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Biotechnology in Health & Pharma sectors
The Indian biotech industry crossed the US$ 1 billion dollar mark in 2004-05, and is expected to cross US$ 5 billion by 2010. The industry is growing by an impressive 36.5% over the previous year. Biotech exports from India stood at US$ 455 million, contributing over 42% of the industry revenues.
Segment Sales 2003-04 (US$ million) Sales 2004-05 (US$ million) Growth (per cent)
Biopharma 625.45 811.36 29.72
BioServices 62.50 96.59 54.55
Agribiotech 29.55 75.00 153.85
Industrial Biotech 54.09 72.73 34.45
BioInformatics 18.18 22.73 25.00
Total Industry Size 789.77 1078.41 36.55
Source: Biospectrum-ABLE Annual Survey 2005
Biopharma, with revenues of about US$ 811 million in 2004-05, forms the largest pie of the biotechnology market in India, with a share of about 75%, followed by BioServices (9%).
Principal sub-sectors of Bio Pharma
Segment Sales 2003-04 (US$ million) Sales 2004-05 (US$ million) Growth (per cent)
Vaccines 294.32 379.32 28.88
Therapeutics 94.32 113.64 20.48
Others 144.32 181.82 25.98
Diagnostics 92.50 136.59 47.67
Total Industry Size 625.45 811.36 29.72
Source: Biospectrum-ABLE Annual Survey 2005
Vaccines
The domestic vaccine market is currently in the region of $379 million and this is growing at the overall rate of more than 28% per year. Major multinational pharmaceutical companies active in the vaccine businesses in India include SmithKline Beecham, Hoechst, Glaxo Wellcome and the Serum Institute. In addition, Shantha Biotechnics manufactures a recombinant HBsAg vaccine (Shanvac B), at a cost of approximately $5 per dose. This is the first such genetically engineered product from any category in India.

India is the largest producer of recombinant Hepatitis B vaccine in the world today. The Hepatitis B vaccine market in India is growing at a rate of 20 per cent and is presently estimated at US$ 22.2 million.

Several domestic biopharma companies are manufacturing and marketing recombinant human Hepatitis B vaccine in India, such as Shantha Biotechnics, Bharat Biotech International and Wockhardt. The other Indian players in this segment include Biological E, Panacea Biotec, Serum Institute of India and VHB Life Sciences. Even multinationals such as Aventis, LG Chemicals, GlaxoSmithKline and Wyeth India have their own brands in the Hepatitis B vaccine market. In all, there are over 10 brands available in India.

India is emerging as the vaccine hub of the world. Several vaccines are being procured from India in large volumes by GAVI (Global Alliance for Vaccines and Immunisation). Exports are therefore a major contributor to India’s vaccine sales.

Serum Institute, one of India’s largest vaccine players, recently announced the launch of its unique rabies vaccine, claimed to be the only indigenously developed Human Diploid Cell (HDC) rabies vaccine in India. Panacea Biotec, another leading player, has developed “thermostable” vaccines in collaboration with Cambridge Biostability, a UK based research company, and also collaborates with The Netherlands Vaccine Institute (NVI) on development of inactivated polio vaccine.

Several Indian companies are now partnering foreign companies to manufacture and market their vaccines in India. Acambis plc, a vaccine developer based in Cambridge, UK has established a manufacturing and marketing agreement with Bharat Biotech International Limited, relating to its investigational vaccine against Japanese Encephalitis. Sanofi Pasteur, France, has a marketing tie up with Ranbaxy for Vaxigrip, its global preventive vaccine against influenza. Panacea Biotec has formed a joint venture with Chiron Vaccines, USA, the world’s fifth largest vaccine company, to provide breakthrough combination vaccines to the Indian market.

Combination vaccines is the opportunity being pursued by Indian companies. Shantha Biotechnics recently launched its four-in-one vaccine, for protecting children against four life-threatening infections including diphtheria, tetanus, pertussis and hepatitis B. Similarly, Serum Institute has announced an indigenous DTP and Hepatitis B combination vaccine, Q-Vac.
Various R&D institutes in the country have been doing R&D on vaccines for cholera, tuberculosis, rabies, HIV, malaria and Japanese Encephalitis, among others.
Therapeutics
The therapeutics market in India grew to US$ 111.1 million in 2004. At present, of the 50 recombinant therapeutic products approved globally for commercial use, 14 have already made inroads into India receiving government approval for marketing in the country.

About 40 companies, both Indian and multinationals, are involved in R&D, importing, manufacturing and marketing of recombinant biotech products in India. Local companies such as Bharat Biotech, Dr. Reddy’s Labs, Panacea Biotec, Shantha Biotechnics, Wockhardt, Biocon and Intas Pharmaceuticals etc. have acquired the expertise to indigenously develop and manufacture seven recombinant biotech products namely Hepatitis B Vaccine, Streptokinase, Human Insulin, G-CSF, Erythropoietin, Human Growth Hormone and Interferon alpha 2b.

The indigenous production of these products by local companies has resulted in drastic reduction of prices and at the same time led to increased consumption. The entry of Indian firms, with their own brands of recombinant products, has changed the dynamics of the domestic market in India.

Companies in India are also looking keenly at the global biogenerics space as a large number of biologicals are set to go off patent. Companies such as Wockhardt, Dr. Reddy’s Labs and Biocon are looking at entering the regulated market in Europe, which has a regulatory system in place for the biogenerics. Wockhardt has received 17 registrations for its biopharmaceuticals and 36 registrations are being pursued in various overseas markets such as Russia, South America, North Africa, Central Asia and South East Asia. It has also formed majority joint ventures in Mexico and South Africa and has set up a subsidiary in Brazil.
Human gene therapy
Human gene therapy offers exciting possibilities to the healthcare and pharmaceuticals industries. It allows genes to be used as drugs to correct hereditary disorders. Reliance Life Sciences, an Indian firm, is one of the ten companies worldwide that have colonies of human embryonic stem cells, which are eligible for research with US government funds. Reliance Life Sciences has seven lines of stem cells and is working on four of them. The company is also setting up one of the largest cord-blood repositories in the world as part of the cell biology center.
Diagnostics
The Indian diagnostics sector in 2004-05 was estimated at US$ 137 million, accounting for 16.5% of the total biopharmaceutical sector. The market can be categorised into two major categories - reagents and allied business; and instruments business.

In 2004, there were about 25 companies manufacturing diagnostic kits in India, mainly in the areas of pregnancy, ovulation, estimation of T3, T4 & TSH, HIV, HBV and HCV infection, rheumatoid diseases and disorders, cancer (cervix, colon, prostate, lung and mouth etc.), kidney function and liver function.

The Indian diagnostics market is still largely import-driven. High import duties, elaborate custom clearance procedures, difficult logistics, slow pace of approvals from statutory authorities and lack of a robust national laboratory network for evaluation and approval of new products are some of the factors slowing down the pace of indigenisation.
R & D Activity in Biopharma
With India embracing the product-patent regime in January 2005, the sector is seeing a subtle shift from generics to innovation led research. Indian companies have recognised the importance of patenting and commercialising their technologies and products. GangaGen Biotechnologies has received two US patents for its proprietary bacteriophage technologies. ReGenesis, the Assisted Reproduction Facility of Reliance Life Sciences, has recently filed for a worldwide patent for a novel diagnostic test to detect genetic defects. The new diagnostic test is used to detect ‘gonadal mosaicism’ or low-grade genetic abnormalities of ovaries which are usually not reflected in the blood test.

Active research is going on in genomics, proteomics, pharmacogenomics, stem cell biology, nanobiotechnology and other frontier areas. The product development focus is on new generation vaccines, diagnostic kits and therapeutics. There are several institutes in the country that have the potential for development of commercially viable technologies for production of rDNA therapeutics. Considerable headway has been also achieved in medicinal plant research, in isolation and characterisation of new therapeutic agents.

There has been increasing activity in the area of stem cell research over the past few years in both the public and the private sector. As per the guidelines on stem cell research prepared by the Indian Council for Medical Research (ICMR), human cloning is barred while therapeutic cloning is allowed subject to IRB (Institutional Review Board) clearance. Over 15 institutions (mostly public sector) in the country are known to be working on stem cell research currently.
Role of State Governments
Some state governments, notably Karnataka, Tamil Nadu, Andhra Pradesh, and Maharashtra have taken initiatives to encourage entrepreneurs to set up biotech industries. Some of the key steps taken by the state governments include: announcing separate Biotechnology Policy for their states, setting up of exclusive Biotechnology Parks, setting up of Task Forces with experts to guide them on policy issues.

For more details of Biotechnology Policies of respective states, please refer to the following websites:

Karnataka:         www.bangalorebio.com
Tamil Nadu:        http://www.tn.gov.in/policynotes/archives/policy/indbiopol-e.htm 
Andhra Pradesh: www.indiainbusiness.nic.in/indian-states/andhra-pradesh/biotechnologypolicy.htm
Kerala:               http://www.kscste.org/other/biotechnology.htm
Maharashtra:      http://www.indiainbusiness.nic.in/indian-states/maharashtra/biotechpolicy.htm

Human resources
Human resource development is a key factor in the future growth of biotechnology. At present, India has a capacity of less than 700 post graduate students spread over the various segments- agriculture, vaccine research, neurosciences, brain cell research, etc. Realizing the need to bridge the enormous gap in availability of trained personnel, many states have moved to expand the programmes at important universities, besides setting up specialized institutes.

Financing
Availability of funding for start-ups has been identified as a key issue for the promotion of biotechnology activities in India.  According to the industry, business plans of the present players call for an investment in the region of US$ 500 million, of which only $ 100 million have been tied from various sources. Promoter equity and venture capital assistance from Indian financial institutions account for a large share of the assistance at present. The principal institutions in the sector have been venture capital arms of Indian financial institutions, notably ICICI Ventures, ICF Ventures, UTI Ventures, and SIDBI. 

Venture capital assistance has been much below expectations. Reasons for the low interest level by private and overseas venture funds include a rationalization of exposure after the dotcom bust, and the inherently “high- risk” perception of biotech research, given its open-ended revenue models that make purely commercial decisions difficult. Also, in India, biotechnology was still shrouded in controversies regarding its benefits and ethical aspects. Sartorius Ag, Germany is among the larger venture investors in India, and has invested US$ 0.75 million in biotech start-ups, and has also announced stakes in a biotechnology park in Tamil Nadu.

A host of big names including Connect Capital, ING Barings, Dresdner Kleinwort Benson, Chrysalis Investments, Sartorius AG and Warburg Pincus are evaluating biotech companies for private equity in second-level funding, i.e. beyond the pure start-up stage.
Regulatory aspects / Government policies:
Foreign investment and industrial policy has been liberalized in the sector.
Arrow 74% foreign equity investment is automatic in Drugs and Pharmaceuticals sector, and over 74% is on case-by-case basis
Arrow However, any proposals involving recombinant DNA processing or marketing of products using rDNA processes require prior approval
Arrow Some drugs are subjected to national price controls (insulin is one of them)
Arrow Wholly owned foreign subsidiaries are allowed in research and development activities, but not in purely trading or marketing activities
Fiscal incentives: Companies engaging in scientific research are allowed 150% rebate on own R & D expenditure, and 125% rebate if research is contracted in public funded R & D institutions

Marketing of Imported Drugs:
The Government has amended the Drugs and Cosmetic Rules, 1945 streamlining procedures for approval for manufacture and import of new drugs.  Schedule Y to the Drugs and Cosmetic Rules, which prescribe requirements and guidelines on clinical trails for import and manufacture of new drugs, has been amended in 2001 to make Post Marketing Surveillance (PMS) study mandatory for all imported products.

However, the Schedule also contains an amendment that no clinical trials for a new drug, whether for clinical investigation or any clinical experiment by any institution shall be conducted except under the permission from the Drugs Controller General of India, which may be felt as an unnecessary restriction on cross-border, contract clinical trials.
 
 
 
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