Biotech Blossoms In India

The biotechnology sector in India is one of the fastest growing knowledge based sectors and is expected to play a key role in shaping the rapidly developing Indian economy. Traditionally, the Indian biotech sector was mainly confined to conventional biotechnology which included fermentation processes using micro-organisms for producing products such as alcohol, cheese, bread etc., and medicinal and industrial products such as antibiotics and enzymes. However, in the last few years, there has been growing awareness and demand for modern biotechnology products such as recombinant vaccines, diagnostics, biopharmaceuticals and hybrid seeds. The focus of biotech research is now primarily on recombinant DNA technology, hybridoma technology, gene transfer, cell fusion techniques, structural and functional genomics, protein engineering, molecular design, monoclonal antibodies and genetically modified crops.

Though, India today holds a small share of the global biotech market, with its large pool of scientific talent and rich biodiversity, it is expected to emerge as a strong player in the global biotech arena in the coming years. India is expected to gain leadership in biotechnology due to its skilled and knowledgeable manpower, good research laboratories, huge market for products and services with its large population and abundant raw materials and plant, animal and human genetic diversity. India has the strength and capabilities in this industry and a definite advantage to move forward and become the chosen location for many biotech companies looking for large markets and low cost qualified manpower.

Industry Overview

The Indian Biotechnology industry can be divided into five major segments: Biopharmaceutical, bioservices, bioagriculture, bioindustrial and bioinformatics.

The biopharmaceutical segment constitutes the largest segment of the industry's total revenue (67 %). According to EMC Consultancy, the biopharma segment recorded sales in excess of $1.72 billion (Rs. 6,899 crores), registering a 16 % growth during 2007-08. By 2012-13, the sector is expected to be worth $5.7 billion. The segment includes vaccines, therapeutics and dignostics. Till now, twenty recombinant therapeutics have been commercialized in India (www.igmoris.nic.in) and many are currently in clinical trials.

The bioservices market is the second largest sector (15 %) of the Indian 
biotechnology industry and includes 
clinical trials, contract research and 
manufacturing activities. The sector 
has contributed Rs.10 billion ($250 million) to the biotech industry in 2007-08. During 2007, the country conducted 
approximately 220 clinical trials, accounting for more than 2 % of the global trials, and this is likely rise to about 5 % by 2012.

India is facing challenges to produce more farm commodities for the growing human and livestock population and this is where the bioagricultural segment can play a key role. Bt cotton is the first and currently only crop in India that has been released for commercial cultivation. Transgenic rice, corn, sorghum, groundnut, castor, tomato, okra, brinjal, cabbage, cauliflower and potato are already into field trials. The bioagricutural sector recorded sales of about Rs.11 billion accounting for 12 % of the total industry revenues during 2007-2008.

The bioindustrial sector predominantly includes enzyme manufacturing and marketing companies. This sector accounts for 4 % of the total industry revenues generating Rs.4 billion. And lastly, bioinformatics deals with the creation and maintenance of extensive databases on various biological systems. This sector accounts for 2 % of the total industry revenues generating Rs.1.3 billion.

Market Size

The revenues generated by the industry reached $2 billion in 2006-07, an increase of $1 billion over 2004-05 and $1.5 billion over 2005-06. According to the EMC Consultancy, the biotech industry grossed $2.5 billion (Rs.103 billion) in revenues during 2007-08. The biotechnology sector in India is progressing rapidly at a rate of over 40 % annually and is expected to reach the five billion-dollar mark by 2010. India is ranked among the top 10 biotech destinations in the world and is predicted to join the elite club of the top five by 2010.

Exports presently dominate the Indian biotechnology market, with bioservices and bioinformatics in particular being export driven industries. The Indian Biotechnology industry exported biotech products worth Rs.18.17 billion ($0.40 billion) during the year 2003-04 and during 2007-08 period exports grew to Rs.5733.7 crores in revenue.

Government Initiatives

There has been a significant increase in Government outlays for biotechnology over the past decades. The government of India has set up a separate Department of Biotechnology (DBT) in 1986 under the Ministry of Science and Technology, with the purpose of planning, promoting and coordinating various biotechnological programmes and activities in the country. The main function of DBT is to provide grant support to national research laboratories, universities and research foundations for biotechnology related activities in different sectors like health care, agriculture, environment and industry.

The main responsibilities of the DBT are to promote the large scale use of biotechnology, identify and set up centres of excellence for biotech R&D and manufacturing fields, establish infrastructure facilities to support R&D and production, act as an agent of the Government for import of new recombinant DNA based biotechnological processes, product and technology, and evolve bio-safety guidelines for laboratory research, production and applications etc.. DBT is also involved in the promotion of transgenic research in plants. Patenting of innovations and technology transfers have given a new direction to biotechnology research.

Other government ministries such as the Ministry of Science and Technology, Ministry of Agriculture, Ministry of Health and Family Welfare, etc., and the departments and agencies within them are also involved in promoting and funding biotechnology. The Indian Patents Act, with amendments in 2005, allows a 20- year patent term, inline with the provision made by WTO and TRIPS. India also has well established regulatory framework to evaluate, monitor and release of genetically modified organisms. A National Biotechnology Development Strategy Policy, 2007 has been announced with the following key features:

• Creation of an independent, autonomous body, Biotechnology Regulatory Authority of India, to provide a single window mechanism for biosafety clearance of genetically modified products and processes;
• A high-powered Inter-ministerial Committee to be set up under the chairmanship of Secretary, DBT, for effective coordination of the development of the sector by addressing cross cutting issues;
• 30 % of the DBTs budget to be spent on public-private partnerships;
• A Biotechnology Industry Partnership Programme (BIPP) for Advanced Technology has been launched;
• The Small Business Innovation Research Industry (SBIRI) to successfully promote innovation in SMEs; and
• A Biotechnology Industry Research Association Council (BIRAC) is to be launched to act as an interface between academia and the private sector, nurture and catalyze R&D and innovate biotechnology in the private sector and promote public-private partnership. The interface has been initiated as a pilot programme by DBT.

The biotech industry in India also benefits from the following tax incentives that have been provided as per Budget 2008-2009:

• Excise duty on pharma products has been reduced from 16 % to 8 %;
• Custom duty on certain specified life saving drugs and on the bulk drugs used for the manufacture of such drugs have been reduced from 10 % to 5 %;
• Reduction in sales tax from 3 % to 2 %;
• Amount spent in R&D is eligible for a 125 % weighted reduction; and
• There has been an increase in healthcare allocation by 15 % to Rs. 16,354 crores.

In addition to the initiatives by the Government of India, several state governments have also undertaken various initiatives to encourage and nurture the biotech industry. Karnataka was the first state in the country to announce a "millennium" biotechnology policy in 2001 to promote the developing biotech sector. Later many other states came up with their respective policies. Exclusive biotech parks have been set up by the various state governments such as Shapoorji Pallonji Biotech Park and Hyderabad. The States of Andhra Pradesh, Kerala, Maharashtra, Punjab, Tamil Nadu and Uttar Pardesh have made substantial progress in establishing biotech parks whereas Himachal Pradesh, Karnataka, Madhya Pradesh, Rajasthan and Uttaranchal are in the developing stage. The state governments are also supporting the industry players for tax holidays, incubators, incentive packages and venture funding.