BOMBAY, 6 August — “Stocks like sheep, move in herds. If you want your sheep to move north, you better pick a sheep in a herd moving north.”
This is a very sound investment advice, this implies that one should look at the whole picture instead of just a part of the picture. Industry analysis helps investors choose stock by looking at the big picture first. Hence instead of investing merely by looking at individual stocks, it is imperative to look at the industry in which it operates. Knowledge of the industry helps one look at the demand and supply curve, the competitors, marketability and more importantly, the investment worthiness. Keeping a close watch on the industry will help one spot a winner. Surely there are quite a lot of us who would be feeling that they had spotted Infosys before it touched the sky!
So for all those who missed the bus, there is one industry which holds the promise of being a sure winner of the future. Just as infotech is the most sought after industry of the present, biotech will be the industry of the future. And it would prove to be very prudent to invest in biotech companies at the current rates, given the potential which the biotech industry has for the future. After pharmaceuticals, biotech companies are the next best thing to happen on the Indian economic horizon. Genetically engineered pharmaceuticals are the buzz word. Already, India’s pharma stars are pouring money into the field and attempting to come out with world-beating new products. This is the next big thing !
In India, the “hottest” biotech company which skyrocketed into the news was this small Hyderabad-based biotechnology firm, Shantha Biotechnics. It was the first company in India which four years ago developed the first genetically engineered hepatitis B vaccine called Shanvac-B. Now, the company hopes to complete trials on Shanferon, a vaccine for cancer treatment. The icing on the cake for this company is that it has received a $1 million grant from Bill and Melinda Gates Foundation to produce cut-price typhoid vaccines.
Another major company which is a bigwig in this sector is Wockhardt. It has already spent $7.5 million on biotech research and in April it launched Erythropoietin, a vaccine for the treatment of hemoglobin deficiency. The company is also getting into areas like recombinant biotech research. It has also lined up on the anvil, the launch of a new bio-pesticide called Halt and a plant growth promoter called Biozyme. Most of the analysts are unanimous that biotech will be the fast-growth industry of this decade. The combination of a skilled workforce and quick thinking entrepreneurs will turn it into a multi-billion dollar industry for India. This sector is growing at 40 percent annually and India is expected to be a global player in this field. The nascent Indian biotech industry has already jumped from $500 million in 1997 to $1.8 billion in 2001 and is expected to grow to $4.3 billion in 2010.
What is more than proof of this fact is that almost any Indian company which holds some ranking in the Indian corporate has got into this sector. Even the giant Reliance Group is working on a product called Relicord, a genetically engineered, enriched blood product for treating thalassemia.
Then there is the highly renowned and successful pharma giant of India, Dr Reddy’s Labs, which has invested Rs.500 million to develop therapeutic proteins through recombinant DNA technology, and is expected to bring out the country’s third biotech vaccine — a cancer vaccine GCSF (Granulocite Colony Stimulating Factor) that is slated to hit the market by year end. The company is so confident about the potential of this sector that it is looking at having six more products within the span of the next 12 months.
In this new world, the fast-rising stars are companies like Syngenta that teamed up with Novartis and Zeneca, and is now attempting to produce genetically modified cotton that is resistant to pests like boll-worm.
Syngenta is also hoping to strike the big time with disease resistant vegetables.
Then there are the other pharma companies like Morepen Labs, Zydus Cadila, Bharti Biotech, Cipla and Panacea Biotech which are all furiously working on developing their own projects. Biotech does not mean just developing human genomes but it is more about developing new drug molecules and producing disease-resistant and high-nutritional food crops. In the field of agriculture, biotech is yet to be accepted. People have to still come to terms with the fact that one can develop giant turnips and cherry sized tomatoes. But despite this, there is no denying the fact that this industry will prove to be a boon for the agriculture sector. Very soon people will realize that any genetically modified crop will have additional economic value, any advanced technology will be more reliable, faster and will cost less.
There are hordes of companies which are waiting to plant their seeds and reap the profits. Leading the way is Monsanto, the US Company that is a leader in the field, giving the world its first genetically modified crop, a hybrid soybean and hybrid cotton called CRY1aC in 1996. Here, in India, it has joined hands with Mahyco and wants to sell its pest resistant BT Cotton. And most of the companies world wide are looking at the Indian shores to set up their R&D centers as the R&D costs are considerably lower in this country than in Western Europe or the United States. The best part is that along with biotechs, there is another field which is also coming up fast — bioinformatics. This is the infotech support given to the biotech industry and this is great news for the infotech industry since Y2K. There are many companies which have started working out complex biotech problems.
Undoubtedly, the Indian biotech industry is the “sunrise” industry of India, the next sure shot multi-billion dollar bet.