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Andy Wong/The Associated Press

A failure to strike partnerships in China and India is costing Canadian biotech and pharmaceutical companies billions in lost opportunities to reduce costs and speed the development of innovative drugs and therapies, new research concludes.

The pharmaceutical markets in China and India have each grown more than 16 per cent annually for the past five years and are forecast to continue double-digit growth rates until at least 2015.

Yet even as R&D expenditures are booming in the two countries, Canadian biotechnology firms and drug makers are largely ignoring co-development and sales partnerships in these fast-growing emerging markets, according to a report to be released Tuesday by the Asia Pacific Foundation of Canada.

More specifically, Canadian biotech firms are "missing the boat" by not teaming up with Chinese and Indian companies because of competitive concerns and worries about intellectual property protection, the report argues.

"To consider the rising technological and innovation capacity [in China and India]only in competitive terms misses half the story – namely the considerable opportunities that these developments present for the Canadian industry and health care consumers," writes Rahim Rezaie, a post-doctoral research fellow at the Vancouver-based foundation and the Munk School of Global Affairs at the University of Toronto.

The average cost of bringing a drug to market has soared to more than $800-million (U.S.) and is rising at an annual rate of 7.4 per cent above inflation.

Dr. Rezaie, whose research focuses on health-technology innovation in developing countries, argues that these costs could be significantly reduced if Western biotech firms were to co-develop drugs and outsource trials with Chinese and Indian partners. In addition, drugs developed in collaboration with partners in Asia would likely be more suitable for these burgeoning consumer markets.

A 2008 survey of 181 Canadian biotech health companies found that only 26 per cent had any collaborative links with the developing world. Of those firms, 22 had partnerships with Chinese companies and 17 had partnerships with counterparts in India.

"One would expect a greater level linkages between Canada and these markets. In contrast, one sees involvement from U.S.-based entrepreneurs in all areas of the sector in China and India," the Asia-Pacific Foundation report says.

Canada boasts a significant biotech and pharmaceutical industry and ranks seventh in the world in the number of annual scientific publications. According to industry association and lobby group BIOTECanada, the health, medical and pharmaceutical sectors account for about 7 per cent of Canada's annual gross domestic product.

However, Dr. Rezaie writes that "Canada's engagement with Asia is not commensurate to the size of our industry and the scale and scope of emerging opportunities in Asia."

Canadian companies that have engaged with partners in China include Vancouver's Welichem Biotech Inc., which has joint ventures with Chinese pharmaceutical firms in Yuxi and Shenzhen; and Toronto's Microbix Biosystems Inc., which has struck a joint venture agreement to build a $200-million influenza vaccine manufacturing plant in China's Hunan province.