PerspectivesAre you interested in submitting a Perspective Article? Be sure to read The Science Advisory Board's Editorial Guides for Perspective Articles. Click here. India: An Emerging World Leader in Biotechnology by Hari Mohan Saxena, Ph.D. A 2008 SAB Steering Committee Member and SAB Member since 2007 Department of Veterinary Microbiology College of Veterinary Science Guru Angad Dev Veterinary & Animal Sciences University Ludhiana, India  Biotechnology Business and India The global biotechnology industry in 2006 stood at USD 73.12 billion, up by 15.49% compared to 2005. The revenue of the Indian biotechnology industry reached INR 85.41 billion in 2006-07, up 30.98% from INR 65.21 billion in 2005-06. In 2006-07, top ten Indian companies reported revenue of INR 37.74 billion. The Indian biotechnology sector is acquiring global visibility. India accounted for 2% of the $41 billion global biotech market and in 2003 was ranked 3rd in the Asia-Pacific region and 11th in the world in the number of biotech enterprises. In 2004-5, the Indian biotech industry saw its revenues grow 37% to $1.1 billion. India's biotechnology revenues touched US $2 billion in 2006-07, up from $1 billion in 2004-05 and $1.5 billion in 2005-06. Powered by an average growth rate of 30-35% per year (more than double the industry's global growth rate), the Indian biotech sector has set a target of $5 billion in revenues by fiscal 2010-11. The Indian government's Department of Biotechnology says annual sales could touch $25 billion by 2015. India's biotech business is on an upswing and has a formidable global presence. In terms of volume, it is ranked fourth in the world, while in terms of value of output it stands 13th. And it is the vast pool of skilled manpower and low costs that are drawing global biotech giants to partner with Indian companies. The biotechnology industry in India has been growing at an average annual rate of 40% during the last five years and its turnover during 2004-05 exceeded US $1 billion. Biotechnology as a business segment for India has the potential of generating revenues to the tune of US $10 billion and creating one million jobs by 2010 through products and services. Biotech could become the largest sector for employment of skilled manpower in India. This can propel India into a significant position in the global biotech market. The Indian biotech revenue is to the tune of Rs. 2960 crore, contributed by Biopharma (61%), Bioindustries (8%), Bioagri (4%), Bioinformatics (3%), Bioservices (19%) and Biosuppliers (5%). The biotechnology development is led by the Biopharma sector, showing a growth of 38%, followed by Bioagri (63%) and Bioinformatics (6.7%) and Bioindustries (6.3%). The Indian biotech market is dominated by biopharmaceuticals; 75% of 2004-5 revenues came from biopharmaceuticals, which saw 30% growth. Of the revenues from biopharmaceuticals, vaccines comprised 47% of sales. India hopes to sweep the market in biogenerics and contract manufacturing. Biopharmaceuticals alone have the potential to be a US $2 billion market opportunity largely driven by vaccines and biogenerics. Clinical services can generate in excess of US $1.5 billion, whilst bioservices or outsourced research services can garner a market of US $1 billion. US $500 million is attributable to agricultural and industrial biotechnology. Indian Biotechnology Companies By 2010, global contract research is likely to be worth about $15.1 billion, and Indian companies want a share of the cake. The Confederation of Indian Industry has said that India's share could be about $1 billion. More than 100 pharmaceutical companies, including Pfizer, Merck, Novo Nordisk, Aventis, Novartis, GlaxoSmithKline and Eli Lilly, are currently outsourcing clinical trials to Indian companies. Among the Indian companies in the biotech sector two firms have exceeded 100 million dollars in revenue. There are more than 265 firms registered in India. The top ten companies capture 47% of the market. The top five companies were homegrown; Indian firms account for 62% of the biopharma sector and 52% of the industry as a whole. The Association of Biotechnology-Led Enterprises (ABLE) is aiming to grow the industry to $5 billion in revenues generated by 1 million employees by 2009. Of the $110 million invested in 14 biotech projects globally, the International Finance Commission of the World Bank has given $43 million to 4 projects in India. Bangalore is emerging as India's biotech capital. Global biotech players have shown increasing interest in partnering Indian companies. The US-based Biogen Idec, one of the pioneers of the biotech industry, has set up an Indian subsidiary with the objective of doing research and development (R&D) and integrating India into its global clinical development programs. Amgen, billed as the world's biggest biotech company, is said to be planning a direct presence in India with its own clinical development center. Other global majors such as Genentech, Genzyme, Pall Life Sciences, Agilent Technologies' biotech division, and HistoGenetics have either just set up base in India or are in the process of doing so. India's largest biotech company, Biocon, signed a memorandum of understanding with Deakin University in Australia for joint multidisciplinary research focused on biotechnology and biosciences. Among other things, the MoU provides for joint development of a mammalian-cell bioprocessing facility in Australia and research in metabolic diseases that Deakin will undertake for Biocon. Hyderabad-based Shantha Biotechnics has set up an independent subsidiary, Shantha West, in San Diego to develop human monoclonal antibodies, and Dr. Reddy's Laboratories, Transgene Biotek, and Bharat Serums and Vaccines each have subsidiaries or research units in the United States, focused on early R&D. Indian biotech companies have been hugely successful in bringing down the price of drugs. For instance, Hyderabad-based Shantha Biotechnics has made hepatitis B vaccine available at a cost of $1.25 per course, in comparison with the multinationals' version that carries a price tag of $125. Shantha Biotechnics supplies nearly 40% of the United Nations Children's Fund's global hepatitis B vaccine requirements, which is distributed in developing countries of Africa, Asia and Latin America. Global pharmaceutical giants are increasingly outsourcing R&D, clinical trials and product development to countries such as India. Ranbaxy is the leader in the Indian pharmaceutical market, taking in $1.174 billion in revenues for a net profit of $160 million in 2004. It was the first Indian pharmaceutical to have a proprietary drug (extended-release ciproflaxin, marketed by Bayer) approved by the U.S. FDA, and the U.S. market accounts for 36% of its sales. 78% of Ranbaxy’s sales are from overseas markets; its offices in 44 countries manage manufacturing in 7 countries and distribution in over 100. Ranbaxy is among the top 100 pharmaceuticals in the world and it is the 15th fastest growing company. By 2012, Ranbaxy hopes to be one of the top 5 generics producers in the world, and it consolidated its position with the purchase of French firm RGP Aventis in 2003. It keeps a dedicated research facility in Gurgaon staffed with over 1100 scientists. They currently have two molecules in Phase II trials and 3-5 in preclinical testing. It spent $75 million in R&D in 2004, a 43% increase over its 2003 expenditure. Founded in 1984 with $160,000, Dr. Reddy’s was the first Asia-Pacific pharmaceutical outside of Japan and the sixth Indian company to be listed on the New York Stock Exchange. It earned $446 million in fiscal year 2005, deriving 66% of this income from the foreign market. In order to strengthen its global position, Dr. Reddy acquired UK-based BMS Laboratories and subsidiary Meridian Healthcare. Although 58% of Dr. Reddy’s revenues come from generic drugs, the company was committed to WTO-compliance long before the 2005 bill took effect, and most of these products were already off patent. Dr. Reddy has long been a research-oriented firm, preceding many of its peers in setting up a New Drug Development Research (NDDR) in 1993 and out-licensing its first compound just four years later. Dr. Reddy’s has since outlicensed two more molecules and currently has three others in clinical trials. Nicholas Piramal, a company grossing $350 million per year, started its existence with the 1988 acquisition of Nicholas Laboratories and grew through a series of mergers, acquisitions and alliances. The company has formed a name for itself in the field of custom manufacturing. It cites its 1700-person global sales force as another core strength; with its acquisition of Rhodia’s inhalation anaesthetics business, Nicholas Piramal gained a sales and marketing network spanning 90 countries. Nicholas Piramal is well-poised for the challenge of surviving in the aftermath of product patent protection. The company has respected intellectual property rights since its inception and refused to “support generic companies seeking first-to-file or early-to-market strategies.” Instead, it decided to make its own intellectual property and opened a research facility in Mumbai with hopes of launching its first drug in 2010 at a cost of $100,000. Cipla distributes its 800-odd products in over 140 countries. Privately-held Cipla holds a prominent spot in its home country as well; it is the leader in domestic sales, having unseated GlaxoSmithKline for the first time in 28 years. Revenue in 2004 totaled $552 million (using Rs 43.472 = $1), about 75% of which was derived in India. Biocon is probably best known for its founder, Kiran Mazumdar-Shaw, who overcame incredible gender-based discrimination to become the richest woman in India. Originally an extension to an Irish chemicals company seeking to break into the Indian market, Biocon is now the leading biotech in India, bringing in Rs 646.36 crore (almost $150 million) in revenue for fiscal year 2004. It initially made its money by producing enzymes, but Biocon recently decided to become a research-oriented company with the goal of bringing a proprietary new drug to market. The company launched Insugen, a bioinsulin that is its first branded product. Biocon also has two wholly-owned subsidiaries, Syngene and Clinigene, that perform custom research and clinical trials. The Serum Institute of India is the world’s largest producer of measles and DTP vaccines, and its portfolio includes other vaccines, antisera, plasma products and anticancer compounds. Two out of every three children in the world are immunized with one of their vaccines. The Serum Institute earned Rs 565 crore ($130 million) in revenue in fiscal year 2005, selling mainly to UN agencies and to the Indian government. The Indian biotech sector parallels that of the U.S. in many ways. Both are filled with small start-ups while the majority of the market is controlled by a few powerful companies. Both are dependent upon government grants and venture capitalists for funding because neither will be commercially viable for years. In India, biotech is a hot field with a lot of growth potential. The biotech industry in India could become the single largest sector for employment of skilled human resources in the years to come.  Problems in the Indian Biotechnology Sector India's biotech industry has the potential to grow and occupy considerable space in the global biotech business. But there are bottlenecks in the path of its growth. Indian biotech companies remain starved for early-stage funding. Global technology funds have not yet started supporting Indian startups. Innovation startups are being launched, often by returnees from the West. The most likely sources of funds for the biotech sector are government grants and venture capital, which is a relatively young industry in India. Government grants are difficult to secure, and due to the expensive and uncertain nature of biotech research, venture capitalists are reluctant to invest in firms that have not yet developed a commercially viable product. India hopes to solve its funding problem by attracting overseas investors and partners. Biotech companies are increasingly looking to banks for funding. Bank of America and Citibank are eyeing India's biotech sector, and some funds from abroad are beginning to trickle in, including investment from the International Finance Corp, the private sector arm of the World Bank group. Indian biotech companies are trying to get around the funding problem by forming subsidiaries abroad to help them access capital investment, transfer knowledge, and expand overseas. Although Indian funds like ICICI Ventures, APIDC, the N.S. Raghavan Foundation and Kotak Private Equity are stepping in, it is still small. Avastha Gengraine Technologies (Avasthagen) has accessed 25 million euros (about $33.5 million) from European banks and Shantha Biotechnics has been acquired by French bio-pharma major Merieux Alliance. But such examples of cash infusion are few and far between. Government‘s Role in the Growth of Indian Biotechnology The Indian government established the Department of Biotechnology in 1986 under the Ministry of Science and Technology. The Economic liberalization in 1991 provided the much needed impetus for FDI flows, foreign collaborations, incentives and tax exemptions for industrial growth. India provides tax incentives and grants for biotech startups and firms seeking to expand, and has established the Biotechnology Parks Society of India to support ten biotech parks by 2010. States are offering exemption from VAT and other fees, financial assistance with patents and subsidies on everything ranging from investment to land to utilities. The government has also taken steps to encourage foreign investment in its biotech sector. It has allowed 100% foreign direct investment without compulsory licensing from the government. India hopes to solve its funding problem by attracting overseas investors and partners. The strategy for the 11th five year plan (2007-2012) is to provide products and services at affordable prices and make India globally competitive in the emerging bioeconomy. Emphasis is being laid on sectors such as agriculture and food biotechnology, industrial biotechnology, medical biotechnology, bioengineering, nanobiotechnology, bioinformatics and IT enabled biotechnology, bioresources, environment, intellectual property & patent law, international cooperation and meeting the basic needs of the society. Carefully thought out strategies will provide direction and enable us to achieve the full potential of this field for the social and economic well being of the nation. Indian Advantages in Biotechnology The price of a drug developed by an Indian company is significantly cheaper than an imported equivalent. India has many assets in its strong pool of scientists and engineers, a vast institutional network, and cost effective manufacturing. There are over a hundred national research laboratories employing thousands of scientists. There are more than 300 college level educational and training institutes across the country offering degrees and diplomas in biotechnology, bioinformatics and the biological sciences, producing nearly 500,000 students on an annual basis. More than 100 medical colleges add about 17,000 medical practitioners per year. About 300,000 postgraduates and 1500 Ph.D.s qualify in biosciences and engineering each year. These resources can create a productive enterprise. India is a mega biodiversity country and biotechnology offers opportunities to convert its biological resources into economic wealth and employment. Biotechnology can ensure livelihood security of 110 million farming families in India. India has several natural advantages in biotech. The country's diverse flora and fauna offer a goldmine of raw information. A century ago in Ganga, bacteriophages were found to be effective against such diseases as cholera and bubonic plague. A Bangalore start-up, Gangagen, is reevaluating the phage therapy's potential. The Chennai-based ABL Technologies hopes to produce blood-cutting agents from certain seaweeds found in the Bay of Bengal. Even the nation's diverse gene pool has rich potential. Clusters of isolated genes can be found within intermarried castes and tribal groups. Also, India's diabetics population -- predicted to touch 20 million by the end of the decade -- give researchers analysing genetic links to the disease a wealth of material to work on. The biotechnology industry is highly research and development (R&D) intensive. Globally, about 37.9% of revenue is spent on finding and developing new products. The major biotech companies in India are spending considerable amounts on biotech R&D. The alignment of a vast pool of scientific talent, a world class information technology industry, and a vibrant generic pharmaceutical sector has positioned India to emerge as a significant spot on the global biotech map. ### << Previous Next >> [ View All Perspectives ] |
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