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Indian Biotech Industry: Going strong

Touching a new milestone

Its time for India's promising sunrise industry to celebrate. The reason being that the fledgling industry has touched the magical $one billion (Rs 4745 crore) mark ($1.068 billion to be precise) in '05.

With the new product patent regime in place and a national biotech policy set to be notified soon, India's fledgling biotech industry is expected to grow still further to reach a value of $5 billion in 2010, with biopharmaceuticals continuing to capture the lion's share of the growing market and the sector as a whole employing 1 million people by that time.

Sunrise Industry of India

There are today over 280 Indian companies in the biotech sector. Circa 1978, biotech meant fermentation and enzyme production. In 2005, the $1-billion plus Indian biotech industry consists of new drug discovery, bioinformatics, clinical research, and synthetic chemistry with approximately 230 drugs in the market spanning 13 therapeutic segments. A large number of therapeutic biotech drugs and vaccines are currently being marketed, accounting for a US$40 billion market.

For a country like India, biotechnology is a powerful enabling technology that can revolutionize agriculture, healthcare, industrial processing and environmental sustainability. The Indian Biotechnology sector is gaining global visibility and is being tracked for emerging investment opportunities.

According to a study made by the Confederation of Indian Industry (CII) of 52 Indian companies in the modern biotechnology segment, the total project investment by these companies was over US$ 100 million in the last decade. Out of these 52 companies, 32 alone were incorporated after 1998, showing the increased interest from the industry.

Global Scenario

Despite this, the fact remains that Indian biotech's contribution to the world biotech market (around $90 billion) is still a miniscule 1.1 percent. However, it is poised for an exponential growth over the next five years with an expected global market share of 10 percent. The consumption of biotech products in India is estimated to grow ten-fold to US $1.5 billion by 2007 and to US $4.5 billion by 2010.

Currently the global biotech industry's nearly 1,457 companies employ more than 179,000 people in research, development, manufacturing, sales and other types of jobsworldwide.

Top 10 Global Biotech Companies ($ In millions)

Company Name

Symbol

Share Price

Mkt.Value

SPC1M (%)

Genentech Inc

DNA

94.48

99,630.29

-2.56

Amgen Inc

AMGN

76.78

94,771.09

-7.74

Gilead Sciences Inc

GILD

52.10

23,857.58

-4.16

Genzyme Corporation

GENZ

71.79

18,538.04

-6.91

Serono S.A

SRA

19.57

16,548.22

8.36

Biogen Idec Inc

BIIB

44.78

15,198.78

-1.21

MedImmune Inc

MEDI

35.84

8,818.72

-1.13

Chiron Corporation

CHIR

44.68

8,425.58

0.74

Amylin Pharmaceuticals Inc

AMLN

39.38

4,337.94

7.63

Invitrogen Corporation

IVGN

68.94

3,643.62

5.75

Industry Data

There were as many as five biotech firms that clocked revenues of over Rs 100 crore for the year ended March 31, 2005. These include Biocon (Rs 556.67 crore), Serum Institute of India (Rs 505 crore), Panacea Biotec (Rs 217.28 crore), Venkateshwara Hatcheries (Rs 188 crore) and Novo Nordisk (Rs 135 crore).

The top 20 bio-pharma companies, which had sales of Rs 2,970.23 crore, registered a year-on-year rise of 26.67%. Biocon leads the tally of bio-pharma companies with a 18.74% market share, followed by Serum Institute of India with 17%. The next is Panacea Biotec, which has a mere 7.32% share, followed by Venkateshwara Hatcheries with 6.26%.

The bio-pharma sector grew by 29.72% to touch Rs 3,570 crore (Rs 2,752 crore).

Vaccine production continued its domination as a key segment in the bio-pharma sector. Vaccine revenues were Rs 1,669 crore (Rs 1,295 crore), which represented a 28.88% year-on-year rise while therapeutics were Rs 500 crore (Rs 415 crore), clocking 20.48% growth. Diagnostics witnessed a 47.67% growth at Rs 601 crore (Rs 407 crore).

According to a NASSCOM-KPMG Study, in India the biotech industry's R&D and services will reach a turnover of US$3 billion by 2010 and the bioinformatics market will touch US$ 2 billion. The industry is subsequently expected to reach 4,40,000 Crores in 2020.

Industry Trends

The world is looking at the Indian biotech industry from a new perspective, especially after the introduction of new patent rules. Pricing pressures, funding challenges and improved regulatory norms are driving global companies to seek increased cross-border partnering in India.

The development of the biopharma sector in India comes at a time when regulatory routes are opening up in Europe and the US for generic versions of biologic drugs, suggesting that Indian companies may attempt to achieve in the biopharmaceutical sector what they have accomplished in the market for supplying traditional active pharmaceutical ingredients (APIs).

Moscow-based Shreya Life Science is investing $22.1 million in India. German biotech major MWG Biotech AG has set up an Indian subsidiary to cater to the entire Asia-Pacific region. Indian companies, too, are in an overdrive, forging a plethora of alliances during the past one year with some notable deals being signed between Panacea Biotec and Chiron Vaccines and Biocon with Bristol-Myers Squib.

The remarkable growth of the industry, 39% in 2004-05, and its potential has been noticed by states too, especially those which failed to capitalise on the IT boom. At last count, there were over 15 biotech parks proposed to be set up, all promoted by state governments.

The key markets for Indian Biotechnology sector include industrial biotech (e.g. enzymes), vaccines (e.g. recombinant Hepatitis B), diagnostics (e.g. immunology kits), veterinary products (e.g. animal health products), agri-biotech products (e.g. genetically modified seeds). The industry comprises mainly of pure biotechnology start-ups and large established companies in pharmaceuticals, agriculture, and information technology.

Pie chart depicting the market share of key biotech services

 Market Leaders

Market leaders in this industry are

  • Biocon,
  • Shantha Biotechnics
  • Bharat Biotech
  • Wockhardt
  • Dr. Reddy's Laboratories
  • Serum Institute of India
  • Zydus Cadila
  • Aventis Pharma,
  • Reliance Life Sciences.

Some foreign companies having presence in the Indian biotech sector are

  • Monsanto
  • Pfizer
  • Astra Zeneca
  • Unilever
  • Dupont
  • Bayer
  • Eli Lilly
  • Hoechst Roussel Vet
  • Millipore
  • Novozymes
 
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