Biotech is the buzzword of the decade. The year 2005 saw a robust growth in the global biotech sector with Asia Pacific countries achieving cumulative profitability. But 2006 has a lot more to offer. According to the Ernst & Young's Biotech Report 2006, the 20th edition of ‘Beyond Borders: The Global Bio-technology Report 2006’ promises a bright future.

The report says that the revenues of publicly traded biotech companies surpassed $60 billion for the first time in the sector's 30-year history. “Since our first report 20 years ago, we have seen historic scientific advances and dramatic changes in market conditions, which combine to produce a rapidly maturing industry,” says Donn Szaro, Leader of Global Biotechnology and Pharmaceutical sectors, Ernst & Young.

The Indian niche

India is definitely not lagging behind in any global trend. “India's generic firms are positioning themselves to play a big role in the evolving biogenerics market. With our advantage in information technology and access to well-trained and relatively less expensive human capital, India is well poised to become a hub for processing and managing clinical data. Further, stem cell research will also help us create a niche,” says Utkarsh Palnitkar, Industry Leader—Health Sciences, Ernst & Young, India.

The Indian biotech sector has not just attracted funds from international organisations like the World Bank, but it has also successfully tapped investors, including some hedge funds for cash. These moves reflect growing investor confidence in the sector. However, the high risk factor has deterred active flow of venture capital into the sector.

But, finding suitable valuation benchmarks in the Indian biotech sector is often a challenge, a changing regulatory and policy structure adds to the complexity of valuing companies. “Seed capital to fund start-ups will be critical for the growth of India's biotech sector and government incentives or initiatives to spur seed capital hold the key to investments in this sector,” says Palnitkar.

However, the hidden Indian biotech potential is being discovered by foreign companies and this is resulting in many outsourcing partnerships evolving into equity investments. Similarly, Indian companies are expanding and scaling up manufacturing capacity to become global players. India is rapidly moving from label extension support centre to include global pivotal studies and the growing generics industry is boosting the flow of pharmacokinetic studies to the country.

Stemming stem cells

India finds itself in an envious position when it comes to stem cells research. Stem cells have raised some debates in the West but huge investments have been flowing to India in this field. The strategic emphasis in India has now shifted to developing new vaccine delivery systems instead of just manufacturing vaccines in bulk to maintain cost competitiveness. Changes are also occurring upstream through enhanced capabilities in conducting discovery research, and downstream, primarily in the capacity to manufacture biopharmaceuticals. Cross border services in molecular diagnostics and genetics are expected to grow, given India's strong value proposition in this space, the report points out.

The next big step for India anchors on product theme and this will be driven by domestic innovation, competitive cost, availability of valid data, and viable business models that have already been tried and tested in India.

(www.expresspharmaonline.com)