The Indian biotechnology sector is one of the fastest growing knowledge-based sectors in India and is expected to play a key role in shaping India's rapidly developing economy. With numerous comparative advantages in terms of research and development (R&D) facilities, knowledge, skills, and cost effectiveness, the biotechnology industry in India has immense potential to emerge as a global key player.
The Indian biotech industry registered 18.5 per cent growth in FY12; total industry size stood at US$ 4.3 billion by the end of the financial year. The industry is expected to increase in size to US$ 11.6 billion by 2017, driven by a range of factors including growing demand, intensive R&D activities and strong Government initiatives.
This exceptional growth has been facilitated by the robust performance of all the sub-sectors of the Indian biotechnology industry, namely, bio-pharmaceuticals, bio-services, agri-biotech, bio-industrial, and bio-informatics. Bio-pharmaceuticals is the largest sub-sector of the industry, whereas agri-biotech is the fastest growing. Out of the top 10 biotech companies in India (by revenue), six specialise in bio-pharmaceuticals and four specialise in agri-biotech.
The bio-pharmaceutical sector accounted for the largest chunk of the biotech industry, with a share of 62 per cent in total revenues in FY12. In the same year, bio-services and the bio-agri segments followed the bio-pharmaceutical segment with shares of 18.3 per cent and 14.9 per cent, respectively.
Growth was fastest in the bio-agri segment (23 per cent in FY12), followed by bio-pharma (19.0 per cent) and bio-services (15.5 per cent).
Domestic bio-services sector grew an astounding 102 per cent in FY12 to US$ 109.3 million. The domestic bio-pharma sector, which accounts for more than 61 per cent of the domestic biotech industry, registered a 26.6 per cent growth in FY12; in comparison, the growth in domestic bio-informatics sector was 24 per cent.
Biotech export revenue reached US$ 2.1 billion in FY12, nearly half (48 per cent) of total industry revenue. Over the years, export revenue has grown considerably from US$ 0.4 billion in FY05 to US$ 2.1 billion in FY12 (a CAGR of 25.6 per cent).
Investments, along with outsourcing activities and exports, are key drivers for growth in the biotech sector.
Foreign direct investment (FDI) up to 100 per cent is permitted through the automatic route for manufacturers of drugs and pharmaceuticals.
According to data released by the Department of Industrial Policy and Promotion (DIPP), the drugs and pharmaceuticals sector has attracted FDI worth Rs 45,980.03 crore (US$ 8.47 billion) between April 2000 and December 2012.
Some of the major investments in the sector are as follows:
- Biocon has entered into an agreement with Mylan for the global development and commercialisation of Biocon's generic insulin analog products (long lasting insulins), which has a global addressable market of US$ 11.5 billion
- Biomax Fuels has formed a 50:50 joint venture (JV) with the Jeddah-based Middle East Environment Protection Co. to set up the first bio-fuel plant in Saudi Arabia
- Eli Lilly and Strides Arcolab have inked a pact to increase delivery of cancer medicines in emerging markets. Agila Specialties, the specialties division of Strides Arcolab, will make cancer medicines and Eli Lilly will market them in emerging geographies
- India's biotechnology company Biocon has entered into an agreement with the US-based Bristol-Myers Squibb (BMS) to further develop its IN-105, an oral insulin product
- VayuGrid has signed a memorandum of understanding (MoU) to create a biofuel cluster for its VayuSap—high-yield Pongamia—in Ethiopia. The cluster will create US$ 2.5 million biofuel investment opportunity
- GE Capital has picked up 7.69 per cent stake in Syngene, a subsidiary of Biocon, for Rs 125 crore (US$ 23.03 million). Syngene, a contract research organisation, is into drug discovery and development services