Business Opportunities in India

The Indian Biotech Scenario

Recent Developments in the Bio-tech sector

India is poised to play a major role in biotech/pharma, post 2005 ,as she stands to gain from more direct investment by MNCs,and increasingly new focuses for the Indian biotech/pharma companies in brand development ,and an expansion especially in research, clinical trials and production.

It's clear that India has had success in the industry with its expertise in reverse technology, its support at the state government level with the emergence of biotech parks and incentives to develop business, and the natural competitive advantages of language, low costs, and an ever-expanding educated workforce. The IT boom of the last decade also will help in attracting foreign direct investment in the future.

India's biotech and pharma industries constitute a modest proportion of their respective global markets (in value terms) and have the potential to become strong players in the coming 5-10 years.Companies like Dr Reddy's and Ranbaxy's have already started making their global presence felt. Yet another company in the list is Biocon that has captured a 10% of the US cholesterol lowering drug market with Lovastatin, in less than 6 months of its launch. WHO certification for Shantha Biotechnics' indigenously developed hepatitis-B vaccine last year is also a significant achievement.

Ernst & Young, the leading global professional services firm unveiled its 2004 Global Biotechnology Report series at
BIO 2004 in San Francisco on June 7, 2004. The three reports Resurgence, The Americas Perspective;Refocus, The European Perspective; and On The Threshold, The Asia-PacificPerspective— outline how the global industry responded to the tough economicconditions of the preceding years by restructuring business models to conserve.

The Report has selected India as one of the 5 emerging biotech leaders in Asia Pacific; the others being Singapore, Taiwan, Japan and Korea, with Mainland China catching up quickly. India is currently ranked 3rd in the region based on the number of biotech companies (96), trailing behind Australia (228) and China, including Hong Kong (136).

According to the Report, India is expected to generate $ 5 billion in revenues and create more than one million biotech jobs over the next five years. This growth is expected to come on the back of increased partnering activity, transition to a product driven model, growth in the biogenerics market and government initiatives to encourage investment and expansion.

Though intellectual property protection in the country continues to be a bugbear, several Indian companies have managed to cross IPR hurdles to work with international partners through confidentiality and non-disclosure agreements. The effective implementation of the WTO mandated product patent regime on the anvil will give further impetus to a change in perception.”

Source : Ernst & Young Global Biotech Report 2004

Pharmabizz.com

Biotech Industry in 2003-04

Sector - Wise Growth

Export VS Domestic Business

Segment-wise Share of Total Exports & Total Domestic Business

Status of Manpower

Regional Trends

Percentage of Manpower engaged

Region Wise Growth

Source : India in Business

The current demand for Biotech Products in India according to the Technology Information Forecasting and Assessment Council (TIFAC) report is the main contributors to the industry in India include:

• Fermentation based products in vaccines.
• DMA products and antibiotics among healthcare products.
• Alcohol, organic acids, enzymes, amino acids, baker's yeast and other industrial products.

There were about 400 firms in India with biotechnology-related activities in 1995. This number has risen to 800. India's biotech-industry is small compared to its pharmaceutical industry (about 16,000 small and large drug manufacturers).

Biotech in India began during the mid-1980s and was concentrated within the large domestic or multinational drug firms. In 1986, the Government of India established the Department of Biotechnology (DBT) within the Ministry of Science and Technology. Several small biotech companies have been established since then.

The Indian biotech industry employs more than 10,000 people, which is expected to grow to 20,000 (research 50%, technical/ services 35%, management 15%) by 2001 (Monsanto Knowledge Centre). The sector players in the industry can be divided into the following companies:

• Contract Research Organizations : Sygene Labs, Biological E, Bangalore Genie, Avestha Gengraine etc.
• Biotech Companies that do basic research using recombinant DNA technology and develops & launches its products: like Shanta Biotech, Bharat Biotech & Biocon India.
• Biotech Wings or subsidiaries of pharmaceutical/ agri-tech organizations, doing customized research using recombinant DNA technology: Lupin Labs, Wockhardt, RPG Life Sciences, Monsanto, Cadila Healthcare, Dr Reddy's Labs, etc.
• Companies that do not use recombinant DNA technology but apply biotechnology principles to Industry: here we can include Floriculture, Tissue Culture Companies and industrial application of biotechnology like Enzymes Industry, Fermentation & Bio-Chemicals.

There is a need to look into each sub-market, or industry that is affected by biotechnology, or comprise the biotech industry in India.
Indian Enzyme Market

Indian Enzymes Industry is estimated to be Rs. 1200 million in the year 2000-01 (Chemical Business, January 2000). The consumption of enzymes in India is predominantly in the detergents market (32%), followed by the Starch Market (15%) (www.biotechsupportindia.com).

In comparison with the world market, the use of enzymes in India is rather limited. Moreover, 70% of domestic demand is imported. However, Indian enzyme market is growing, because of increased awareness of eco-friendly processes. Indian players include Biocon India, EPIC Enzymes, ABL Limited etc. Multinational players include Novo Nordisk, and Genecor who have approximately around 30% of the market share.

Vaccine Market

The vaccine market in India is approximately around $100 million and growing at the rate of more than 20% per year. India produces many traditional vaccines but imports major ones such as Hepatitis A and B vaccines. The largest markets for vaccines in India exist for (in ascending order): Tetanus Toxoid, Polio, DPT, Typhoid & Hepatitis B (determined by million doses requirement of Vaccines in 1999-2000, www.biotechsupportindia.com). Major private sector pharmaceutical companies with vaccine business in India are: Shanta Biotech, SmithKline Beecham, Hoechst Marion Roussel, Wyeth Lederle, Cadila healthcare, Wockhardt, Bharat Biotech, Panacea Biotech, Haffkine, etc. All these players are banking on a ten-fold increase in demand for vaccines when the government includes Hepatitis B vaccine in the expanded program of immunization.

Diagnostic Market

India's diagnostic market is around $50 million. Monoclonal and Polyclonal antibodies for disease immunodiagnosis, tissue typing, clinical assays and research constitute a huge portion of the market. Immunology, kits for pregnancy detection, blood grouping, amoebiasis, filariasis. leishmaniasis, typhoid, hepatitis B, HIV, TB and malaria have been developed locally and capture a small portion of diagnostics arena. Key industry players in this space include Lupin Labs, Cadila, Dr. Reddy's Laboratories, Ranbaxy etc.

Veterinary Biotech

Animal Health

The animal health biotech market is yet another expanding field. It is expected to reach $200 million by 2001 (Monsanto knowledge Center). Demand for veterinary vaccines, diagnostics therapeutics and protein feed is ever increasing. Companies with animal health divisions based in India are: Bayer, Hoechst, Pfizer, Glaxo Wellcome, American Home products and Sarabhai. Smaller firms involved in animal health biotech are Indovax (New Delhi), Shubh (Ahmedabad), Indian Immunologicals (Hyderabad), Venkateswar Hatcheries (Pune). Monsanto's recombinant bovine growth hormone (Posilac) to increase milk production in cows and buffaloes will be marketed by Eli Lilly-Ranbaxy.

Agribiotech

Agricultural biotechnology is an important R&D and business sector in India. India is the world's largest producer of fruits and the second largest producer of vegetables and milk. Some analysts predict that by 2020 India can become the world's largest exporter of agricultural products. The genetically engineered seed market has an estimated value of $250 million.

The total seed market has been estimated at $500 million (The sector is still very low-tech, with 70% of sales coming from farmer bred seeds, 26% from public bred, and only 4% from researched hybrids) with expected sales of $1.5 billion by 2001. At present, out of an estimated 400-odd seed companies in the country, only 18 belong to the public sector and 10 to the cooperative sector. The remaining units are established in the private sector, of which, about 25 to 30 are in the large private sector, while over 300 are medium and small size units.

However, a large number of unorganized family owned units remain a typical feature of the Indian seed industry. About 400 organizations are doing commercial research on agriculture: 200 research labs, 150 companies and 50 service firms. Medical foods and nutraceuticals are also under development. Based on areas of leadership & strength, Indian seed companies would naturally grow into multi-nationals, with direct investments, joint ventures, and licensing arrangements to produce Indian-bred cultivars in other countries.

However, this natural development is blocked by export controls on breeder & foundation seed. Population is a major determinant of the potential size of a seed market. India, with a population of 1 billion presents one of the largest potential seed markets in the world. The Indian agrochemical market was at Rs.30 billion in 1998-99. Unlike the international market, the herbicide market is yet to pick up in India, but based on international trends it too should be a huge market, creating opportunities for safer biotechnology generated alternatives to agri-inputs.