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Friday, February 25, 2005

Next Wave Of High Tech Outsourcing - BioTechnology

I met Kiran Mazumdar Shaw,(sometimes referred to as the richest woman in India)- CEO of Biocon,an India headquartered bio- technology firm in Singapore almost a fortnight back when she came to deliver the CEO series lecture under the auspices of India Club - In her well researched presentation, she was highlighting phenomenal opportunties for India in Biotech related outsourcing and she mentioned in the course of the talk based in trade industry trends related to purchase of some bio-tech chemicals for research, she felt that the activity in India exceeded that of China(both are anyway seeing huge growth in this area) in the last ten years.
Andrew Pollack, writing for the New York Times, covers a trend in the biotech/pharma business that I believe will become pretty significant in the next couple of years - offshoring research and development to India. As with IT, you can hire biotech and pharma experts in India at significantly lower costs.

The life sciences industry, with its largely white-collar work force and its heavy reliance on scientific innovation, was long thought to be less vulnerable to the outsourcing trend. The industry, moreover, is viewed as an economic growth engine and the source of new jobs, particularly as growth slows in other sectors like information technology. While life sciences jobs may be less vulnerable to outsourcing than jobs in information technology, industry officials say many companies are looking at that option as pressures mount to control drug prices and cut development costs. Fueling the outsourcing trend are Indian and Chinese scientists who obtained graduate degrees and work experience in the United States and Europe and are now returning to their native countries. In that sense, what is going offshore might be called "back laboratory" work, somewhat equivalent to the back-office information technology functions that have moved in the past. But there are signs that the biotech migration will go beyond low-level work.
The outsourcing of some life sciences jobs could be seen as evidence that American biotechnology companies, like their counterparts in other industries, are doing nothing more than building global connections that help make them more competitive around the world. There are some factors that suggest life science jobs will be slower to migrate offshore than those in information technology. For one thing, drug companies face less pressure to cut costs than, say, computer disk drive manufacturers because pharmaceuticals have relatively high profit margins. "We're not trying to eke out another percent of operating margin," said Kevin Sharer, chief executive of Amgen, the largest biotech company, which is based outside Los Angeles. Also, life sciences companies often prefer to be near the best university research, which, for now, is largely in the United States because of ample funding from the National Institutes of Health.

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