Maharashtra Chief Minister Sushil Kumar Shinde on Thursday released a report by Ernst & Young titled Beyond Borders: The Global Biotechnology Report 2003, depicting an industry that is simultaneously struggling and succeeding. "Maharashtra government will continue its efforts to provide appropriate policy sanctions and infrastructure required for the development of biotechnology industry in the state," assured CM Shinde.
The report indicates that the industry may achieve profitability by 2010 if regulatory issues can be dealt with effectively over the next few years. It reveals that biotechnology companies worldwide are struggling with a prolonged capital market depression that caused industry stock prices to plummet and created severe stock shortages for many companies. Despite the challenges, biotech industry fundamentals remain strong. Overall, global biotech revenues increased 15 per cent to more than $41 billion and R&D expenses jumped 34 per cent to more than $22 billion in the past year, with more than 50 per cent of revenues being reinvested in R&D activities.
"Our report demonstrates that in an increasingly complex 21st century environment, biotechnology is not only surviving but succeeding," said Kashi Nath Memani, Chairman, E&Y India. Commenting on the state of Indian biotech industry, Utkarsh Palnitkar, Head - Health Sciences Industry Practice, E&Y India, said, "Global alliances and harmonization is the key to market success. Companies are building networks of alliances much like the IT sector to spread risk and reward of drug development among a number of companies. Here in lies India's greatest opportunity. India has a unique advantage, being blessed with a populace of scientific temperament and a wide existing network of centres of excellence in biotech-related research."
According to the report, "Success for biotechnology will largely depend on creating the lowest cost base for innovation, a strategy pursued by other nations, including China. India needs to differentiate itself through high value innovation. It is imperative to evolve fiscal and regulatory policies that alleviate capital intensive research and manufacturing, long gestation timelines for product commercialization and investments in patenting and technology licensing."
The competitive financing environment is convincing companies to do something investment experts have urged for years - consolidate strengths by finding merger partners with complementary technologies. This consolidation will continue and many struggling companies likely will emerge stronger financially, said the report.
Pat year-on-year increases in company totals in Europe and the US have been significantly higher, suggesting the down cycle in capital markets is taking its toll on new company formation. Asia-Pacific industry revenues were up 28 per cent, the number of employees increased 24 per cent, and the number of public and private companies grew by 17 per cent.
Ongoing critical drivers furthering the globalisation of biotechnology are - Biotech and pharma companies are spanning the globe for partnerships, R&D alliances, and engaging in outsourcing to help bring products to market more efficiently.
The governments are staking much of their 21st century economic development on biotechnology innovation.
Venture capital investors are seeking new opportunities with less of an emphasis on location and more attention paid to the experience of the people involved and the quality of the intellectual property.
University scientists have increased access to rich public databases of biological information, which also enhances researcher-to-researcher collaboration.