Saturday, October 27, 2007

The trap of Contract Research

Following my post about a month ago ("Why are Indian pharma firms cutting back on R&D?"), I hear that at least one major Indian pharma company has actually decided to spin off its research department into a separate company.

This will no doubt mean more cash for the owners of the current company and it may even make the spin-off itself quite profitable.

What is questionable is whether it will lead this company into any leadership position in terms of new products, as all the research will be for other (foreign) companies.

This is simply "body-shopping" in a new sector. IT companies have so far made their money by providing cheap labour rather than by producing any genuinely new products, and it seems that our pharma leaders want to follow in the footsteps of their IT peers.

While the spinoff makes sense for the company in the short term, it does not necessarily make sense for the company in the medium or long term. The workload on the scientists will increase and any genuinely innovative research will become even more difficult than it is now.

And what makes sense for a company does not necessarily make sense for a country.... Sphere: Related Content

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