Big Pharma Moving More Work Offshore

To illustrate how companies can save money by conducting R&D overseas, Tufts Center researchers cite an analysis by Fast Track Systems, which provides clinical trial software and services to drug and biotech companies.

Using 2006 data, Fast Track created an index in which the U.S. cost of clinical trials is rated as 1.0. The cost in China is 0.52 and the cost in India was 0.56. Among 10 countries surveyed, Russia was the cheapest at 0.40 and Germany was the most expensive at 1.20.

India, for example, offers many Western-trained, English-speaking clinical investigators, says Christopher-Paul Milne, associate director of the Tufts Center. "China is beginning to realize that they are a lot cheaper [than many other countries], so they are raising their prices," he says.

Milne adds that outsourcing R&D to overseas firms or offshoring work makes strategic, as well as economic, sense. "The Food and Drug Administration is more willing to accept foreign clinical trials than it was 10 years ago," he says. "Overseas data seems to have become more reliable."

Conducting clinical trials abroad gives drugmakers access to a larger pool of patients, especially "treatment-naive" patients -- those who aren't taking medications for diseases that are the subject of clinical trials. "The goal in clinical trials is to control as many factors as possible," Milne says.

Companies also gain access to more people, enabling them to conduct more complex analyses to meet regulators' standards. But drugmakers must be vigilant, making sure foreign-clinical trials use patients who voluntarily participate, Milne says.

And if you're trying to expand your market, says Finegold of Rutgers, it certainly helps to conduct clinical trials, or even build an R&D facility, in countries viewed as significant sales growth targets.

"If you want to serve the needs in the Asian market," he says, "you want to have a lab in that region."