India's blossoming biotech
boom By Sudha Ramachandran
BANGALORE - India's biotechnology industry
is on a roll. Revenues touched US$2 billion in
2006-07, up from $1 billion in 2004-05 and $1.5
billion in 2005-06. The growth of India's biotech
sector has been overshadowed by the dazzling
achievements of its information-technology (IT)
sector. But the biotech companies are signaling
that their ambitions are no less.
Powered
by an average growth rate of 30-35% per year (more
than double the industry's global growth rate),
the Indian biotech sector has set a target of $5
billion in revenues by fiscal 2010-11. The
Indian government's
Department of Biotechnology says annual sales
could touch $25 billion by 2015.
India's
biotech sector has often been compared to its IT
sector. Like IT, the biotech business is on an
upswing and has a formidable global presence. In
terms of volume, it is ranked fourth in the world,
while in terms of value of output it stands 13th.
And as with the IT sector, it is the vast pool of
skilled manpower and low costs that are drawing
global biotech giants to partner with Indian
companies.
India's software hub Bangalore
is also emerging as its biotech capital. According
to the latest Association of Biotechnology-Led
Enterprises-BioSpectrum survey, of the 340 biotech
companies in India, 183 (53%) are in the southern
state of Karnataka, of which 137 are in Bangalore,
its capital. Nine of the 21 new biotech companies
set up in India in 2006-07 were in Bangalore.
The biotech industry's upbeat mood was
evident at the just-concluded Bangalore Bio-2007,
a three-day annual event that showcases the
biotech industry's potential. The event witnessed
participation from 15 countries. It played host to
more than 600 conference delegates, about 150
exhibitors, 85 national and international
speakers, and an estimated 20,000 business
visitors.
Global biotech players have shown
increasing interest in partnering Indian
companies, and this was stressed by several
company chief executive officers participating at
the event in Bangalore.
This year,
US-based Biogen Idec, one of the pioneers of the
biotech industry, set up an Indian subsidiary with
the objective of doing research and development
(R&D) and integrating India into its global
clinical development programs. Amgen, billed as
the world's biggest biotech company, is said to be
planning a direct presence in India with its own
clinical development center. Other global majors
such as Genentech, Genzyme, Pall Life Sciences,
Agilent Technologies' biotech division, and
HistoGenetics have either just set up base in
India or are in the process of doing so, reports
The Times of India.
At Bangalore Bio,
India's largest biotech company, Biocon, signed a
memorandum of understanding with Deakin University
in Australia for joint multi-disciplinary research
focused on biotechnology and biosciences. Among
other things, the MoU provides for joint
development of a mammalian-cell bio-processing
facility in Australia and research in metabolic
diseases that Deakin will undertake for Biocon.
Industry watchers are likening India's
biotech industry to a baby elephant. It is still
young and has the potential to grow and occupy
considerable space in the global biotech business.
But there are bottlenecks in the path of
its growth. Indian biotech companies remain
starved for early-stage funding, writes Subir Roy
in Business Standard, an Indian business daily.
"Global technology funds have not yet started
supporting Indian startups. Innovation startups
are being launched, often by returnees from the
West, in both IT and biotechnology, but it is the
former that is able to get the early-stage funding
till now."
Although "Indian funds like
ICICI Ventures, APIDC, the N S Raghavan Foundation
and Kotak Private Equity are stepping in, it is
still small beer", Roy says. Avastha Gengraine
Technologies (Avasthagen) has accessed 25 million
euros (about $33.5 million) from European banks
and Shantha Biotechnics has been acquired by
French bio-pharma major Merieux Alliance. "But
such examples of cash infusion are few and far
between," he writes.
According to Utkarsh
Palnitkar of Business Advisory Services at Ernst
& Young in Hyderabad, venture-capital
reluctance to invest in biotech reflects the
nascent stage of the industry in India. The type
of products and the relatively small size of
biotech enterprises contribute to this reluctance.
"Only a few companies have product
portfolios that extend beyond biogenerics,"
Palnitkar said. "The absence of a tangible exit
route adds to the problem."
Biotech
companies are increasingly looking to banks for
funding. "Bank of America and Citibank are eyeing
India's biotech sector, and some funds from abroad
are beginning to trickle in, including investment
from the International Finance Corp, the
private-sector arm of the World Bank group," said
a recent report titled "India's Health Biotech
Sector at a Crossroads".
Brought out by
the McLaughlin-Rotman Center for Global Health at
the University of Toronto and Wharton Health Care
Systems at the University of Pennsylvania, the
report says that Indian biotech companies are
trying to get around the funding problem by
forming subsidiaries abroad to help them access
capital investment, transfer knowledge, and expand
overseas. For instance, Hyderabad-based Shantha
Biotechnics has set up an independent subsidiary,
Shantha West, in San Diego to develop human
monoclonal antibodies, and Dr Reddy's
Laboratories, Transgene Biotek, and Bharat Serums
and Vaccines each have subsidiaries or research
units in the United States, focused on early
R&D.
Indian biotech companies have
been hugely successful in bringing down the price
of drugs. For instance, Hyderabad-based Shantha
Biotechnics has made hepatitis B vaccine available
at a cost of $1.25 per course, in comparison with
the multinationals' version that carries a price
tag of $125. Shantha Biotechnics supplies nearly
40% of the United Nations Children's Fund's global
hepatitis B vaccine requirements, which is
distributed in developing countries of Africa,
Asia and Latin America.
However, biotech
companies have come in for criticism for their
active participation and encouragement of the use
of Indians as guinea pigs in clinical trials. The
subjects in these trials are often poor and
illiterate, with little knowledge of the
implications that the trials have for their
health.
Global pharmaceutical giants are
increasingly outsourcing R&D, clinical trials
and product development to countries such as
India. India's large pool of patients, fast
patient recruitment, well-trained English-speaking
physicians, and intellectual-property protection,
besides low costs (clinical trials cost 30% less
to carry out in India than in Australia and about
50% less compared with the US), are factors that
make this country an attractive destination for
clinical trials.
The "India advantage",
according to the website of IGate Clinical
Research International, lies in its "huge patient
base", its "diversity of diseases" and its
"drug-naive population" (read: untreated). To
these global giants and their Indian partners,
India's poor masses are a gold mine. They
represent an opportunity that will enable the
global majors to cut costs and the Indian
companies to rake in millions.
By 2010,
global contract research is likely to be worth
about $15.1 billion, and Indian companies want a
share of the cake. The Confederation of Indian
Industry has said that India's share could be
about $1 billion. More than 100 pharmaceutical
companies, including Pfizer, Merck, Novo Nordisk,
Aventis, Novartis, GlaxoSmithKline and Eli Lilly,
are currently outsourcing clinical trials to
Indian companies.
Sudha
Ramachandran is an independent
journalist/researcher based in Bangalore.
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