But when it comes to innovation driven by new science, the challenge for the Asian companies is clear: How do you transform yourself from a company that successfully copied someone elses innovative products cost effectively into a true innovator?
Continuing to do what now amounts to a commodity business has been a good springboard, but only successful R&D can turn this nice but modest base into a sustainable global presence over the long haul.
Remember, Asian firms are not only competing with their more developed counterparts in the U.S. and EU, but also with each other, especially in their bread-and-butter generic business. Chinese API manufacturers, for example, are just coming into their own, and will likely pressure the Indian companies pricing options even further.
And as if these concerns were not enough, over a dozen well-qualified Indian companies are all keen to enter the developed western countries with their generic products, setting up an intense battle in markets with the promise of exceptional margins (as compared to the domestic Indian market), leading to longer term returns from these capital-intensive initiatives likely being lower than these Indian companies expect.
Of course, discovery research is not only risky but requires skills and infrastructure that the Asian companies have not inherited, and must cultivate de novo. The initial discovery programs at Ranbaxy (Haryana) and Dr. Reddys Laboratories (Hyderabad), the two leading R&D-focused Indian companies, have not been successful.
While this outcome should not be surprising to anyone, it underscores the challenges that these companies face, especially as they can only invest relatively modest sums in R&Djust double digit million of dollarsa fraction of what a typical unprofitable biotech company in the west spends year after year to fulfill its dream of new science-driven success.
Fortunately or unfortunately, as Pfizer and others are finding out, money alone cant buy success. Fully aware of this dichotomy, Asian companies are on a steep learning curve with great hopes that their smart, alert and diligent efforts will find an optimal path despite their limited financial resources.
With a relatively clean slate due to a lack of prior investment in the area, Asian companies can move forward with a sense of freedom and adventure, unbound by any organizational tradition, especially as it becomes easier to motivate their successful citizens in the west to return home with their skills and experiences.
Researchers in Korea, Singapore, and India are capitalizing on opportunities in stem cell research and therapeutic cloning, and some of their discoveries may even provide some breakthrough leads needed for developing practical applications from the new science. The recent announcement by South Korean scientists of the cloning of personalized stem cells could be an achievement with far reaching implications.
These new science-anchored frontiers offer scientists from Asia a niche other than going down well-trodden paths with the objective of creating research powerhouses of their own.
While innovation is essential for sustainable long-term success, the next generic frontier offers robust growth prospects. Asian firms can be expected to gain as strong a foothold in bio-similars or biogenerics, (which is a bit of a hybrid path between their current business model and that of biotechnology companies) as they have with the small molecule generics.