NEW YORK: India and China are becoming centers of pharmaceutical R&D, according to a new Kauffman Foundation study. Cost pressures, the need to tap global talent, and growth opportunities in emerging markets led Western pharmaceutical companies to shift substantial manufacturing and clinical-trial work to China and India.

But the new study sponsored by the Ewing Marion Kauffman Foundation on the globalization of the pharmaceutical industry shows that big pharmaceutical companies such as Merck, Eli Lilly and Johnson & Johnson are now counting on these countries for advanced research and development as well. This study is the first in a series on how industries are rapidly changing and the most sophisticated forms of research are now being performed abroad. According to the study, "The globalization of innovation: Pharmaceuticals.

Can India and China Cure the Global Pharmaceutical Market?", Indian and Chinese scientists are rapidly developing the ability to innovate and create their own intellectual property as a result of the movement of research and development (R&D) to their countries. Several firms in these countries are performing advanced R&D and are moving into the highest-value segments of the pharmaceutical global value chain. In 2006, 5.5 percent of all global pharmaceutical patent applications (WIPO PCT applications) named one inventor or more located in India, and 8.4 percent named one or more located in China.

This had increased fourfold from 1995. According to Vivek Wadhwa, executive in residence at Duke University and a fellow at the Labor and Worklife Program of Harvard Law School, who led the team of researchers conducting the study, this report is the first in a series which shows how India and China are becoming major players in global R&D.

"Even though China is investing hundreds of billions of dollars into next-generation plants to turn the country into an export power in semiconductors, passenger cars, and specialty chemicals, India is ahead in innovation and R&D," he says. "We observed that in the aerospace industry, Indian companies are designing the interiors of luxury jets, in-flight entertainment systems, collision-control/navigation-control systems, fuel-inverting controls, and other key components of jetliners for American and European corporations," Wadhwa adds.

"In the automotive industry, Indian engineers are helping to design bodies, dashboards, and power trains for Detroit vehicle manufacturers. In telecom and computer networking, Indians are developing futuristic technologies for the intelligent cities which are being constructed in the Middle East.