Widely hailed as India's next big growth story after the IT success, the biotech industry has been witnessing tremendous growth in the past two years. During the year 2006-07, the Indian biotechnology sector grew by 30.9 per cent to reach Rs 8,541 crore, while exports increased by a massive 47 per cent to Rs 4,937 crore, according to survey jointly run by Association of Biotech Led Enterprises (ABLE) and Biospectrum.
The current topline figures roughly work out to $ 2 billion and exports $1.2 billion, the industry targets to attain $5 billion by 2010. The top three companies contributed 27 per cent of the industry revenue.
The biopharma segment continues to be the key driver of the industry. With reported sales of Rs 5,973 crore, it accounted for over two-thirds of the industry. Biotherapeutics represent a growth of 27 per cent. Nearly 40 percent of the total 325 biotech companies operate in the biopharma sector.
India's vaccine major Serum Institute retains the top slot. The Pune-based firm recorded revenues of Rs 951 crore. The Bangalore-headquartered Biocon and New Delhi-based Panacea Biotec came 2nd and 3rd positions with Rs 823 crore with Rs 600 crore turnovers respectively.
The foregone financial year also witnessed several global alliances, mergers and acquisitions. The French life science consortium Merieux Alliance picked up 60% stake in the Hyderabad based Shantha Biotechnics. Panacea Biotec, the second largest vaccine producer in India, signed an agreement with Indonesia's PT Bio Farma to manufacture and market the measles vaccine.
Reliance Life Sciences invested Rs 279 crore in GeneMedix, a UK-based biopharmaceutical company. Serum Institute picked up a 14 per cent stake in Lipoxen, the UK-based biopharmaceutical firm focussed on developing biologicals, vaccines and oncology drugs. Serum also signed up Akorn of US for the development and distribution of biotech rabies vaccines. Syngene's (Biocon) deal with Bristol-Myers Squibb to provide R&D services for discovery and early drug development; Wockhardt's marketing pact with Advanced Biotechnologies of US on Kelocote; Ocimum Biosolution's acquisition of BioMolecules synthesis business division of Netherlands' Isogen Life Science are among other developments.
The rDNA edge
Increasingly pharma companies are diversifying into biotech, while established players are committed to robust expansion. Indian firms are developing their own brands of recombinant products, which are increasing market share and rivaling leading global brands in their quality. Shantha Biotechnics was the first Indian company to launch an rDNA vaccine for hepatitis B in 1997.
Bharat Biotech, Biocon, Biological E. Limited, Cadila, Dr. Reddy's Labs, Intas Pharmaceuticals, Panacea Biotec, Serum Institute, and Wockhardt followed.
Highly skilled scientists and low cost of operations have helped India achieve a leadership position in the global vaccines market. Currently, it accounts for about a third of global vaccine sales and is the largest producer of recombinant hepatitis B vaccine in the world. 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.
Policy support
Proactive initiatives from the government are helping the biotech sector.
Policymakers are responding to the industry's demand for a simplified regulatory framework through critical reforms. The draft National Biotechnology Development Strategy was released for comments in April 2006. Besides a single National Biotechnology Regulatory Authority for providing a faster and more efficient clearance for all biotech products, it also proposes increased incentives for commercializing scientific research.
Bio Parks
India's Department of Biotechnology has announced support for setting up 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.
In February 2006, the SEZ Act came into force and India's first biotech SEZ, the Serum Bio Pharma Park was launched. Other SEZs given final clearance include projects by Biocon, and Jubilant Organosys.
The Department of Biotechnology has also launched 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.
Funding
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 Limited). 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 also showing keen interest on Indian biotech industry. 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 business. In August 2006, biotech firm Avestha Gengraine raised €20 million (US$24 million) from European banks to fund its expansion plans and pipeline.
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.
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 classified different activities as permissible under stem cell research. 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. Reliance Life Sciences is investing in an animal house to conduct regulatory, toxicology and preclinical efficacy studies for cell-based therapies.
Bioinformatics
India's proven strengths in computer science and software, along with a large pool of trained professionals in life sciences, have made a prosperous bioinformatics segment. The Institute of Genomics & Integrative Biology (IGIB) in New Delhi is leveraging India's diverse population to develop a database of genetic pro-files. Global biotechnology companies could increasingly outsource services to India's bioinformatics segment, as well as source specialized software tools and databases.