Yet Indian companies are still able to churn out operating margins often comparable to those of western-branded pharmaceutical companies. Obviously, the Indian managers are changing the very business model that has defined success for western companies during the past century.

Over a dozen well-qualified Indian companies are all keen to enter the developed western countries with their generic products, setting up an intense battle in markets with the promise of exceptional margins (as compared to the domestic Indian market), leading to longer term returns from these capital-intensive initiatives likely being lower than these Indian companies expect.

Researchers are capitalizing on opportunities in stem cell research and therapeutic cloning, and some of their discoveries may even provide some breakthrough leads needed for developing practical applications from the new science.

These new science-anchored frontiers offer scientists a niche other than going down well-trodden paths with the objective of creating research powerhouses of their own.

While innovation is essential for sustainable long-term success, the next generic frontier offers robust growth prospects. Indian firms can be expected to gain as strong a foothold in bio-similars or biogenerics, (which is a bit of a hybrid path between their current business model and that of biotechnology companies) as they have with the small molecule generics.

Today, India stands on the threshold of a new era in which millions will be safe from many diseases. Diseases such as poliomyelitis, leprosy, and neonatal tetanus will soon join smallpox and guinea-worm as diseases of the past.

Concurrently, the country is surrounded by the burden of both communicable and non-communicable diseases. Some infectious diseases thought to have been conquered have returned with a vengeance or have developed stubborn resistance to drugs.

These include viral hepatitis, tuberculosis, malaria, and pneumonia. Furthermore, new and previously unknown diseases such as HIV/AIDS, the ebola virus, and food- and water-borne diseases continue to emerge.

Here are the highlights :

The health care sector in India has been growing at an enormous pace. During 2002, India's health care industry contributed 5 percent to the GDP and employed approximately 4 million people. By 2012 this industry is projected to contribute 8.5 percent of the GDP. Health care spending in the country will double over the next 10 years. Private health care will form a large chunk of this spending, rising from US$14.8 billion to US$33.6 billion in 2012. Though the health sector performance has much improved there are still some deficiencies with respect to access, affordability, efficiency, quality and effectiveness.

There are about 200 recognized medical colleges spread throughout the country and approximately 20,000 medical graduates pass out each year. In India, 136 medical schools admit more than 6,000 postgraduate trainees in their programs. Involvement of postgraduate physicians in health education is also proving to be quite beneficial.

In the last five years, the number of patients visiting India for medical treatment rose from 10,000 to about 120,000. With an annual growth rate of 30 percent, India is already inching closer to Singapore, an established medical care hub that attracts 150,000 medical tourists a year.

Hospitals in India can conduct the latest medical procedures at very low costs. An estimated 100,000 "Medical Tourists" visited India last year, representing a 20 per cent jump over the previous year. More and more people have started traveling to India for Medical Treatment and Medical Tourism is finally coming of age.

India boasts of several good private owned hospitals with facilities second to none. They have some of the best doctors, with most top end being educated in USA and UK. When it comes to becoming a doctor, India also has some of the stringest criteria. Language is another plus factor - English, which is widely spoken throughout the country and in all good hospitals.

Furthermore, the costs are much lower than most countries and most importantly, there are no waiting lists. With all the media hype about medical tourism, most hospitals have geared themselves up for medical tourists from abroad.

With a rural population nearing 700 million, India will benefit enormously from digital data transmission related to healthcare. Both public and private entities are aggressively pursuing the use of telemedicine to hasten diagnostics and treatment of a variety of diseases. Private hospitals such as Apollo Hospital Group, Escorts Heart Institute and Fortis Healthcare.

The Apollo Hospital Group has networked dozens of remote rural hospitals providing digital connections as one of its main facilities in. In one example, Apollo has set up a 50-bed telemedicine center in Aragnoda, a small village in the Andhra Pradesh section of south India. The facility is equipped with CT-scans, X-ray and ECG equipment as well as an integrated laboratory and is linked to Apollo's specialized hospitals with connectivity conducted through the use of ISDN lines and VSAT.

The Indian government has also made important commitments to telemedicine by reducing import tariffs on infrastructure equipment.

The recent regulatory and much awaited patent law changes have lead the Indian Pharmaceutical Industry towards exploring newer avenues of drug development, thus, promising higher capital investment in the pharmaceutical industry in the near future.

The Indian Pharmaceutical Research is backed by strong Government support and availability of surplus skilled technical workers at lower costs.

The key to the success of Indian pharmaceutical companies is their ability to retain their cost advantage while matching the quality standards of the west. But lower costs alone cannot be enough. Availability of skilled manpower and a favorable regulatory environment that assures compliance with global norms are the other two legs underpinning success. The service sector in particular is witnessing robust growth.

With a growing skill set and capacity in contract research (from combinatorial chemistry to high throughput screening to assay development and validation to clinical trials) and contract manufacture, Indian companies are increasingly becoming preferred partners for western biopharmaceutical companies seeking to bring their products to the market in a timely and cost-effective manner. India already boasts more U.S. FDA GMP-approved API facilities than any other nation other than the U.S.

The opportunity for Indian companies to leverage their success in the generic segment cannot be over-emphasized. Despite $126 billion worth of branded drugs going off patent in the next ten years, investors are disenchanted with the prospects for western generic companies due to intensifying price competition.

In their domestic markets, Indian and Chinese companies are successfully serving countries with high GDP growth (89%) and large populations (1 billion+ people each) while selling drugs at prices that would give most pharmaceutical executives a coronary.