BOMBAY, 15 December 2003 — Biotech is the sunrise industry on the horizon of Indian industry. This has been said earlier also and surely, it will get repeated again and again. Just as information technology (IT) took everyone by storm, biotech is also on the threshold of a similar booming growth.

Many rued over the fact that they were taken unaware by the IT boom and by the time they realized the potential, it was too late. Well, for all those who missed the bus then can get set to board this fast train of biotech.

First — what is biotechnology? The simplest definition of the industry is that it deals with the application of biological knowledge and techniques pertaining to molecular, cellular and genetic processes to develop products and services. The applications range from agriculture (genetically modified food, insect resistant fiber, food processing), industrial (biofuels, bioenzymes in pollution control) and medical biotechnology (diagnosing diseases, developing new drugs).

Undoubtedly, biotech in India is on the verge of exponential growth. This optimism stems from the latest statistics which says that the Indian biotechnology sector is expected to rake in a global market share of 10 percent in the next five years from the present one percent. A recent survey by the National Association of Software & Service Companies (Nasscom) has put the consumption of biotechnology products in India at Rs.21 billion by the end of 2010 from Rs.4 billion in 1999. The market for modern biotechnology products and services in India is estimated to be about $150 million for 2002, of which about 40 percent are estimated to be export revenues.

The government’s budgetary allocation to biotechnology has risen to $500 million in 2002-03 from $300 million in 1997-98. The budget provides for 150 percent tax deduction for R&D spending on biotechnology.

That’s not all. The latest figures from the industry have also been encouraging. The Indian biotechnology industry exported 53 percent of its output of Rs.18.30 billion in 2002-03. And the industry expects to grow by 25-30 percent in the current year and the Rs.6 billion invested in it is expected to double in two years.

The first ever survey of the Indian biotechnology industry conducted jointly by BioSpectrum, a Cyber Media publication, and ABLE (Association of Biotechnology Led Enterprises) has stated that altogether 6,400 people work in the industry, up 68 percent on the previous year.

The industry is made up of segments such as biopharma, bioagri and bioindustrial products, bioinformatics, and the clinical trials and contract research services. The biopharma sector accounts for Rs.12.75 billion of revenue, making up 70 percent of the market share. Vaccines, therapeutics, diagnostics and animal health care products form key products. The bioindustrial segment consisting of enzymes, organic amino acids and yeast and yeast-based products, account for sales of over Rs.2.35 billion or 13 percent market share.

Bioservices — clinical research, contract research and contract manufacturing — account for 7 percent of the market share and Rs.1.35 billion revenue.

The bioagri market has a market share of 6 percent and Rs.1.10 billion revenue. The bio-IT market is estimated at Rs.750 million. The Bangalore-based Biocon India is the country’s largest biotech company with a turnover of Rs.2.55 billion. The second and third positions are taken by Panacea Biotec of New Delhi (Rs.1,698.8 million) and Wipro Health Science, Bangalore (Rs.985.5 million). The survey also states that south-based companies account for nearly 39 percent of the business done, west accounts for 32 percent and the north for 29 percent. Among the top 50 companies, 19 are from south, 17 from west and 14 from north.

Compared to the other countries, India enjoys certain advantages such as low operational costs, low-cost technologies, skilled human resource base and large network of research laboratories, he said.

According to Ernst & Young’s “Global Biotechnology Report”, growth is primarily expected to result from the increasing R&D collaborations of Indian companies with foreign firms, growing investment by strong and traditional companies and availability of significant foreign investment.

It is interesting to note that operational costs in India are one-seventh to one-tenth of those in developed markets and are among the lowest in the world.

The government has also realized the significance of this industry and has taken initiatives to set up biotech parks across the country to make available world-class infrastructure to the biotech industry.

India is already experiencing a strong interest in biotech from the global investment community with significant players like Connect Capital, ING Barings, Dresdner Kleinwort Benson, Warburg Pincus and Rabo Bank.

And with so much happening, the big pharma companies are also realizing the importance of having a presence in this sector. In order to become a leading player in biotechnology, Ranbaxy Laboratories, India’s largest pharmaceutical company, is moving into the area of biotech research. The company has committed R&D investments to the tune of $50 million-$60 million.

Another company, Shantha Biotech which has the distinction of being the first company in India to develop hepatitis-B vaccine through genetic engineering is also planning to add a typhoid vaccine to its portfolio soon. Well, with so much happening in the biotech sector, the future does look very bright for the sector.