License Raj and the Drug Firms

October 3rd, 2008 | Sources: Wall Street Journal

The stage seems set for India to become the worldwide center of pharmaceutical R & D. It has more than a billion citizens, many of whom need health care and will gladly participate in clinical trials. It also has a huge pool of scientists who work for a pittance compared with salaries in the US and Europe. Some predict that India will host as much as 15% of the world’s clinical trials by 2011, even though it hosted only 1% in 2005.

Mumbai’s Piramal Life Sciences was incorporated recently to leverage this opportunity. But Piramal is doing clinical trials in Canada these days.

India’s exasperatingly complex regulatory system it turns out, cannot support rapid growth in pharmaceutical R & D, at least not yet. India doesn’t have enough experts to interpret results from animal experiments for example, and this delays progression to human testing.

India’s regulatory bureaucracy is itself an even larger problem. The unwieldy system is a remnant of India’s brief flirtation with socialist principles after gaining independence in 1950. It has been contemptuously labeled the “license Raj.”

India has already streamlined the license Raj in many business sectors and this has helped fuel economic growth. But the license Raj is alive and well in drug R & D. India’s vast drug discovery potential will remain hemmed until it snips the red tape.


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