New York: India and China are the new pharmaceutical research and development (R&D) hubs, with India having an edge in the race, a industry study released on Wednesday said.

It said India was more mature in chemistry and drug-discovery activities than China. Chinese firms were more prevalent in less lucrative segments such as pre-clinical testing, animal experimentation and manufacturing.

The study on the globalisation of the pharma industry also found Indian and Chinese firms to be heavily dependent on major multinational corporations for commercial development of new intellectual property.

This was because they rarely have the capital and the regulatory expertise to develop a drug beyond phase II clinical trials, it said.

The Ewing Marion Kauffman Foundation-sponsored study shows that big companies such as Merck, Eli Lilly and Johnson & Johnson are now counting on India and China for advanced R&D as well.

The study found that 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 is a fourfold increase since 1995.

Indian firms researchers talked to included Aurobindo Pharma, Biocon India, Cipla, Dabur Pharma, Dr. Reddy's Laboratories and Ranbaxy.

The leader of the study, Vivek Wadhwa, a fellow at Harvard Law School and executive in residence at Duke University, said: "Globalisation is happening faster than people think. Having India and China conduct such sophisticated research and participate in drug discovery was unimaginable even five years ago.

"The challenge is for America to understand this trend and realise the potential of globalisation."

According to the study, because Indian drug companies have the most experience in selling generic drugs that meet America's FDA standards, India is playing a more strategic role in early discovery.

Companies such as Ranbaxy, Aurigene, Advinus, Nicholas Piramal and Jubilant have negotiated long-term deals with Western pharmaceutical companies to discover and develop new chemical entities.

Often, they share the financial risk in discovery as well as the potential financial rewards.

According to the study, it is too early to tell whether China and India will become important sources of new drugs. In contrast to industries such as software and electronics, the pharmaceutical industry takes many years for a new product to emerge from the R&D and regulatory approval stages.

The early progress, however, is promising, say researchers. Several companies have reached significant development milestones with new chemical entities. Several drugs from these partnerships are going into clinical testing.

Robert Litan, vice president of Research and Policy at the Kansas-based Kauffman Foundation said, "The US benefits from innovation wherever it occurs. Having more countries like India and China develop treatments for diseases ... will help reduce the overall costs of healthcare. But the US benefits most when those discoveries are made by companies owned primarily by US citizens". IANS