One of the most significant attributes that distinguishes man from other species is the ability to control and manipulate surroundings. This has been made possible by a variety tools. One area where tools have made a significant impact is in the field of life sciences. Tremendous advancements have been made in this field in a short span of time. The emergence of biotechnology through the use of knowledge obtained from studies of molecular and cell biology have added a new dimension to our ability to learn, control and manipulate the biology of life. The tools of trade in the form of enzymes, reagents, chemicals and analytical equipment have been the catalysts for the rapid growth and evolution of the biotech industry.
Globally, biotech companies lay a lot of emphasis on research and development. These companies are playing a significant role in the science of drug discovery and development. Biology knowledge in the form of genomics and proteomics is a major component of today's drug discovery and development process. The use of 'omics' knowledge is heavily dependant on specialist reagents, such as nucleic acid modification enzymes, cell culture reagents, various light sensitive dyes and pure chemicals. Nucleic acids and proteins are highly specific and sensitive biological material and the reagents used to study them need to be equally specific and sensitive. The instruments used to study them are equally advanced analytical instruments. Some of the analytical instruments include high-performance liquid chromatography (HPLC), microarray scanners, DNA sequencers and real time thermal cyclers. Apart, the next generation of instruments like capillary electrophoresis systems, laser capture microdissection instrument (LCM) and super fast thermal cyclers are slowly entering the Indian market.
Another trend in the life sciences industry is the off shoring of research to countries such as India and China. According to a recent Frost and Sullivan study, the contract research services market in India was valued at US $118.81 million for the year 2006, a 43 per cent growth from the figures of 2005. India is turning into a preferred destination for outsourcing of 'omics' based research services. Indian pharmaceutical companies have also been forced to invest in genomic and proteomic research, keeping in line with the global trend. These two factors are expected to contribute significantly to the growth of the lab reagent and equipment market in the country.
Foreign players rule the roost
Though India has a very mature and accomplished pharmaceutical manufacturing sector, most of the lab reagents are imported. Very few Indian companies have been able to establish themselves in the market, while foreign brands rule the roost and are most preferred by the Indian scientific community. Although the country has great prowess in chemistry, it still needs to enhance its knowledge base in the field, as lab reagent manufacturing industry is a specialized one. It requires the amalgamation of knowledge in chemistry, enzymology and fermentation. The reagents used for research have to be highly consistent in their performances. The smallest variation in the quality of the reagent can put the veracity of the experiment under doubt. The lack of clear-cut quality control and standards is another factor that hinders the growth of the reagent manufacturing industry.
Though a significant factor, product packaging and presentation is often overlooked. Imported reagents have well-designed and attractive packaging material and the product sheets have complete information about the product. On the contrary, Indian packaging and presentation is often tacky, with the product information sheet often being confusing and incomplete.
Also, in terms of scientific literature and publication, India's contribution has been low, compared to other countries. As a result, Indian scientists generally like to use the same reagents as seen in the foreign publications in their own research. Thus the foreign reagent brands have a strong recall value among Indian scientists. They are preferred over comparable and cheaper Indian made reagents. The need to adhere to good laboratory practices (GLP) has forced the companies to prefer imported reagents, whose quality is certified.
Notwithstanding these obstacles, there are some home-grown biotech reagent and equipment manufacturers who have managed to carve out a niche for themselves. Companies such as Bangalore Genie have been particularly successful in capturing the growing educational lab reagent/equipment market. Its biotechnology kits and instruments are the training grounds for many of India's future scientists. India has a tremendous advantage as a destination for the manufacturing of lab reagents. The country has a large pool of trained chemists and many biotechnology students pass out of its institutions every year. The cost advantage that India affords is tremendous when compared to similar manufacturing operations in developed countries. By collaborating with the foreign reagent manufacturers many manufacturing operations can be off-shored to India. But, in order to do this, India needs to focus on improving its infrastructure and recruitment and training of qualified personnel.
Lab equipment market
As is with the case of lab reagents, the equipment used in the biotech industry in India is imported. Imported lab equipment account for more than 50 per cent of the market, with the US catering to the 30 per cent of import needs. India also depends on countries like Japan, Germany and other European countries for lab equipments. Major consumers of the equipment are government-funded laboratories under the Council for Scientific and Industrial Research (CSIR). As all government institutes are duty exempt, they are always on the look out for advanced equipment.
However, with the government set up come the usual bureaucratic and procedural delays in purchase procedures. Sometimes procedural delays lead to procurement of the equipment but not the reagents needed to run it. In such a situation the equipment remains unused. But, this has offered a good opportunity for public-private cooperation. Start-up biotech firms use this equipment for research after paying a fee to the institute. Small companies that do not have the financial resources to purchase equipment, benefit from access to high-end equipment. This model is already being followed by some institutes and should be encouraged in India.
Equipment Leasing
Most institutes and companies buy the equipment outright and use it until it becomes obsolete. Equipment in the biotech sector becomes obsolete faster than in other sectors. The pace of technological advancements in this field makes the product cycles for the equipment extremely short. It may not be practical for companies and institutes to constantly upgrade equipment. Vendors have responded to this by offering buy back offers for equipment. Other schemes that can be looked into are leasing of equipment and finance schemes.
Leasing of equipment and lab furniture is a common practice in the US. In a way the leasing process benefits both parties. As for the biotech companies, their liabilities are reduced, while the vendor profits from the return of the equipment or its purchase by the leased company. There are a number of leasing agreements that can be worked out based on the situation. Also, finance schemes can also be explored. Here too both parties stand to gain.
Most lab reagents and equipment sold in India is through local distributors of foreign companies. But off late, recognizing the growing market for contract research services, a number of these companies have opened offices and set up operations in India. Companies such as Bio-Rad, BD, GE Amersham, Eppendorff and Thermo Electron have started operations in the country and more are expected to follow suit. Large multi-product companies such as Sigma Aldrich and VWR Inc. have set up shops in India. Sigma Aldrich has a bonded warehouse and an oligo manufacturing facility in Bangalore, while VWR Inc., a leading supplier of lab reagents and equipment in the US and Western Europe, has just opened its office in Bangalore and has started serving India and the South Asian market.
Jay Gopalan, country leader for VWR India, said, "the company is looking to provide the same kind of lab reagent and equipment shopping experience as seen in the US. VWR wants to be a one-stop-shop for all labs needs right from high-end equipment and reagents to specialized housekeeping equipment for labs. The Indian scientific community will have access to over 1.5 million products from 6000 vendors under the VWR certificate of guarantee."
With more and more companies entering the Indian market, competition among the vendors is getting fierce. In order to gain a large chunk of the market, vendors will need to know the market well and understand the needs of their customers. They will need to regularly evaluate their marketing methods and have access to up to date market intelligence.
(Joseph Manoj Victor is senior research analyst, healthcare practice, Frost & Sullivan. The author can be reached at:sthomas@frost.com)