The biotechnology sector is one of the sectors which have contributed to enhancing the global profile of India in the last decade. At the beginning of the decade, this industry began to take shape with the sprouting of dozens of start-up companies as well as the diversification of established pharma players which set up biotech divisions to focus on this segment. A lot of significant developments have taken place in the sector since.
India is among the top 12 biotech destinations in the world and is the largest producer of recombinant Hepatitis B vaccine. Out of the top 10 biotech companies in India (by revenue), six focus their expertise in bio-pharmaceuticals and four specialise in agri-biotech.
The sector has witnessed some emerging trends. Bio-pharma, which constitutes nearly two-thirds of the Indian biotech sector, invests in innovative product development. Clearly, a lot of companies see more value in ramping up their service offerings even as they try to master the technological, financial and regulatory challenges, before they are able to offer cutting edge drugs in the market place.
The Indian biotechnology industry has evolved over the last three decades to a mid-maturity stage. The industry is expected to experience significant growth amid favourable business conditions. By FY 17, India’s biotech industry is estimated to increase to US$ 11.6 billion from US$ 4.3 billion in FY 12, growing at compound annual growth rate (CAGR) of 21.9 per cent. If a favourable business environment is created, the biotechnology and healthcare sectors combined will be able to grow at a rate of 25–30 per cent and have the potential to generate revenues of US$ 100 billion by 2025.
Indian biotechnology sector is divided into five major segments – pharma, services, agri, industrial, and informatics. The bio-pharmaceutical sector accounted for the largest share of the biotech industry, with a share of 64 per cent in total revenues in FY 13, followed by bio-services (18 per cent), bio-agri (14 per cent), bio-industrial (3 per cent) and bio-informatics (1 per cent).
Revenue from bio-pharma exports contributes more than 64.5 per cent to total export revenues in the biotech industry; exports from this segment grew by 25 per cent to reach US$ 1.4 billion in FY 13. The bio-informatics sector reported maximum growth (more than 33 per cent) in export revenues in FY 13. This reiterates the export potential of the segment, which the industry is set to exploit in the coming years.
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 56,014.89 crore (US$ 9.29 trillion) between April 2000 and February 2014.
Some of the major investments in the sector are as follows:
The Government of India (GOI) through the Department of Biotechnology (DBT) has helped nurture the biotechnology field in India since its inception in 1986. India now has a large pool of outstanding people and infrastructure, created through several innovative schemes, which can serve as the capstone for the future growth of this sector and help the country achieve its vision to become a bio-economy and to extend benefits of biotechnology to its people.
Some of initiatives taken by the Government to further promote the sector are as under:
India is now recognised as a global destination for vaccines, bio-services and increasingly for contract manufacturing, especially biosimilars. Many firms are exploring exciting areas of stem cell biology, synthetic biology, agri-biotechnology systems biology and evidence-based traditional medicine. The dynamic changes in the economy will make India a leading economic power in the world. The growth in gross domestic product (GDP) over the next decade will expand the domestic market and Indians will be able to afford healthcare products, and demand for food commodities and energy will grow too.
There is a huge opportunity for Indian biotechnology to play an important role in the Indian economy as well as contribute to the global economy. Indian biotechnology has multiplied six times from 2003 to reach more than US$ 4 billion. This pace of growth at 20 per cent for over a decade is impressive. However, if the biotechnology industry operating landscape becomes more innovation friendly spurred by the government’s policies then the industry could possibly grow at 30 per cent CAGR. This will make the combined total of the biotechnology and healthcare industry to touch US$ 100 billion by 2025.
Exchange Rate Used: INR 1 = US$ 0.0166 as on May 01, 2014
References: Press Information Bureau (PIB), Media Report, Department of Industrial Policy and Promotion (DIPP), Department of Biotechnology