In an environment of heightened competition and changing regulatory and intellectual property (IP) regimes, India's biotech industry continues to transform itself. Government initiatives are helping bridge gaps, and Indian companies are competing aggressively in critical competitive niches - reinventing themselves through research and development (R&D), as well as acquisitions and alliances with companies around the world. Indian firms are developing their own brands of recombinant products, which are increasing market share and rivalling leading global brands in their quality.
Government support: India's policymakers are responding to the industry's demand for a simplified regulatory framework through critical reforms. With the amendment of the Indian Patent Act in 2005, stronger IP protection is spurring innovation. This legislative change allows for patenting pharmaceutical products for the first time; the previous regime allowed for patenting the process used to make a product, effectively allowing companies to legally produce patented products as long as they found an alternative production process. Conglomerates and pharma companies are diversifying into biotech, and established players are committed to robust expansion.
In April 2006, the draft National Biotechnology Development Strategy was released for comments. Based on input from key constituents and relevant ministries and departments, a final Cabinet Note has been prepared and awaits final approval. The draft strategy seeks to promote innovation in small and medium biotech companies. It calls for establishing a single National Biotechnology Regulatory Authority and providing a faster and more efficient clearance for all biotech products. The strategy proposes exempting all biotechnology segments from compulsory licensing requirements, and allowing expedited foreign direct investment up to 100 percent using the "automatic route". It also suggests continuing all existing biotech fiscal incentives through 2010.
The draft strategy also offers increased incentives for commercializing scientific research-often critical for spurring technology transfer. A key proposed clause is that for all publicly funded projects, one-third of the value of the patent would go to the scientist who created the IP, one-third would go back for funding R&D, and one-third to the institution that created the project.
India's Department
of Biotechnology has announced support for setting up numerous biotech parks, five of which are already being established. These parks are intended to spawn clusters by assembling companies, universities, and R&D institutes in one location. The finance minister has proposed concessions for incubatee-entrepreneurs to strengthen entrepreneurial R&D. The Indian government conceptualized Special Economic Zones (SEZs) as far back as 2000, but the absence of supportive legislation deterred the flow of money into the zones. That changed in February 2006, when the SEZ Act came into force, and the launch of India's first biotech SEZ, the Serum Bio Pharma Park. Other SEZs given final clearance include projects by Biocon, and Jubilant Organosys.
Venture funding: Venture capital is in a nascent stage in India. A handful of prominent VC firms, including ICICI and Morgan Stanley, have been fairly active, but most VCs are unwilling to invest in biotech R&D. Instead, they prefer companies whose products and markets are clearly identified or who focus on funding the commercialization of techniques already developed. While access to venture capital has been challenging, Indian biotechnology firms have increasing options through government funding.
The Department of Biotechnology is poised to announce the first investments under its Small Business Innovation Research Initiative (SBIRI)-designed to fund earlystage, pre-proof-of-concept research. The Indian government also has earmarked funds for the industry through soft loans from the Technology Development Board. State governments, particularly Maharashtra, Gujarat, Andhra Pradesh, and Karnataka, also have earmarked funds for developing biotechnology, both for R&D and commercial ventures. Other SEZs given final clearance include projects by Biocon, and Jubilant Organosys.
The Gujarat Biotech Venture Fund (GBVF), a 12-year close-end fund with a target of Rs 500 million (US$11.1 million), has received fund commitments to invest in startups, as well as early-stage and growth companies, in biopharma, agricultural biotech, contract research, and industrial biotechnology. GBVF is managed by GVFL Ltd. (formerly Gujarat Venture Finance Ltd).
In September 2006, GVFL announced that it is providing earlystage funding of Rs 20 million (US$444,000) to Ahmedabad-based Celestial Biologicals.
Global financial institutions are looking at the Indian biotech industry with renewed vigor-due in part to the better protection of patents under the amended 2005 Indian Patent Act. The International Finance Corporation, the private-sector arm of the World Bank Group, committed equity of up to US$4 million to Andhra Pradesh Industrial Development Corporation (APIDC) Biotechnology Fund, a private-equity fund investing in startup and early-stage Indian life sciences businesses. In August 2006, biotech firm Avestha Gengraine raised €20 million (US$24 million) from European banks to fund its expansion plans and pipeline.
Vaccines and recombinant therapeutics: With its highly skilled research scientists, large institutional buyers, and low cost of operations, India is an ideal location for vaccine development. The country has already achieved a leadership position in the global vaccines market; it accounts for about a third of global vaccine sales and is the largest producer of recombinant hepatitis B vaccine in the world. India also is well positioned to seize emerging market opportunities in the global recombinant therapeutics market. The Department of Biotechnology estimates the Indian market for recombinant therapeutics products at US$90 million, and growing at an annual rate of 30 percent.
India's presence in recombinant biologics dates back to 1997, when Hyderabad-based Shantha Biotechnics launched Shanvac-B, an indigenously developed hepatitis B vaccine. This was followed by a spate of launches by companies like Bharat Biotech, Biocon, Biological E. Limited, Cadila, Dr. Reddy's Labs, Intas Pharmaceuticals, Panacea Biotec, Serum Institute, and Wockhardt, who reinvented a market that had previously been dominated by global majors.
The Indian vaccines market was traditionally marked by damaging price competition and increasing market fragmentation. However, with initiatives by the Indian government and organizations like the WHO and UNICEF, players have gradually shifted focus toward global markets. These organizations have engaged companies such as Serum Institute of India, Panacea Biotec, and Shantha Biotechnics as prequalified vaccine manufacturers and procure vaccines from them at highly competitive prices.
New vaccines are being developed in close cooperation with premier research institutes. Bharat Biotech has partnered with U.S.- based Novavax to develop an avian influenza vaccine. The company has also aligned with Acambis for a vaccine against Japanese encephalitis. Serum Institute of India, supplier of vaccines to over 137 countries around the world, is partnering with Chiron on a meningitis vaccine, the Gates Foundation, and PATH for accessing testing technology for a pneumococcal vaccine, ICMR and WHO for an improved delivery system for an aerosol measles vaccine, and John Hopkins University and ICMR for Hib vaccine development.
Indian Immunologicals is collaborating with the Indian Institute of Science to develop a DNA vaccine for rabies. Shantha Biotechnics is developing a cholera and typhoid vaccine in cooperation with International Vaccine Institute of Korea and a rotavirus vaccine in conjunction with the U.S. National Institutes of Health (NIH). Stem cell research: Stem cell research continues to be an area of aggressive investment. India's Department of Biotechnology, under the Ministry of Science and Technology and Indian Council, has jointly formulated draft guidelines for stem cell research, classifying different activities as "permissible" (e.g., adult and umbilical cord blood stem cell research), "restricted" (embryonic stem cell research), and "prohibited" (reproductive cloning and the introduction of animal embryos in humans).
The Center for Cellular and Molecular Biology (CCMB) has made rapid strides. CCMB has a collaborative arrangement with the Deccan Medical College (DMC) for liver stem cell research and is partnering with the Japanese Nichi-in Centre for Regenerative Medicine in human trials using stem cells in end-stage liver failure patients. The CCMB has worked also with the L.V. Prasad Eye Institute to grow corneal limbal cells to help repair damaged corneal tissue and restore vision. The All-India Institute for Medical Sciences (AIIMS) has made progress in therapeutic stem cell research work, using bone marrow mononuclear cells in clinical trials with about 40 patients. Reliance Life Sciences is investing in an animal house to conduct regulatory toxicology and preclinical efficacy studies for cell-based therapies. Stem cell banking firm Asia Cryo-Cell expects to start massive clinical trials at its stem cell transplant center in Chennai using technologies licensed from Japanese and U.S. biotech firms. Chennai-based Life Cell, which currently operates 26 stem cell transplant centers throughout India, is opening an additional five centers in Spring 2007.
Bioinformatics: India's proven strengths in computer science and software, along with a large pool of trained professionals in life sciences, have made for a prosperous bioinformatics segment. With the diversity of its human gene pool, the country is well positioned to play a leading role in genome analysis. The Institute of Genomics & Integrative Biology (IGIB) in New Delhi is leveraging India's diverse population to develop a database of genetic profiles. Global biotechnology companies could increasingly outsource services to India's bioinformatics segment, as well as source specialized software tools and databases.
(Courtsy: Beyond Borders : The Global Biotechnology Report 2007, Ernst&Young)