Biotech Companies in India: Innovators or Copycats?

chillibreeze writer — Sailendra Dewan

Unlike its big brother Information Technology (IT), less is known about the Bio Tech (BT) sector in India. When the IT boom hit India, there were expectations that BT too would rise to such huge proportions. This thought led to the proliferation of numerous educational institutes that would bring in the human resources needed for this sector – courses in biotechnology, microbiology, bioinformatics and so on sprang up in every nook and corner of the country.

But after a decade of its arrival there is restraint rather than excitement in this field. Every now and then there is news about Biocon and its founder Kiran Mazumdar doing well, but other than that, this sector has not risen to the dizzying heights scaled by the IT sector. The would-be resources of the biotech companies have moved on to other vocations having found it difficult to find a place in this sector. The global biotechnology industry is pegged at $54 billion. However, India’s biotechnology industry was worth only $1.5 billion in 2006, which constitutes around 2 percent of the global revenues.

What ails the biotech sector?

What stops this sector from growing rapidly? The first basic answer to this question is that it was a mistake to compare the IT and BT sector. They are as different and chalk and cheese. Biotech depends on performing cutting-edge research, having a highly skilled workforce and making huge investments. IT is a pretty mature field, whereas one has to decide if something can even be developed in BT. Even favorable results are no guarantee of profits for a BT company. Moreover, the turnaround time for a new biotech product is many years.

Are there investors in India ready to be pour money into multimillion-dollar research programs needed in BT? The answer is a firm no. Even with all the hype of us being an economic superpower, our biotech companies cannot yet afford to invest such huge money into research. Most have opted for a less risky route – to develop or modify something that already exists rather than start to develop an entirely new product.

Move to generics

Each passing year brings news that yet another biotech company is moving into the pharmaceutical sector. Pharmaceutical products bring in revenues at less cost and have become the bread and butter of BT companies. Development of generic drugs and vaccines – copycat versions of those that have become off-patent – has become the focal point of biotech research. Unfortunately our true capability as a biotech country has not been tested. Many of the biotech companies have just become copycats in order to sustain themselves. Innovation has taken a back seat.

Biotech and pharmaceutical companies in India are quite averse to research and development. It is surprising to note that most of the innovative R&D is still conducted in government laboratories, in contrast to what happens in the West. It was only after January 2005, when the patent law changed in India, that biotech firms started focusing more on R&D. They could no longer produce copycat drugs for which patents existed.

The road ahead

The Indian biotech sector is at a crossroads today. Whether it takes the easier route to just cater to the global demand for cheap generic drugs or take the riskier road of true research and development will decide how this sector shapes up in future. Biotech can still become a big industry if it focuses on internal customers in fields like agriculture and health. As investments in this sector improve the copycat character will be replaced with an innovative focus.

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Sailendra writes for chillibreeze.

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