Ranbaxy Laboratories Ltd, India's largest pharmaceuticals company, saidon Tuesday that it could carry out new drug discovery research at one-fifth the cost of global pharmaceutical companies.

While globally the cost of developing a new drug ranges between $550 million and $900 million, Ranbaxy could develop it at $120-180 million, Ranbaxy president (research & development) Rashmi H Barbhaiya told mediapersons in New Delhi.

Barbhaiya said this would be achieved by employing a model built around superior risk management and cost effectiveness.

While Ranbaxy could save around $130-200 million through superior risk management, it could save another $160-300 million on labour arbitrage, or getting the work done by cheaper Indian scientists, and another $140-220 million due to operational effectiveness.

The three factors together will give Ranbaxy an advantage of $430-750 million over its global competitors.

Ranbaxy has also been looking at global alliances in new drug discovery research. It recently replaced Swiss pharmaceutical major Roche as the "pharma partner" for the Geneva-based Medicines for Malaria Venture for developing a synthetic peroxide anti-malarial drug. Roche was the partner for the project in the past three years.

Besides pharmaceutical and clinical development, Ranbaxy will have worldwide rights for the registration and commercialisation of the product.

Ranbaxy's team of scientists will now work in collaboration with scientists and researchers from the University of Nebraska Medical Centre, Monash University and the Swiss Tropical Institute in identifying a molecule for development.

However, a few hours before Barbhaiya disclosed these figures, Tom McKillop, the chief executive officer of AstraZeneca Plc, told newspersons that drug discovery costs did not vary much across countries.

"Our decision to locate the unit for discovery of an anti-TB molecule in Bangalore has nothing to do with costs. It has more to do with the availability of scientific talent in India," he said, adding, "the equipment and the infrastructure is the same whether the research is carried out here or abroad. The wages might be slightly lower in India, but that does not make a sizeable impact".

AstraZeneca announced that it was investing $40 million in the facility, which employs around 100 scientists.

McKillop said depending on the success of the ongoing project, the company could use India for discovering drugs for other infectious diseases.

While admitting that India could become a base for drug discovery research for global pharmaceutical companies once patent protection came into force in 2005, McKillop said much would depend on the implementation of the laws.