Biotechnology Industry in India

chillibreeze writer — Kshitija Pande

India has an enormous potential in becoming a leading player in the global biotechnology industry. This is primarily because India has a large cost-competitive, skilled, and talented workforce with strong scientific abilities. The sector is one of the fastest growing knowledge-based sectors in India and experts predict that biotechnology is going to play a key role in shaping India's rapidly developing economy.

In India, the biotechnology sector can be divided into five categories: bio-pharma, bio-services, bio-agri, bio-industrial, and bioinformatics. The largest contribution comes from bo-pharma with almost 65% contribution to the total revenue of the sector. The biotechnology sector has around 325 firms and approximately 20,000 scientists working in it.

A Few figures
According to a report by the Confederation of Indian Industry and KPMG, India is in the top 12 biotech markets globally, and is ranked third in the Asia-Pacific region, after Japan and Korea. Currently India holds a 2% share of the global biotechnology industry.

In India, the size of the biotechnology sector is likely to touch USD 5 billion by 2010 and USD 25 billion by 2015. In FY 2008-09, the industry revenues stood at USD 2.67 billion which is an 18% growth year on year in value terms. The growth has been a result of the rise in domestic business, increase in exports, and new product innovations due to the various government initiatives to promote the sector.

A large portion of the growth of the sector also comes from the activity in contract research services, early stages of drug discovery, manufacturing of clinical supplies, and clinical development. A June 2009 bio-spectrum industry survey revealed that the exports of biotech products and services were to the tune of USD 1.5 billion in FY 08-09 which is about 59% of the total revenues of the sector. Within these, bio-pharma contributed revenues of USD 1070.96 million (68%) followed by bio-services at USD 432.08 million (27%).

Why India?

Indian companies are capable of offering extremely competitive and economical options for research and manufacturing work for international firms.
India has built up a positive IP climate with the implementation of the Patent Act in accordance to the TRIPS agreement.
India has a large base of skilled and talented human resources.
In India the cost of R&D is considerably lower and companies can save close to USD 200 million by outsourcing their work here.

The Sector
India can be divided into four main bio-clusters: Pune-Mumbai, Bangalore, Ahmedabad-Vadodara, and Hyderabad. Along with these, a few tier II and III cities such as Goa, Thiruchirapalli, Madurai, Nagpur, Mysore, and Coimbatore are also upcoming destinations for setting up biotechnology industries.

For India, intellectual property protection is critical for its biotechnology industry to reach its full potential. Indian companies have traditionally been unwilling to invest in new product development which has largely resulted from the Patents Act of 1970, which did not provide patent protection for products and instead awarded only process patents. Because of this, the companies had no incentive to invest large amounts of money to innovate and develop newer, better products only to have them reverse engineered by a competitor and hence loose the competitive advantage.

This resulted in India not developing any considerable skills in the area of innovation. With the implementation of the Patents Act in 2005 as per the WTO and the TRIPS agreement, India now grants product patents for innovations in the life sciences sector. This move has motivated many Indian companies to start innovating although the sector lacks adequate risk capital to fund these innovations and R&D.

Government Initiatives

The Department of Biotechnology implemented the National Biotechnology Development Strategy 2007 to support India’s core biotech space which seeks to address challenges relating to the sector in terms of R&D, technology transfer, IPR and other regulations, investments, talent and human resources.
The Biotechnology Industry Partnership Program offers funds to the industry to carry out high-risk research. The program provides support in the form of grants and soft loans to innovative projects in companies for early stage and late-stage clinical trials.
The Small Business Innovation Research Initiative in which the government provides early-stage funding.
The government is looking to speed up the process of setting up a National Biotechnology Regulatory Authority which will support public and private investment in biotechnology which will thus help in creating infrastructure which can support high-end research in the long term. This authority would create a single regulatory body managing all aspects of biotechnology and drug regulation.
Another initiative, the New Millennium Indian Technology Leadership Initiative program assists public-private partnerships in the industry.

Key Players in India
Serum Institute of India, Biocon, Panacea Biotec, Rasi Seeds, Nuziveedu Seeds, Novo Nordisk, Siro Clinpharm, GlaxoSmithKline, Novozymes South Asia, Shantha Biotech and Jubilant.

Serum Institute is the top player posting revenues exceeding USD 245 million in FY 2008-09. Both Serum Institute and Biocon have crossed revenues of USD 200 million in 2008-2009 followed by Panacea Biotec at USD 130 million. Novo Nordisk and Novozymes South Asia, both MNCs in India, have crossed USD 50 million in revenues over the same period.

Challenges facing the Sector in India

Streamlining India’s regulatory framework so that we are able to meet global standards.
Necessary international funding required for Indian companies to be able to invest in cutting edge research.
Lack of knowledge sharing amongst scientists and research organisations across India to facilitate faster research and avoiding duplication of efforts.
Large amount of investments required in modern infrastructure to support R&D.
Health and environment issues faced with ‘Bt crops’.

In view of the above facts and figures, it is clear that India is the next big destination for international biotechnology companies. With the right kind of funding and collaborations between the Indian and foreign companies the industry is set to grow tremendously in the coming years.

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Chillibreeze's disclaimer: This is a contributed article and was published on Chillibreeze in May, 2010. The views and opinions expressed in this article are those of the author(s) and do not reflect the views of Chillibreeze as a company. Chillibreeze has a strict anti-plagiarism policy. Please contact us to report any copyright issues related to this article. The relevance of the facts and figures cited (if any) could change after a period of time.

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—About our writer:

Kshitija says, "A B-school grad and aspiring travel writer, I have an MBA in Marketing and International Business from the prestigious Symbiosis International University. I love the world of advertising. A chef at heart I am among those who live to eat. Though wanderlust hits me at regular intervals I believe in what JRR Tolkien said; “not all those who wander are lost”."

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