Lifescience jobs flowing abroad, too

By Andrew Pollack The New York Times February 25, 2005

Bala S. Manian rarely looked back after he left India to attend graduate school in the United States. Since 1979, he has started one medical technology company after another in Silicon Valley.

But Manian now is rediscovering his native country. His newest medical venture, ReaMetrix, which makes test kits for pharmaceutical research, is based in Silicon Valley. But 20 of its 28 employees are in India, where costs for everything from labor to rent are lower.

The exporting of jobs by ReaMetrix is telling evidence that the relentless shifting of employment to countries like India and China that has occurred in manufacturing, back-office work and computer programming now is spreading to a crown jewel of corporate America: the medical and drug industries.

It could be a worrisome sign. The life-sciences industry, with its largely white-collar work force and its heavy reliance on scientific innovation, long was thought to be less vulnerable to the outsourcing trend. The industry, moreover, is viewed as an economic growth engine and the source of new jobs, particularly as growth slows in other sectors like information technology.

"What I see in India is the same kind of opportunity I saw in the Valley in 1979," Manian said. In the United States, he said, "a million dollars doesn't go more than three months." In India, by contrast, "I can run a group of 20 people for a whole year for half a million dollars."

While life-sciences jobs may be less vulnerable to outsourcing than jobs in information technology, industry officials say many firms are looking at that option as pressures mount to control drug prices and cut development costs.

"First toys, clothes, those kind of things, then electronics and computers and now, finally, pharmaceuticals and biotech," said Jimmy Wei, a venture capitalist in San Francisco who helped start Bridge Pharmaceuticals, a company that is doing drug screening in Asia for American pharmaceutical companies.

The outsourcing of some life-sciences jobs could be seen as evidence that American biotechnology companies, like their counterparts in other industries, are doing nothing more than building global connections that help make them more compebreastive around the world.

And so far, the job movement has been small. According to the most recent data compiled by the Commerce Department, fewer than 6 percent of American companies with biotechnology operations employed contract workers abroad in 2002, but industry experts say that percentage has increased in the past three years.

"It's a trend that's becoming more pronounced as people's budgets get tight," said Riccardo Pigliucci, chief executive of Discovery Partners International, a San Diego company that does chemistry work for drug companies.

Clinical trials of new drugs, for instance, already are moving to countries in Asia, Eastern Europe and Latin America because the costs of conducting the trials are lower and human subjects can be recruited more easily.

Drug manufacturing is another area that can move. India already has a thriving generic drug manufacturing sector and is moving into biotechnology.

Fueling the outsourcing trend are Indian and Chinese scientists who obtained graduate degrees and work experience in the United States and Europe and are returning to their native lands.