The Department of Biotechnology (DBT) and the Government of India estimate that the Indian biotechnology sector will achieve $5 billion in revenues by 2010 [compound annual growth rate (CAGR) of 35.91 per cent] largely supported by growth in biopharmaceuticals, bioservices and bioinformatics. Last year alone the biotech industry grew at 39 per cent. India has begun to do well in services sector, including clinical research, clinical trials, contract research areas. This proves that the opportunities in this knowledge driven segment is substantial.
Indian companies are looking for alliances to enlarge their market. Shantha Biotechnics along with the Centre for Cellular and Molecular Biology have launched India's first recombinant vaccine for Hepatitis B called 'Shanvac' in 1997.
Many pharmaceutical and biotechnology companies have been eyeing the country, largely due to its status as the world's diabetic capital, with a huge potential for anti-diabetic products. To tap this growing market, Indian companies have invested heavily in R&D for developing indigenous human insulin. Some of these companies have entered into tie-ups with multinationals to market cheap human insulin products in the country. Wockhardt and Biocon have launched their indigenous recombinant insulin, Wosulin and Insugen respectively, in the domestic market.
Alliances with multinationals are also common for sourcing biopharmaceutical products. For instance, Biocon has signed a long-term agreement with Bristol Myers Squibb to supply recombinant insulin. The company has already filed a drug master file (DMF) with the US FDA to market bulk insulin in the US. Further, some Indian pharmaceutical companies are planning to introduce their biopharmaceutical products in the global biogenerics market. To begin with, these companies intend to introduce their products in unregulated markets and then submit filings in regulated markets. For instance, as of July 2005, Wockhardt had received 20 registrations for its biotech products (Hepatitis B vaccine, Erythropoietin and insulin).
The Association of Biotechnology Led Enterprises (ABLE) said that the Indian biotechnology industry posted sales of around Rs. 4745 crore during FY2005, a growth of 36.5 per cent over the previous year, largely due to higher sales of biopharmaceuticals. The sales of biotechnology-based pharmaceutical products accounted for over 75 per cent of the total sales of biotechnology industry in 2005.
The biopharmaceuticals market has four sub-segments. They are: vaccines, therapeutics, diagnostics and others. Vaccines, with sales amounting to Rs 1669 crore is the largest segment, while diagnostics occupies the second place with sales of Rs 60.1 crore. The therapeutics' sales amounted to Rs 50 crore, while other segments generated sales of Rs 80 crore. The diagnostics sector accounted for 16.5 per cent of the biopharmaceuticals market. Despite nearly 25 manufacturers, the market for diagnostics is mainly import driven.
Bioinformatics has proved to be a powerful tool for advanced research and development in the field of biotechnology. The Indian bioinformatics market reported revenues of Rs 100 crore with 40 per cent of revenues coming from the domestic market. There are about 45 companies in the bioinformatics space. Most of these companies are based in southern India with a majority focusing on developing bioinformatics tools and products, while the rest involved in marketing.
Companies such as Strand Genomics, SciNova Technologies, Mascon Life Sciences and Helix Genomics have about five to eight products in their kitty. Further, multinationals such as Accelrys (a subsidiary of Pharmacopeia) and Tripos have a direct presence in India. Prominent software companies such as Infosys and TCS (Biosuite) offer bioinformatics services, while IBM, Sun Microsystems and Intel, provide hardware.
R&D initiatives
Most of the Indian biopharmaceutical companies focus their R&D initiatives on process engineering and different versions of existing drugs, largely due to expensive nature of the new drug discovery. As biopharmaceuticals are already available in the global market, it has significant potential in the domestic and unregulated markets. The biogenerics market of developed countries is a growth opportunity and companies are now focusing more on their R&D efforts on improving the delivery system, new technologies and new products with the assistance of global firms. However, the prohibitive investment, gestation period and uncertainties, hamper research activities in biotech industry. There are probably a few companies doing early stage research, but those are individual initiatives.
Government initiatives
Department of Biotechnology (DBT) is trying its best to push up the Indian biotechnology industry by means of an enabling policy framework. The policy framework includes establishment of science-based and professional regulatory system, promotion of industry-academia partnership in R&D, introduction of manpower training and development programmes, building competence in technology transfer and commercialisation, building and strengthening infrastructure-repositories, biotech parks, regulatory toxicology and safety assessment.
In this model, the role of government is to facilitate, support and reduce the hurdles. The rest depends on the industry. Now, the government has become very supportive in addressing industry concerns. In recent times, the government streamlined the complicated regulatory process through the Mashelkar task force, comprising government and industry nominees.
The biotechnology industry in India has been witnessing a rapid growth in investment. The sector has witnessed a CAGR of 50.31 per cent in investment over the last few years. The industry is expanding rapidly and funding needs of the industry are met by sources such as the government, venture capital funds, private investors, capital markets, banks and financial institutions. The government allocation to the Department of Biotechnology has gone up consistently over the years. It has increased from Rs 263 crore in 2003-04 to Rs 323 crore in 2004-05. The government allocation is expected to further go up by 42 per cent year-over-year to Rs 459 crore for the year 2005-06.
Besides the DBT support, government funding to the biotechnology industry is also routed through various funding agencies that offer research grants and fellowships by means of soft loans or equity for research in various fields of biotechnology and commercializing indigenous biotechnology. These agencies are involved in partnerships with the private sector and thus pass on the benefits of their research activities. Some of the funding programmes of the government are routed through Technology Development Board (TDB) and Technology Information Forecasting and Assessment Council (TIFAC).
The early stage requirements for services
#.Target validation with access to targets and target information critical
#.Lead identification including access to chemically diverse libraries
#.Lead optimization with medical chemistry and lead optimization services key to ensuring that successful leads enter the clinical phase
Outsourcing
Outsourcing enables biopharma companies to focus on their core capabilities. The biopharma industry utilizes a combination of outsourcing models derived from the outsourcing aspects of drug discovery research, the clinical trial process or development and manufacturing process. Applying external skills and expertise directly when and where they are required avoids dependence on fixed resources. This flexibility reduces the need to reallocate or recruit additional personnel with a corresponding reduction in overhead costs.
India - A new market
India, the second largest pharma market in Asia, has an enormous untreated patient population, a strong tech-nological infrastructure IP regime and regulatory environment that will become increasingly aligned with the developed world.
The cost of drug development has soared during the past ten years compelling pharmaceutical and biotechnology companies to look for new, smarter ways of conducting clinical research. Driven by mounting market pressures, companies are increasingly implementing outsourcing strategies to increase revenues through faster drug development. By decreasing their in-house facilities and staff and outsourcing more of their R&D functions, pharmaceutical and biotechnology companies are reshaping the drug development services industry.
Contract research has evolved from providing limited preclinical and clinical trial services in the 1970s to a full-service industry today that encompasses broader relationships with clients, covering the entire drug development process, including preclinical safety evaluation, pharmacology, study design, clinical trial management, data collection, statistical analysis, product support and regulatory services. Pharmaceutical companies are now using drug development services companies to cover gaps in capacity and expand their skills base, control costs and reduce drug development timelines.
Contract research organisations were first structured as outsourcing service companies that provided only clinical trial management. Today, many CROs have expanded their services to comprehensive management of the complex drug trial processes for their client companies and provider of access to vast areas of expertise.
The Indian biotechnology industry is at an early stage of development compared to Europe and US. However, the sector is growing rapidly, as evidenced by the increase in the number of companies and the initiatives taken up by the state governments to push up biotechnology industries. There are approximately 200 biotech companies in India with combined revenues of $500 million and 25,000 scientists in R&D programmes. Apart, the country also have 40 National Research Laboratories employing 15,000 scientists.
The top 10 Indian biotechnology players in terms of revenue are: Biocon, Serum Institute of India, Panacea Biotec, Nicholas Piramal, Novo N, Venkateshwara Hatcheries, Wockhardt, GSK, Bharat Serums & Vaccines and Eli Lilly & Company.
Biocon and Serum are ranked in the top 20 biotechs globally on the basis of revenue. Partnering has also played a major role in the biotech industries growth. Biocon is leading the way forming partnerships with North American companies Nobex and Bristol Myers Squib. This in part has resulted in the need for Biocon to build a new 50,000 sq ft R&D facility to house an addition of 200 scientists.
The Indian biotech sector is growing at 37.42 per cent and inched closer to US $ 1.5 billion in revenues during 2005-06. The bio-pharma segment still dominates this sector with US $ 1 billion in revenues.
Following the path of bio-pharma segment, bio-services has grown at 69.29 per cent with revenues of Rs 720 crore (around US $160 million) during 2005-06. Bio-services clocked revenues of Rs 425 crore in 2004-05 and Rs 275 crore in 2003-04.
Agri-bio with a lot of buzz on introduction of transgenic crop varieties has improved 81.21 per cent to touch revenue of Rs 598 crore in 2005-06. This segment clocked revenues of Rs 330 crore in 2004-05 and Rs 130 crore in 2003-04.
With demand for organic industrial inputs growing, industrial biotech has achieved a growth of 17.19 per cent to Rs 375 crore in 2005-06. This segment had generated revenues of Rs 320 crore in 2004-05 and Rs 238 crore in 2003-04. The bio-informatics segment improved by 20 per cent to Rs 120 crore in 2005-06.
The US biopharmaceutical companies prefer India to China for their immediate expansion plans through outsourcing to get a foothold into the market. Though lack of knowledge of the market and the Indian regulatory issues pose a trouble, the US companies are keen to strike alliances with Indian companies.
The government's decision to allow 100 per cent foreign direct investment to the drugs and pharmaceutical industry has steadily aided the growth of contract research in the country. The Indian subsidiaries of multinational companies were hesitant to introduce cent percent technology transfer for fear of dishonoring the patents. However, the new regime is expected to aid complete technology transfer. The Indian pharmaceutical industry is getting the US FDA compliant to harness the growth opportunities in areas of contract manufacturing and research.
India has 3-4 million scientists, the second largest concentration in the world following the US. Majority of these scientists are English speaking and are willing to work for less than a fifth of the salaries of their Western counterparts.
A healthy future
There are 3 primary advantages to shifting some proportion of bio-pharmaceutical R&D to India.
#.Conducting R&D in India can ease backlogs and capacity shortages, particularly in labor intensive phases of early stage chemistry and of data management during clinical study.
#.Established Indian vendors pay wages that are typically less than 1/3rd and may be as little as 1/5th of those paid by their counterparts in US, Europe and Japan
#.India's population provides MPCs with an ideal patient base for drug studies.
Burgeoning market
The Indian biopharmaceutical market is valued at around $1.05 billion and it is growing at nearly 32 percent. In effect, India's share comes to around 1.5 per cent of the global biopharmaceutical market. It is also estimated that 400-500 biotech drugs are under clinical development for various disease conditions. India is poised to become a leading biopharma base and we should be thankful to the WTO regime that encourages innovation. No doubt, in another three to five years, India will be on par with the West.
Window of opportunities
India has more than 300 biotech companies focusing on different aspects of the value chain. Some of the prominent Indian companies involved in biopharma research are Biocon, Ranbaxy, Wockhardt, Dr Reddy's Laboratories, Serum Institute of India and Reliance Life Sciences. According Mahesh Sawant, Programme Manager, Healthcare Practice, Frost & Sullivan, India has many assets in its strong pool of scientists and engineers, vast institutional network and cost effective manufacturing.
Apart, the country has over one 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 diploma courses in biotechnology, bioinformatics and biological sciences. These institutions are said to produces nearly 5,00,000 students on an annual basis. More than 100 medical colleges in the country generate about 17,000 medical practitioners every year, while approximately 300,000 postgraduates and 1500 PhD students qualify in biosciences and engineering annually.
It is not just the research that is driving the industry. The global market for conventional pharmaceuticals is slowly making way for biopharmaceuticals. Biopharmaceuticals also have different segments to bank on, like compound libraries, current good manufacturing practices (cGMP) synthesis of drug molecules for clinical evaluation, process development, process optimization and several other contract research projects.
There is an acute shortage of biopharmaceuticals manufacturing capacity globally. With numerous biopharmaceuticals going off patent in the next few years, the innovator companies will face a throat cut competition from generic manufacturers. In order to survive, the innovator companies have to cut down the cost and look towards more economical sources of manufacturing these products.
Indian activity
There is a lot of activity surrounding biopharmaceuticals in India
New biologics
With a host of new activities, the biopharmaceuticals market is likely to almost double in terms of revenue turnover. In the global scenario, firms are developing new drugs to treat diseases, including medication for heart disease and stroke, cancer, alzheimer's, diabetes, viral infections, multiple sclerosis and osteoporosis. India is home to some of the important research on these fields.
For instance, Cadila Pharma is home to several in-house and collaborative research biopharma projects. Some of the research carried out in the company is about to be completed by the year end. The company is planning to broadly cover infectious diseases management, cancer, cardiology, gastrointestinal and respiratory ailments. There is a wide scope for biopharmaceutical products in infectious diseases, malaria, kala azar and cardiac syndrome X. Also, products for tobacco induced cancers have a huge market.
In order to cater to increasing demand in India and abroad, the manufacturing of biotechnology products has recently been upgraded to international standards. The world scale Wockhardt Biotech park in Aurangabad is set to supply biopharmaceuticals to Indian and international markets. The Wockhardt Biotech Park has six interconnected manufacturing plants.
Emerging trends
Pricing pressures, funding challenges and improved regulatory norms are driving global companies to seek increased cross-border partnering in India. The development of the biopharma sector in India comes at a time when regulatory routes are opening up in Europe and the US for generic versions of biologic drugs.
Moscow-based Shreya Life Science is investing $22.1 million in India, while German biotech major MWG Biotech AG has set up an Indian subsidiary to cater to the needs of biopharma sector in the entire Asia-Pacific region.
India -Preferred partner
Even though India stands behind China in economic growth, it takes the lead over its neighbors in Asian biotech market. There was a time when investors from the developed countries feared to tread India and China. However, with these countries liberating their massive economies, offering protection of intellectual property and opening their borders for free commerce, the scenario has reversed.
Though India joined WTO years after China's entry, India realized market liberalisation comparatively faster. Like life science, several industrial sectors have got a shot in the arm boosted by free trade and infusion of fresh funds. The fact that India holds the world's highest number of FDA approvals outside the US, illustrates the world-class standards of quality maintained by the Indian drug makers.
The Union government has been supporting the upstart firms with seed funds through the New Millennium Indian Technology Leadership Initiative (NMITLI) and Special Drug Development Research Initiatives.
India also follows the global cluster model for biotech industries. A total of 6 biotech parks are functioning in various states under the public-private partnership. The country can also boast of 10 parks that are at different stages of development. Several world-class scientific institutions like the National Centre for Biological Sciences (NCBS), the Indian Institute of Science (IISc) and Center for Cellular and Molecular Biology (CCMB) spell the future of biotech industry in the country.
Traditionally, Indian biotech sector is well-recognised for low cost fermentation technology and generic biologicals. Bangalore-based Biocon is a leader in industrial enzymes and a key player in statins. Statins is currently the largest selling drugs world over.
Germany happens to be one among the pioneers who made genuine attempts to explore the Indian biotech landscape. German firms initiated few successful alliances with the Indian counterparts. Rhein Biotech's technology tie-up with the Mumbai-based Wockhardt Ltd, is an example. Wockhardt forayed into life science segment through the collaboration with Rhein Biotech's Hansenula polymorpha technology for the production of hepatitis-B vaccine in India. Wockhardt later restructured by acquiring 100% ownership in the 50:50 joint venture and Rhein Biotech is now a part of Berna Biotech.
Companies from United Kingdom have successfully inked alliances with two Bangalore-based bio firms. Genetix, a leading robotics manufacturer, appointed Labmate (Asia) Pvt Ltd as their marketing partner for micro arrays and a leading analytical services provider. M-Scan reached a partnership agreement with Bioinnovat Research Services Pvt. Ltd, a drug development research services consultancy firm.
The Netherlands also find India a fertile land to launch their biotech activities. Nearly a dozen of firms from the Dutch life science industry have visited India's Biotech City. A couple of them are learnt to be in negotiations with firms in Bangalore.
France, having 400 biotech companies, is keen on bio partnering with India. Though younger firms, the companies from France have strong R&D pipelines and several of their new drug candidates are in various phases of clinical research.
(The author is with Accure Labs Pvt Ltd, New Delhi)