Biotechnology: Future of India

By Ravishankar Panda
News, March 11, 2004: The initial public offering (IPO) of the country's first biotech
company, Biocon Ltd, received an overwhelming response on the opening day as it was
oversubscribed within minutes on Thursday. The 100 per cent book-built Biocon issue got
oversubscribed by nearly six times on day one. It received bids for 5.8 crore equity shares
as against the issue size of one crore shares. (Financial Express)
Biocon, one of the leading biotechnology companies in India, was founded in 1978 in Bangalore. It
has two subsidiary companies: Syngene International Limited and Clinigene International Limited.
Biocon with two subsidiaries form a fully integrated biotechnology enterprise specialising in
biopharmaceuticals, custom research, clinical research and enzymes. Biocon's integrated
business approach has enabled the company to establish a significant presence in the global
biopharmaceutical market via its product offerings and customised, high value solutions at any
stage in the lifecycle of a drug - from discovery to market.
India's growth in this sector was mainly due to India's refusal to regard the International Patent
Right in 1970's, which encouraged Indian companies to become expert in duplicating various
drugs to perfection. This led to less and less expenditure in R&D.
Availability of knowledge, technical skill, research and development facilities and raw materials in
cheaper rates enabled India to grow faster in the field of biotechnology. It will play a key role in the
future of Indian economy. Biotechnology is broadly divided into three areas - Agriculture, Animal
and human healthcare and Industrial. India is developing expertise in fermentation based products
through downstream processing methods, cell/microbial culture techniques, plant breeding
cell/tissue culture techniques, etc. India has edge over other countries because of competence in
bioprocess engineering; skills in gene manipulation of microbes and animal cells; capacity in
downstream processing and isolation methods; skills in extraction and isolation of plants and
animal products; recombinant DNA technology of plants and animals; excellence in traditional and
molecular marker assisted breeding of plants and animals; and infrastructure in fabricating bioreactors and processing equipment. Recently Indian companies got the US patents for a number
of products like plafactor, F-virosome, refamicine, hydrophilic nanoparticle for drug delivery
system. This along with success in indigenous production of HIV I and II Detection rapid Test Kit,
Western Blot Test Kit utilizing Indian strain and various other indigenous diagnostic kits including
introduction of transgenic Bt cotton and a number of indigenous rDNA products.
The government has brought in quite an encouraging biotechnology policy to promote this sector.
The government has recognized this sector as key growth area and set up biotechnology parks
along with forming task force to provide expert guidance. India has bright chance of growth
especially in agri-biotech, diagnostic and vaccines. Many Indian companies have introduced
products of original research through technology transfer from R&D institutions in India in the field
of vaccines, diagnostics and reagents. Outsourcing of R&D in biotechnology represents a
tremendous opportunity for Indian companies to do contract research for overseas corporations.
The current global expenditure on outsourced R&D is approximately US$ 7 billion and is expected
to grow at 30 per cent per annum for the next 5 years. There are around 50 R&D labs in the public
sector, providing high quality R&D and over 20 conducting research in specific areas of
biotechnology. The Indian biotechnology market is expected to grow to US$ 500 million by 2005.
This sector will attract more foreign investment because of the following reasons:

India's huge population makes it among the world's largest markets for vaccines of
all types. Therapeutic products market like Insulin, Alpha, Interferon, Hepatitis B
surface antigen based vaccine, Erythropoietin, Streptokinase, Chymotrypsin, PGF,
GCSF, Gm-CSF, Interleukins and others, which is expected to grow to US$ 200

million by 2005.
Hybrid seeds, development of a production base in bio-pesticides and bio-fertilisers
and genetically modified crops like corn, cotton, millet, mustard and other
nutritionally improved vegetables also provide good potential in agriculture sector.
Indian pharmaceutical companies possess competitive skills in chemical synthesis
and process engineering with the application of bioinformatics tools. This definitely
will woo contract research from international players for new drug discovery, clinical
trials, and bioinformatics related services.
With clinical trials in India costing less than one-tenth of the levels in developed
markets, clinical research organizations can seek research and trial projects in India
from international companies.

Indian bioinformatics companies can play a significant role in critical areas such as
data mining, mapping and DNA sequencing, besides functional genomics,
proteonics and molecule design simulation in the US$ 2 billion world market for
bioinformatics services.
The growing interest in outsourced research and the emergence of start ups has led to a demand
for industrial parks, containing a large number of shared facilities for research and development,
most suited to start ups and contract research activities.
The only grey areas that might come as obstacle in the growth of this industry are the time
involved in the drug coming to the market after R&D and clinical trial (5-15 years) and India's
acceptance to recognise the International Patent Rights.
With D-day around the corner the entire Indian pharmaceutical sector including biotechnology
sector has come under clouds of International Patent Standards under the umbrella of World
Trade Organization that will be effective from January 2005. The patents will affect Indian
companies adversely as companies not having new patented products cannot sell newer products
and thus there will be no growth. The cost and time involved in the R&D will make companies
difficult to adopt economically.
The country might face a decline in the growth unless it does not get forearmed by making a
proper foothold by getting more and more patents in order to confront the competition with the
world players. This also might result in Indian companies loosening grip over the domestic market
as international giants will enter India with vigorous marketing backed by solid financial support.
Therefore, as a preventive measure, most of the Indian players are targeting the US and the
European generic markets to boost their bottom line performance. This is also the main reason the
last few years witnessed sudden increase in the investment in research and development.