Introduction
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.
Market Size
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
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
Government Initiatives
The Indian Government’s increased focus on the country’s biotechnology industry has enabled it to grow at a compounded annual growth rate (CAGR) of approximately 20 per cent over the past decade. The biotechnology sector in India has reached an estimated size of Rs 20,441 crore (US$ 3.77 billion) in value over FY12, and is forecasted to reach Rs 55,300 crore (US$ 10.18 billion) by 2015. However, given the availability of skilled manpower, improved infrastructure, and the presence of strong regional markets, analysts project that attaining an ambitious growth rate of approximately 30 per cent, taking the industry to a value of Rs 5,50,000 crore (US$ 101.27 billion) by 2025, is a possibility.
Some of initiatives taken by the Government to further promote the sector are as under:
- Karnataka Biotechnology and Information Technology Services (KBITS) has signed two MoUs with Scottish Development International (SDI) and Georgia Department of Economic Development at Bangalore India Bio
- Association of Biotechnology Led Enterprises (ABLE) and US-based Washington Biotechnology and Biomedical Association (WBBA) have signed a MoU to enable co-operation in the field of biotechnology
- The Government of India has disbursed Rs 205 crore (US$ 37.75 million) as scholarships for women scientists under the Women Scientists Scholarship Scheme (WSSS), Ministry of Science and Technology
- The Association of Biotech Led Enterprises (ABLE) is leading an Indian delegation to Biotechnology Industry Organisation (BIO) International Convention, to be held at Boston, US. ABLE plans to showcase biotech parks established (and under establishment) in various States to attract global biotech industries to India
- The Government of India plans to set up an Indian Institute of Agricultural Biotechnology at Ranchi with an investments of Rs 287.50 crore (US$ 52.95 million). The Institute will be a deemed university and will have different schools to import knowledge in genomics, bioinformatics, genetic engineering, nano biotechnology, diagnostics and prophylactics and basic and social sciences and commercialisation
Road Ahead
India has the potential to become a major producer of transgenic rice and several genetically modified (GM) or engineered vegetables. Hybrid seeds, including GM seeds, represent new business opportunities in India based on yield improvement.
Vaccines and recombinant therapeutics are the leading sectors driving the biotechnology industry’s growth in India. Newer therapies are anticipated to launch in the next few years, prominent among these are monoclonal antibodies products, stem cell therapies and growth factors. The country’s huge population places it among the world’s largest markets for vaccines.
Protein and antibody production and the fabrication of diagnostic protein chips is a promising area for investment. Stem cell research, cell engineering and cell-based therapeutics is another area, wherein India will cash in its expertise.
Indian bioinformatics companies can play a significant role in critical areas such as data mining, mapping and DNA sequencing. There is also opportunity in functional genomics, proteonics and molecule design simulation.
Some other potential areas of development include medicinal and aromatic plants, animal biotechnology, aquaculture and marine biotechnology, seri biotechnology, stem cell biology, environmental biotechnology, biofuels, biopesticides, human genetics, genome analysis, and others.
Exchange Rate Used: INR 1 = US$ 0.081 as on February 22, 2013
References: Press Information Bureau (PIB), Media Report, Department of Industrial Policy and Promotion (DIPP), Department of Biotechnology
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