India and China are becoming attractive destinations for research & development (R&D) conducted by transnational corporations (TNCs) even as developed countries continue to enjoy the major portion of the pie.

A survey conducted by Unctad of the largest R&D spenders among TNCs confirm the growing importance of developing country locations. While China was ranked third in the list of current foreign locations of R&D, India’s ranking was sixth. US and UK occupied the top two slots while France and Japan were placed fourth and fifth.

Unctad’s world investment report 2005 released on Thursday pointed out that some economies in the Asia and Oceania region, especially China and India, had managed to capture a broad range of R&D functions from TNCs including innovative R&D and basic research.

The study observed that while contract manufacturers like Flextronics (Singapore) set up R&D bases in some countries such as India and China in 2004 in order to provide state-of-the-art product development services, pharmaceutical companies are seeking to cut the cost of bringing new drugs to the market by collaborating with biotech firms in India.

 “Thus the dividing line between the kind of R&D that is suited for expansion in developing countries and that which should be restricted to developed countries has become blurred,” the report said.

The report further noted that the number of pharmaceutical TNCs that have a research present in India is growing fast. The country was especially an attractive destination for clinical research for pharma groups looking for faster and more efficient ways to test drugs for western countries.

It has been estimated that firms can reduce costs by 20%-30% by moving their R&D Activities to India, the report said.

It added that savings for firms going for clinical trials in India come from hiring researchers, nurses and staff at less than a third of wages in the West, in addition to differences in the costs associated with the patients.

However, there are some factors holding back the development of clinical research in India such as relatively slow approval process and India’s reverence for animals such as monkeys which makes it difficult to use them for research, the report said