a major reduction in their R&D budgets in the coming years. What repercussions will it create on the pharma industry? Within a span of eight days, the pharma industry has seen three top notch companies cutting down on their R&D investments and downsizing its scientific workforce. Increasing R&D productivity was the unanimous reason given out by the heads of these companies. AstraZeneca was the first company that took the initiative by announcing its R&D restructuring plans that include targeting annual savings of up to $1 billion from its R&D budget by 2014, a reduction in the number of disease areas of focus within its therapeutic portfolio and to continue its focus on externalization. The company has plans to layoff around 1,800 employees. After its integration with Wyeth, Pfizer has shelved off 100 drug development programs to cut down its costs. Pfizer is now left with 30 oncology programs, 11 for inflammation, 10 for Alzheimer\'s and eight for pain. Jeffrey Kindler, CEO of Pfizer, laid out plans to cut down $3 billion out of the newly merged company\'s budget for R&D as it shifts away from in-house projects and opens up to partnerships and collaborations. According to Fierce Biotech, in 2008, Wyeth and Pfizer spent a combined $11 billion on research. By 2012, the merged company plans to whittle that figure back to $8 -8.5 billion. Similarly, GSK outlined an additional 500 million pounds ($791.6 million) of budget cuts. Specifically, GSK announced that it will stop R&D efforts in certain neurological areas with work grinding to a halt in depression and pain. Around six of its R&D centers across the world (mainly in the UK) will shut down together with large scale layoffs amounting to almost 4000 workers. It is predicted that other big names like Bristol-Myers Squibb (BMS) will also follow suit. This does herald a tectonic shift in the pharma landscape where the world is finally moving towards collaborative strategies as predicted last year. This is an indication of the gradual transition from the more conventional model of companies looking at the entire life cycle of a molecule - right from its discovery to commercialization. Mr Sujay Shetty, Associate Director, Pharma Life Sciences Advisory, Pricewaterhouse Coopers (PwC), Mumbai, said, “This step was expected with the spree of mega mergers and restructuring which took place last year. For smooth transactions, there had to be cut downs in R&D since it requires a whole lot of investments.” The good news is that the downsize in budgets will also see the coming out of productive R&D and not a reduction in the number of drugs coming out in the market. “There was a stagnation in R&D for quite some time. Now, we will see some productive R&D coming out but the challenge for many companies is to bring that out through limited resources,” adds Mr Shetty. How can India benefit from this step? Marginal, claim experts because it is hard to quantify but outsourcing is a huge opportunity to tap. Most of these companies will be now looking at externalizing their R&D through cross licensing deals. “We will see a lot of these companies looking at licensing deals with smaller and more focused R&D houses,” adds Mr Shetty. Some of the partnership deals which were in the news last year were the Pfizer-TCG Lifesciences, Biocon and Amylin Pharmaceuticals and GSK-Ranbaxy drug discovery deal. Growing areas in India like bioinformatics can benefit out of this change.

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