The Indian biotechnology market was estimated at a whopping Rs. 4745 crores in FY2005. It is making significant inroads into the global market, with a growth rate of almost 37%. The market is dominated by biopharmaceuticals, which contribute almost 75% of the market share. Recombinant vaccines lead second with a share of almost 47%, valued at Rs. 1669 crores.

The Indian pharmaceutical sector has witnessed considerable change in the past 20 years. Advent of new technologies like recombinant DNA technology has resulted in the emergence of a new range of drugs called recombinant therapeutics. However majority of companies in India have hitherto been using reverse engineering techniques for making bio-pharmaceutical products, keeping in view the domestic market. An increasingly fragmented market, decreasing profit margins, shrinking market shares, and well-formulated IPR policies, have forced the industry to gradually shift focus onto more research intensive, innovative bio-pharmaceutical products, targeting the export markets.

Concurrently, recent years have witnessed a growth in the number of in-house manufactured recombinant biotech products in India. Prominent products include Recosulin and Insugen from Shreya Lifesciences and Biocon. Indigenous manufacturing of recombinant products has led to a drastic reduction in costs of the drugs produced.

There are nearly 50 recombinant products currently in the global market, of which nearly 14 are already into seeking government approval in India. Six companies are into manufacturing, while about 15 are into R&D and manufacturing of these products. As also there are about 16 companies involved in import and marketing of imported products.

The human vaccines market represents the second fastest growing segment within the Indian biotechnology sector. The major demand drivers for vaccines are the government's National Immunization Programmes (NIP) and increasing demand from Global Consortiums such as GAVI, WHO and UNICEF. It is also noteworthy that global organizations such as GAVI and WHO have been increasing the vaccines procurement from emerging suppliers in India. At present Panacea Biotec, Serum Institute of India, Shantha Biotechnics and Chiron Behring from India have got recognition as WHO pre-qualified vaccine manufacturers. Now Biological E is in the process of attaining WHO pre-qualification.

The three key building blocks of the biotechnology industry in India are, namely, the role played by the government, biotech hubs in the country, and allied strengths. The government has allocated a budget funding of $550 million between 2002 and 2007. It has set up a Genetic Engineering Approval Committee to approve genetically modified (GM) crops and recombinant DNA (r-DNA) products. A regulatory policy allowing stem cell research and tax exemptions for firms investing in R&D are other initiatives. The biotech hubs in the country are largely based across the states of Maharashtra and Gujarat in the West, and across Karnataka, Tamil Nadu and Andhra Pradesh in the South.

Concerted efforts of scientists like Prof. Raghunath Mashelkar and Prof G Padmanabhan have brought India into the forefronts of vaccine development and therapeutics. Introduction of the product patent regime in January 2005 has further consolidated India's position in the global biotechnology market.

Strengths

. A strong English-speaking, academically sound contingent of scientists.
. A very well established internationally acclaimed IT industry as a role model
. Low-cost arbitrage in development in comparison to US and European markets

Opportunities

. Post WTO, IPR: Post-2005, the Indian biotech industry is currently expected to gain substantially with increasing foreign investment and interests, given India's inherent strength in biotechnology. A number of multinational pharmaceutical and biotechnology companies are already establishing in India either directly for biotech research or form joint ventures, fueling growth of biotechnology in India. Early entry and a solid foundation in the market will benefit those able to work within the current limitations of intellectual property protection.

. Research base: India has internationally well-regarded research capabilities and established scientific networks, which can attract and retain high quality scientists once the government works consciously to remove bureaucratic hurdles for the scientific community.

. Partnerships, marketing alliances/licensing deals, joint ventures, and so on: Indian biotechnology companies have expertise in bioinformatics, manufacturing, and genetics, as well as more traditional sectors of the industry including fermentation technology, industrial enzymes, and vaccines. Indian biotechnology companies offer opportunities of partnership at the drug discovery stage of research, and manufacturing. India also offers opportunities to form joint-venture partnerships with Indian companies, or establish technology transfer agreements or strategic research partnerships with key research institutions.

Threats

. Established biomedical hubs such as Singapore/ Australia in the region and emerging hubs such as Malaysia: The emergence of Singapore and Malaysia as biomedical hubs could pose a threat to India's ambitions of becoming a regional biotech powerhouse as all the countries vie for the same opportunities. While India does have its advantages over its nearest rivals in terms of English-speaking, technically-qualified manpower, and diversity of natural resources, countries such as Singapore are building advanced infrastructure and flaunting billion-dollar funding potential, which would be hard for India to match in the short term.

. Global Image of India: India continues to be viewed as a 'license-raj' marked by a bureaucratic democracy with a high level of corruption and red tape. Western economies continue to be wary of the much-hyped economic reforms started in the early 1990s.

. Trade barriers: The WTO has worked toward removal of quantitative restrictions (QR) on imports and high tariff barriers put up by various governments for protecting domestic industries from foreign onslaught. However, Indian biotechnology products could still be shackled by various import registration systems, multiple licensing requirements, and disparate regulatory laws relating to Good Manufacturing Practice (GMP), Good Laboratory Practice (GLP), drug testing and so on, and sundry policies followed by various governments. Lack of faith in the Indian regulatory system also poses a grave risk that exports of Indian products could be banned in some countries. India needs a sound regulatory system in line with other countries.

. Human resource development: Although India boasts of a wide base of academically sound and widely English speaking scientists, it is known that there is dearth of bi-lingual experts, in terms of academic-technical capabilities, as well as equally conversant with IPR, regulatory issues and commercial aspects of the market. If this area is not worked upon the expanding biotechnology industry may soon face an acute shortage of persons with desired skill sets.

Future outlook

Given the fact that India has a strong contingency of academically sound, technically capable and well versed English speaking scientists, it is not an unsurmountable task for the Indian biotechnology industry to repeat the IT success story. A pro-active government, improving IPR regulations, lower cost of development and a successful role model IT industry are some of the abilities that the emerging biotechnology market can ramp up to its advantage.

The top five technologies/areas to watch out for in the future are

.Bioinformatics
.Contract research
.Stem cell research
.Genomics
.Transgenic crops.

(Dr Jayashree Mapari is senior research analyst, Frost & Sullivan India. The author
can be contacted through: sunnikrishnan@frost.com)