The Indian biotechnology industry which has shown an impressive growth rate of 20 per cent with earnings to the tune of Rs. 14,199 crore ( US$ 3 billion) in 2009-10, is all set to cross the $ 5 billion mark target set for fiscal 2010-11, according to Kiran Mazumdar Shaw, chairperson Vision Group on Biotechnology, government of Karnataka and chairman and managing director, Biocon Ltd.

Says Dr. Satya Dash, Chief Operating Officer, Association of Biotech led Entrepreneurs (ABLE) India,the sector has reached an inflexion point in the country and is poised for exponential growth. “Our capabilities and strengths in bio-services and contract research are well known. Building on these strengths, innovation, discovery research and value capture via Intellectual Property (IP) has to be

co-opted for future growth. This is already starting to happen in the industry across several segments from bio-pharma, agri-biotech, diagnostics to bioinformatics. Besides, a systemic support system is emerging too in the areas of infrastructure, legal and IP services, clusters, incubators etc. These are all healthy signs for future growth”, he adds.

The country is also an important destination for the western economies which are looking for economies-of-scale in terms of cost and time. The pool of expertise with  scientific focus is also a key component for the success of the sector. Therefore the  key advantages of the  Indian biotech industry is the huge cost advantage and  access to talented, skilled and qualified scientific acumen,  Shaw adds

Of the 380 biotech companies in India,198 are in Karnataka and 191 of them are in Bangalore. The city is known for its most diversified bio-clusters in Karnataka as it is recognized as a  global hub for clinical data management and post marketing data management.

Providing a international  perspective of the industry, Sanjeev Saxena, Chairman & Chief Executive Officer, Actis Biologics said that  despite the global economic turmoil, the biotechnology industry delivered a solid financial performance in 2009.  The  sector  is finally beginning to blossom. While venture capital and private placement funding are not pouring as easily into biotech firms, there are scores of promising new drugs are in Phase I and Phase II clinical trials.   More and more governments around the world are funding this field, be it in India, Malaysia, Mauritius or China.  Laboratories at leading universities throughout the world are partnering with biotech entrepreneurs and biotech companies to push research and development at faster levels.

In the meanwhile, countries such as China, India, Taiwan, South Korea and Singapore are fostering innovation with massive investments in new R&D centres of their own—many of which are focused on stem cell technology.  The promise of personalized medicine is starting to come into fruition, with many types of personal genetic diagnostic services being offered in the US and around the world.

 At the same time genetically-modified (GM) foods are benefiting from the development of agricultural biotechnology at leading suppliers.  Biochemicals are starting to revolutionize the polymers and specialty chemicals sectors.  And biodiesel and other biomass fuels are taking hold.  However, the funding drought by VC’s or PE’s may place the business model that fuelled biotech growth for the past 33 years under strain.  Hence, most biotech companies in India and China are following a hybrid model of CRO and co-development.

Leading Indian biotech players are Biocon, Serum Institute Panacea Biotech  Shanta Biotech, Bharat Biotech, , Reliance Life Sciences, Indus biotech  Intas Biopharmaceuticals,  Zydus Cadila, Lupin, Wockhardt,  Gangagen, Bhat Biotech, XCyton to name a few.

Visible trends :
The trend is towards development of bio-similars and bio-generics. This is driven by the demand for low cost drugs. There is also huge opportunity as there are several expire, pointed out  industry sources.

 There are  four paradigm-shifts which would  accelerate the transition to sustainable business models. These are generics, healthcare reforms, nano technology and personalized medicine, said Saxena.

 As the  dawn breaks on nano medicine, cutting edge nano diagnostics and nano-enabled drug delivery mechanisms will be brought to reality including the much touted and romanticized development of tiny devices like nano robots, powered by nanotechnology capable of carrying out integrated diagnosis and therapy through minimally invasive procedures, he added.

Another emerging area is the integrated medicine.  Here efforts are being made for combining diagnostics, therapeutics and drug delivery.  More and more pharma giants like J&J, Novartis etc and smaller biotech companies like Actis Biologics are making major investments either through acquisitions or through internal development, said Saxena.

 In the case of personalized medicine, the  relative value of research and early development would see biotech’s traditional strengths emerge  giving more bargaining power and better valuations, opined Saxena.

Growing strengths in emerging markets will facilitate creative solutions — new “win-win” models offered by Asian biotech companies could provide solutions for struggling western firms and will fuel the growth of biotech Industry in the East.

Challenges for industry
The capital-intensive biotech industry is witnessing a  severe funding drop over the past year, as venture capitalists and private investors have pulled back. It is also difficult to  find right investors and  bring in additional funds without diluting stakes. There is also the need for  venture and angel funding.

Though the Obama administration has approved $10 billion assistance to the  National Institute of Health for Scientific Research, biotech companies cannot access those funds. Hence biotech companies are looking for new ways to raise funds.  In India, although there are programmes by the Union Government like the Biotech Industry Partnership Programme (BIPP), Biotech Industry Research Assistance Programme (BIRAP) along with the Small Business Innovation Research Initiative (SBIRI) scheme to boost public-private-partnership effort and New Millennium Indian Technology Leadership Initiative (NMITLI) financial assistance schemes, yet there  is a  paucity of funds according sources.

Companies are finding it difficult to generate investor appeal with a cost-effective and  convincing business model. There are also challenges like  close management, intellectual ownership and long-term stability.

There are also issues on the ability of companies to in-license and out-license technologies, besides striking the right deals for partnerships.  From a research perspective, the issue is to identify molecule of promise to  deal with the pressure of drug development. Another issue is the approval of bio-generics. Starting equivalence with a marketed biotech drug and its generic counterpart is a complicated procedure.

There is also the challenge to source the right people for research, production and marketing. While it is difficult to get the right talent, it is also a difficult task to retain them.  There is also the problem to hire fresh graduates because they need to go through rigorous training before they are ready for the industry. Biotech industry has lamented the quality of biotech graduates. Their skills are not adequate for meeting the current challenges.

In spite of large investments in various branches of biotechnology and companies growing in large numbers and in size, lack of trained manpower is proving to be a major road block for the future growth. According to Karnataka government department of IT, BT and ST, while two lakh people are already employed in the biotech sector across the country , there is an immediate need for hiring about 10,000 more.