2. EXPORT-IMPORT BANK OF INDIA
OCCASIONAL PAPER NO. 137
BIOTECHNOLOGY INDUSTRY IN INDIA:
OPPORTUNITIES FOR GROWTH
EXIM Bank’s Occasional Paper Series is an attempt to disseminate the findings of
research studies carried out in the Bank. The results of research studies can interest
exporters, policy makers, industrialists, export promotion agencies as well as
researchers. However, views expressed do not necessarily reflect those of the Bank.
While reasonable care has been taken to ensure authenticity of information and data,
EXIM Bank accepts no responsibility for authenticity, accuracy or completeness of such
items.
© Export-Import Bank of India
Published by Quest Publications
January 2010

4. CONTENTS
Page No.
List of Tables 5
List of Exhibits 7
List of Boxes 9
Executive Summary 11
1. Introduction 32
2. Global Biotech Industry 37
3. Biotechnology in India: Current Status 56
4. Indian Biotech Segments: Emerging Opportunities 82
5. Challenges & Strategies 111
Project Team:
Mr. S. Prahalathan, General Manager, Research & Planning Group
Mr. Ashish Kumar, Chief Manager, Research & Planning Group
Mr. Rahul Mazumdar, Manager, Research & Planning Group
3

6. List of Tables
Table Title Pg. No.
No.
1. Global Biotechnology Data for 2007 and 2008 42
2. Region-wise Biotechnology Data, 2008 43
3. Top 10 Biotech Products by Estimated Sales by 2014 48
4. Top Ten Biotech Drugs in 2008 49
5. Top Biotech Clusters in India - 2008-09 68
6. Top Biotech Cities in India - 2008-09 69
7. Biotech Parks in India 71
8. Understanding Key Segments in Biotechnology Industry 84
9. Select Key Firms in the Biopharma Business in India 86
10. Recombinant Therapeutic Drugs Approved for Marketing In India 90
11. Biotech Crops in Field Trial in India, 2008 94
12. Area, Production and Productivity of Cotton in India (2002-08) 97
13. Consumer Goods made with Industrial Biotech 100
14. Comparison of Generics, Biosimilars and Biologics 104
15. Key Biotech Products Losing Patent Protection in the US 122
5

8. List of Exhibits
No. Title Pg. No.
1. Share of Population above 65 Years in Select Countries (in%) 34
2. Top Biotechnology Nations, 2008 (By Number of Firms) 38
3. Trend in Financing of Global Biotech Industry (US$ Bn) 39
4. Number of Greenfield FDI Projects in Biotech Industry 40
in the World- 2004–2009
5. Share of Regions in Global Biotechnology Revenues - 2008 42
(Public Company Data)
6. Share of Regions in Global Biotechnology 44
R&D Expenditure - 2008 (Public Company Data)
7. R&D intensity (%) and R&D Expenses Per Employee 44
(US$ 000), 2008 (Public Company Data)
8. Share of Regions in Global Biotechnology 45
Employment – 2008 (Public Company Data)
9. Share of Regions in Terms of Number of Players 46
10. Average Revenue Per Employee & Employee 47
Intensity Per Company
11. Indian Biotech Industry in 2008-09 56
12. Evolution of The Biotechnology Industry in India 58
13. Key Advantages of Biotechnology Industry in India 59
14. Indian Biotechnology Industry Structure 63
15. Indian Biotechnology Industry – Revenue by Segments 65
16. Domestic Business of Various Biotech Segments in India 66
17. Export Business of Various Biotech Segments in India 67
18. Top Biotech Regions in India - 2008-09 68
19. Budgetary Allocations in The Five-year Plans in India (Rs. Crore) 75
20. Growth of The Biotechnology Industry in India 83
21. Key Segments in Indian Biotechnology Industry 83
22. Biopharma Revenue By Segments in India 85
23. Segmentwise Shares of Biopharma Industry (2008-09) in India 86
24. UN Human Development Index Rank by Select Countries 112
25. Trends in Pharma-Biotech M&A Deals 119
7

10. List of Boxes
No. Title Pg. No.
1. DNA – Cornerstone of Biotechnology 33
2. Recombinant DNA Technology 36
3. Centers of Excellence in Biotechnology Sector in India 61
4. Biotechnology Patent Facilitating Cell 72
5. National Biotechnology Development Strategy 76
6. Biotechnology Institutional Infrastructre in India 77
(Existing and Proposed)
7. “Builder” Scheme 78
8. India’s First Nanotech Park 108
9. Umbilical Cord Blood Banking 109
10. Ramalingaswami Fellowship - An Initiative for Reversing Brain Drain 118
11. Exim Bank’s Support to Research & Development 121
9

12. EXECUTIVE SUMMARY
INTRODUCTION participation, and most importantly,
Biotechnology is a generic term that due to the proactive and enabling
encompasses a wide spectrum of policies of the Government. In fact,
scientific and technological the various policies of the
applications used across a variety Government over the last three
of sectors. Biotechnology therefore decades have enabled the Indian
must be seen in the context of a biotechnology industry to carve out
continuum of other disciplines and a niche for itself in the globally
technologies where its synchronized competitive environment and
application drives new products and consolidate its position.
technologies. In the present day
context, the importance of the GLOBAL BIOTECH INDUSTRY
biotechnology sector has assumed The global biotech industry is
increasing significance. The sector predominantly skewed in favour of
today possesses the ability to the developed countries, both in
provide crucial leads, which can terms of number of firms as also
help not only in curing critical in terms of revenues. USA tops the
diseases but also reduce list with over 1750 companies,
widespread hunger. With a strong followed by France (824), South
and consistent research and Korea (773) and Spain (659). India,
development thrust, the sector is with 325 biotech companies in
increasingly being viewed as an 2008, was ranked 11th in the world
answer to diseases, such as cancer and fourth in the Asia-Pacific region
and AIDS; as an instrument to after South Korea, Japan and
enhance agricultural productivity; Australia.
and in providing solutions to climate
Notwithstanding the recent
change and promoting sustainable
economic meltdown, the revenues of
development through use of
the public biotechnology companies
biofuels.
across the world increased from
The industry today has achieved US$ 84.7 bn in 2007 to US$ 89.6 bn
a global status through firm-level in 2008, an increase of 5.7%. In spite
strategies, active industry-level of this increase in revenues, the
11

13. inudstry posted loss in operations, Science and Technology (DST) in
although the loss in the year 2008 1982. The NBTB acted as an apex
declined from US$ 2.6 billion in 2007 body, which was given the task of
to US$ 1.4 billion in 2008. The R&D identifying priority areas and
expenditure in the biotech industry evolving a long-term plan for the
registered a marginal decline of 0.3% development of biotechnology. Four
in 2008, reflecting the overall years later in 1986, the NBTB was
recessionary situation prevailing in upgraded to a full-fledged
the world economy. The total Department of Biotechnology
employees engaged in the public (DBT). This paved the way for
biotechnology companies also furthering the growth of
exhibited similar trends registering a
biotechnology in the country.
marginal decline of 0.5% in 2008, to
reach a little over 2 million. The global The progress for biotechnology
revenues per employee in the industry in India has been possible
biotech industry were to the tune of due to the inherent advantages that
US$ 0.44 million, while the global the country has, including diverse
employee intensity per company in flora and fauna, large gene pool,
the biotech industry was at 42.5 temperate climate, quality manpower
employees. In the year 2008, there and low-operational costs. Further,
were more than 4700 companies the proactive policies and measures
operating in biotechnology industry taken by the Government of India
across the globe, with most of them
and its agencies, have allowed the
(83%) controlled by private entities.
industry to capitalize upon such
advantages. Today, biotechnology is
BIOTECHNOLOGY IN INDIA:
being promoted in the country
CURRENT STATUS
keeping in view its enormous
The Indian Biotechnology industry potential to improve agriculture, food,
has been evolving over three health, environment and energy
decades. The milestones of the requirements of the population.
evolution of biotech industry in India
began in 1978, in Bangalore, when In terms of market dynamics, the
the country’s first biotech company Indian biotech sector had a healthy
Biocon was established for growth in 2008-09 with its revenues
producing industrial enzymes. The reaching Rs. 12137 crore. Within
Government provided a major this, BioPharma contributed
thrust to the sector with the Rs. 7883 crore, followed by
establishment of the National BioServices (Rs. 2062 crore),
Biotechnology Board (NBTB) under BioAgriculture (Rs. 1494 crore),
the aegis of the Department of BioIndustrial segment (Rs. 478
12

14. crore), and BioInformatics (Rs. 220 25% to Rs 7,152 crore. Sub-
crore). Recent trends in turnover of segments like BioPharma and
the industry indicate that the Indian BioServices have had a majority of
biotechnology industry recorded a their revenues coming from exports,
CAGR of 31.5% during the period with export revenue constituting
2001-02 to 2008-09, increasing from around 62% and 95%, respectively,
Rs.2345 crore to Rs. 12137 crore in these sub-segments during 2008-
during the period. The domestic 09. In fact, these two segments
biotechnology market clocked constitute over 95% of the total
revenues of Rs 4,985 crore in 2008- biotech exports from India.
09, registering a 10% growth as BioInformatics (2.37%), BioIndustrial
compared to the previous year, and (1.24%), and BioAgri (0.89)% are
accounting for around 41% of marginal contributors to overall
revenues generated in the industry. export of indian biotech industry.
As regards segment-wise data, The Indian biotechnology
for the year 2008-09, industry is spread across many
BioPharmaceutical sector accounted states in the country. These states
for the largest chunk of the biotech have unveiled state-specific biotech
industry, garnering a share of 65% policies and have established biotech
in total revenues, with vaccines being parks to attract investment in this
the largest contributor within the industry. These parks have emerged
BioPharmaceutical segment. as a focal point of some of the
BioServices (17%) and BioAgri leading biotech clusters such as
(12.3%) are other major sub- Genome Valley in Hyderabad and
segments of Indian biotech industry. Hinjewadi in Pune. The respective
Segments like BioIndustrial and government policies in these states
BioInformatics garnered a share of and scientific ambiences have also
3.9% and 1.8%, respectively of the been responsible for the growth of
total revenue in 2008-09. bioclusters.
Interestingly, the share of the various
Government of India on its part
segments of the biotechnology
has initiated certain far-reaching
industry remained almost the same
legislations to promote the growth of
with minor changes in 2008-09, as
the biotechnology industry in the
compared to 2007-08.
country. In India, there are
The Indian biotech industry is involvement of several organisations
largely export-driven accounting for regulating the development of
60 % of the total revenues in 2008- biotechnology, which has often
09. In rupee terms, the resulted in overlap of functions. In
exports business went up by almost order to streamline the regulatory
13

15. process, the Government has been supporting the sector through
proposed the establishment of the provision of funds. While
National Biotechnology Regulatory Government funding to the Science
Authority (NBRA), to provide a & Technology sector increased
consistent mechanism for regulatory nearly three times from the Tenth
approval. In July 2008, the DBT Five-Year Plan to the Eleventh Five-
introduced the National Year Plan, support to the biotech
Biotechnology Regulatory Act, which industry increased by as much as
would establish the NBRA as an four times during the same period
empowered body to approve with the budgetary allocation
genetically modified crops, food, shooting up from Rs. 25301.35
recombinant biologics like DNA, crore in the Tenth Plan to
vaccines, recombinant gene therapy Rs. 75304 crore in the Eleventh
products, and recombinant and Plan. In fact, the Department of
transgenic plasma-derived products Biotechnology received almost
such as clotting factors, veterinary 8.5% (Rs. 6389 cr) of the total
biologics and industrial products. budgetary outlay of the Ministry of
Science & Technology in the
The enactment of New Patents Eleventh Plan. Though the DBT
Act, 2005, brought a paradigm shift remains the main funding
in research and development in the organization for the Biotech sector
sector. Previously, India had a patent in India, there are other scientific
protection for process rather than the departments, which have also
product, which brought about started contributing in this field.
complacency without initiating much
effort upon the development of new Research & Development
products. The New Patents Act of Facilitation
2005 enforces product patents
thereby inspiring firms and research The DBT and other organizations
institutions to undertake the have also proactively taken up a
innovation at their behest. Apart from number of initiatives in creating
this, there are two bills, namely, DNA institutional infrastructure and a
Profiling Bill, and The Protection and strong research base in the country
Utilization of Public Funded in areas relating to agriculture and
Intellectual Property Bill, which are forestry, human health, animal
on the anvil and are expected to be productivity, environmental safety
passed by the Parliament shortly. and industrial production.
DBT has also been at the
Government Funding forefront of maintaining many
In addition to creating enabling international collaborations and
policies, the Government has also introducing joint proposals with
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16. countries like Australia, Canada, competition, and ever changing
Finland, Germany, Sweden, USA, regulations, the Indian biotech
Japan and the EU. Under the industry has been successful in
National Bioresource Development creating a niche for itself in the
Board, a major initiative has been world.
taken for the establishment of a
The biotech industry in India can
Microbial Culture Collection– be broadly categorized under five
Biological Research Centre at Pune. distinct segments - BioPharma,
The Centre has provision to hold BioServices, BioAgriculture,
more than 2,00,000 bacteria and BioIndustrial, and BioInformatics,
fungi following international with each sub-segment contributing
standards, with the gradual to the growth of the biotechnology
upgradation of the facility as an industry.
International Depository Authority on
microbial collections. Under the BioPharmaceuticals
programme on prospecting of drugs
BioPharmaceutical products are
from microbial sources, about one
therapeutic or preventative
lakh bacterial isolates have been
medicines that are derived from
collected and screened. More than
materials naturally present in living
two lakh extracts have been
organisms using recombinant DNA
prepared, and about 7,000 promising
(rDNA) technology. The growth in
hits obtained. BioPharmaceutical drugs and
biologics has outperformed the
INDIAN BIOTECH SEGMENTS: pharmaceutical market. This has
EMERGING OPPORTUNITIES been so largely due to two factors
The biotechnology industry has a – firstly, the former addresses areas
global presence today. While the of clinical needs that are
industry has its roots in the unmanageable with conventional
developed country markets, therapeutics, including cancers and
emerging countries like India have genetic diseases; and secondly,
started playing an important role they are able to command a
leveraging upon its USPs (Unique premium price. The total
Selling Proposition) through better BioPharma segment in India
coagulation of academic research registered a 14.3% growth in terms
and commercial development, of total revenues in 2008-09 to
coupled with the synchronization of aggregate Rs. 7883 crore as
science and finance to emerge as against Rs. 6889 crore recorded in
a strong contender in the global 2007-08. The segment has been
biotech industry. Amidst an the single largest contributor to the
environment of continuing cut-throat Indian biotech industry for many
15

17. years, especially due to its export 15 different vaccines. A BioSpectrum
orientation. In 2008-09. exports estimate put the size of Indian
accounted for 62% of the vaccine sub-segment at Rs 3,587
BioPharma revenue, while domestic crore (US$ 737 million) in 2009, and
sales accounted for the remaining is expected to grow at about 20-25%
38%. With India having a relatively over the next few years; while
well developed pharmaceutical globally, the vaccine sub-segment is
sector, there are synergies that valued at US$ 20.6 billion and is
exist between the two sectors. The growing faster than the pharma
success strategies adopted by the industry. The world market size of
Indian pharmaceutical sector combination vaccine is projected to
therefore needs to be suitably cross US$ 2 billion mark in 2013,
leveraged by the Indian biotech which implies an annual
players in order to realize the compounded growth of over 18%.
untapped business potential.
As far as the therapeutic sub-
The BioPharma sector can be segment is concerned, it contributed
further classified into three broad around 37% of the total revenues
sub-segments, viz. vaccines, generated from BioPharma in 2008-
therapeutics and diagnostics. The 09. During 2008-09, the Indian
vaccines sub-segment is the prime therapeutics market recorded a 19%
contributor, accounting for close to growth to record revenues worth Rs.
46% of the total revenues arising 2956 crore. Human insulin was the
from the BioPharma sector in 2008- largest contributor to the therapeutics
09. The vaccines segment has also market, a reflection of India’s large
shown a healthy growth trends diabetic population. With diabetes
recording a CAGR of 15.3% during now ranked as the fifth leading
the period 2005-06 to 2008-09, disease causing death across
increasing from Rs. 2341 crore to developed country markets, and
Rs. 3587 crore. On a yearly basis, forecast to grow, the market for
the revenue in 2008-09 increased at once-a-day drug delivery and non-
10.2%, from Rs.3250 crore in 2007- invasive drug delivery systems
08. continues to offer significant potential
for expansion. India is predicted to
The recent upsurge in demand
lead the way with 73.5 million people
for vaccines, both in domestic and
expected to have diabetes by 2025.
international markets, is important
both from public health and The diagnostics business
economic perspectives. According to accounted for close to 17% of the
Department of Biotechnology, total BioPharma business in 2008-
Government of India, there are 09, recording a CAGR of around
around 15 companies involved in 14% during the period 2005-2009
marketing over 50 brands for (from Rs. 905 crore to
16

18. Rs. 1340 crore). On a yearly basis, organizations (CRO) and to some
the revenue increased at 16.5% - extent custom manufacturing. The
from Rs.1150 crore in 2007-08. BioServices sector, which
However, this increase has been accounted for about 17% to the
lower as compared to the growth in total biotechnology industry’s
the previous year, which was around revenues, and recorded a growth
21%. It is estimated that of 31% in 2008-09, over the
approximately 60-70% of medical previous year. Exports dominated
treatments in India are based on the BioServices segment
laboratory diagnostic tests. accounting for almost 95% of the
Diagnostics revenue market total BioServices revenues of
increased from Rs.905 crore in 2005- Rs. 2062 crore in 2008-09. In fact,
06 to touch Rs.1340 crore in 2008- the BioServices segment
09. contributed to over 27% of the total
With increasing health exports from the biotechnology
consciousness among the Indian industry. Even in this sub-segment,
population and an increase in the country holds certain
awareness of diseases such as advantages that could be suitably
AIDS, Hepatitis, coupled with the leveraged. According to a recent AT
Government’s efforts to promote Kearney global survey, India is
community health, such as ranked third across all countries
compulsory testing by blood banks (after the USA and China) in terms
for AIDS, there exists enormous of its overall attractiveness as a
potential for the diagnostic sub- clinical trial destination. India, with
segment. It is also important to note the availability of large scientific
that with a higher disposable income pool is well placed to cater to a
and with a growing middle class significant part of this demand.
population, the market for quality
Of late, a new trend in
medical facilities are increasing in
BioServices sub-segment is being
India. Hospitals and diagnostic
observed, where large companies
centres across the country are
outsource their clinical
therefore concentrating on equipping manufacturing facilities while
themselves with the best in class retaining commercial manufacturing
medical and diagnostic services. and control over cost of goods,
This is likely to be another driver of quality, and on supply. On the other
growth for this sub-segment. hand, it has also been observed that
some specialized clinical
BioServices manufacturing organizations prefer
BioServices mainly include clinical to outsource the routine job of
research and contract research commercial manufacturing, which
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19. they may no longer perceive as their Hybrid Seeds
core competence area, as also The Indian population has already
outsource the core business of crossed the 1 billion mark. To
research and development. As the provide food and nutritional security
BioServices business expands, for such a large population,
many firms engaged in this segment
including protection against
are offering services in areas like
malnutrition, it is important that
data management, clinical trials, site
productivity levels are increased
management, bio equivalence and
through the use of right quality
bio availability studies, toxicology
seeds, which have the capacity to
studies, apart from catering to
produce more with lesser inputs. In
knowledge process outsourcing for
this context, the seed industry has
pharma industry. All these trends
offer significant opportunities for the a critical role to play in
Indian biotech companies. dissemination of latest agricultural
technology to the farmers, and
BioAgri making good quality seeds
available to them. Adoption of
BioAgri contributed around 12% of genetically modified (GM) crops
the total market value of would assure higher productivity
Biotechnology in India after and nutritional security. Presently,
BioPharma and BioServices, in
GM plants are largely in use for
2008-09, with a total revenue
commercial agriculture and
generation of Rs. 1494 crore, of
predominantly linked with traits of
which domestic revenues
one or two transgenics that fosters
constituted around 96%. The
salinity and alkalinity resistance,
BioAgri segment revenues
drought resistance, herbicide
witnessed the second highest
tolerance, insecticide resistance,
growth rate after BioServices
segment, with over 24% growth in and resistance to microbial
2008-09, over the previous year. diseases. With the success of Bt
The domestic market, combined Cotton, the Government has
with a reasonable scientific realised the enormous potential of
infrastructure in agriculture, rich bio- such technologies and has been
diversity and skilled human-capital, keen to put in place policies and
make India an important global regulations, which would promote
base for BioAgri research. The responsible crop biotechnology.
surge in opportunities are expected
to improve agricultural productivity, Biopesticides and Biofertilisers
especially at a time when per capita The biopesticides and biofertilisers
arable land and water resources sub-segments, though constituting
are diminishing. a modest proportion of the BioAgri
18

20. segment, have been growing at a of 16.6% over the previous year.
healthy pace since the last few While almost 81% of the revenue
years. The Government of India in the year 2008-09 was generated
has initiated a number of from the domestic market, this sub
programmes to control major segment contributed around 1% of
weeds and pest-diseases of the total biotechnology exports from
important crops, vegetables and the country during the year.
plants to increase their productivity
Indian BioIndustrial companies
through various biocontrol agents.
produce various enzymes, which
A number of universities and
include amylases, proteases,
institutes have been working in the
cellulases, xylanases, gluco-
area of biofertilisers. The agriculture
amylases, pectinases, papains,
sector in India has been supported
bromelain and catalases among
by public research programmes in
others, with around 45% of total
varietal development, yield
enzyme production catering to the
improvement and disease pharmaceutical industry. It is worth
management. Several international noting that the product range and
companies have set up research services offered by the firms in this
and development facilities in India sub-segment are growing rapidly as
for developing hybrid seeds and the use of enzymes is gaining
other biotechnology-based widespread acceptance. Firms today
activities. are increasingly looking at producing
various types of industrial enzymes
BioIndustrial using natural methods of production,
The BioIndustrial segment from plants and vegetable origin, and
predominantly consists of enzyme fermentation.
manufacturing and marketing
companies. These enzymes are BioInformatics
used in manufacturing segments The share of BioInformatics in total
such as detergents, textiles, food, Biotechnology sector is around
leather, paper and pharmaceuticals. 1.8% in 2008-09. This sub segment
Although the use of enzymes is still made a modest progress,
at a relatively low level, interest in increasing from Rs. 75 crore in
the benefits of using enzymatic 2002-03 to Rs. 220 crore in 2008-
solutions in India has been showing 09, thereby growing at a CAGR of
an upward trend. The BioIndustrial 19.64%. The sector is largely
segment is estimated to have export driven with almost 77% of
garnered revenues to the tune of the total revenues coming from
Rs. 478 crore in 2008-09, a growth offshore markets in the year
19

21. 2008-09. Considering the rapid are called as biosimilars.
diversification of software Biosimilars attempt to copy the
applications and the continuous process, which leads to the
quest for growth in the IT industry, production of the original innovative
BioInformatics segment presents a biotechnological medicine.
prospective area for IT application.
As regulatory obstacles to
BioInformatics segment uses
biosimilars development is
computer software tools for
increasingly being resolved, a
database creation, data
growing number of opportunities are
management, data warehousing,
being created for generic companies
data mining, and global
in the BioPharmaceutical market.
communication network. The Indian
According to IMS data, the world
firms have been strategically
BioPharmaceutical market was
devising tools so as to cater to the
valued at US$ 85.9 billion in 2007.
world requirements. Some of the
Conservative projections estimate
firms based in India, such as
that sales of BioPharmaceutical
Strand Life Sciences, Molecular
products would exceed US$135
Connections, Mascon Life Sciences
billion by 2011. With some of the
and Helix, have created indigenous
earliest BioPharmaceutical products
tools for various components
having already lost patent protection,
across the drug discovery value
the originators of BioPharmaceutical
chain that are being used all over
products are facing intense
the world. Strand Life Sciences has
competition from generics
devised a software program called
developers. In response, originators
‘Avadis’ for which it has received
are resorting to a range of defensive
awards from organizations like Red
tactics, including the reformulation of
Herring, Frost & Sullivan, and
existing products to improve efficacy,
World Economic Forum. “Avadis” is
an integrated decision analytics the implementation of more efficient
program that deals with data mining delivery systems, and the pursuit of
and analytics needs of the various high-level intellectual property (IP)
life sciences sector. battles.
The US, one of the largest
Emerging Niche Areas in biosimilar markets in the world,
Biotechnology recently introduced the Waxman
Biosimilars Bill in March 2009, which
Biosimilars provides the approval of biosimilar
The expiry of patent protection and products that are defined as “no
regulatory data protection for clinically meaningful differences
certain biotechnological medicines between the biological product and
has led to the development of what the reference product”, as well as
20

22. “interchangeable” biosimilars, convergence of nanotechnology
defined as a product that can be and biotechnology. From an Indian
“switched one or more times” with the context, nanotechnology is at a very
reference product “without an nascent stage, but given the
expected increase in the risk of potential of the sector, it is expected
adverse events”. The Bill, upon to grow at a robust pace in the
passing into an Act is expected to coming years. Nanotechnology also
provide immense opportunities for has the potential to revolutionize
Indian firms, especially those that the Indian agriculture scenario. It is
have already ventured into the
predicted that nanotechnology will
Biosimilars space, and have filed
transform the entire food industry,
Abbreviated New Drug Applications
changing the way food is produced,
(ANDAs) in the US. With a few
processed, packaged, transported,
players in the Biosimilars space, the
competition is expected to be and consumed. Several Indian firms
comparatively low and thereby acts and research institutes are working
as a great boost for biosimilar players on nanotechnology products for
in the market. drug delivery, water filters, arsenic
removal, reducing water and air
According to Datamonitor, the pollution, antimicrobial coatings and
Indian biosimilars market is projected river cleaning projects. The
to grow to more than US$ 2 billion Government on its part is
by 2014 as key patent expires for
proactively promoting various
drugs such as epoetin alpha,
programs under nanotechnology
filgrastim, interferon beta 1a,
initiative. A ‘Vision Group’ has been
interferon alpha, human growth
formed with members from
hormone (hGH), and insulin-
glargine. While many of these drugs academia, industry and research, to
represent the low-hanging fruit of the develop a national nanotechnology
biologics world and are unlikely to policy. Government of India has
provide the monetary gains of more announced an investment of
complex drugs, they do offer Rs. 1,000 crore through a mission
manufacturers the opportunity to on nanotechnology from 2006 to
position themselves within the 2011. The Government has also
biosimilars sector in anticipation of announced a US$ 250 million
more lucrative targets. programme to build three national
institutes for nanoscience.
Nanotechnology
Nanotechnology is considered Stem Cell Research
widely as the most promising Stem cell research is being touted
technology of the 21 st century. as the next wave of biotechnology
Recent years have witnessed a not only in India but also across the
21

23. world, which could potentially hundreds of stem cell lines around
transfigure treatment of diseases in the world for US fund, and this is
the next couple of decades. expected to expand collaborations
According to a study by Frost & with Indian researchers, who have
Sullivan, the global market for stem over the past decade, under fewer
cell therapy is projected to be restrictions, carried forward this
around US$ 20 billion by 2010. initiative with their own funding.
There are almost 180 prominent
companies working on stem cell CHALLENGES & STRATEGIES
research in the world, majority of
which are based in the US, followed Challenges
by the EU, Israel, Thailand,
Skill Development
Canada, and Australia. The Stem
Cell Research Forum India (SCRFI) In spite of mushrooming of
has predicted India to have a educational institutions offering a
market size of about US$ 540 range of courses in biotechnology,
million by 2010 with an annual the void between the needs of the
growth rate of 15%. industry and skills taught at these
institutions still remain, though the
The potential of stem cell gap is being narrowed down. Most
technology to develop therapy for of these institutions have limited
many untreatable diseases through ability to provide the right
cellular replacement or tissue pedagogy, or the requisite
engineering is being widely infrastructure. The challenge of
recognized. Therapies using stem bridging the gap between the
cells are giving hope to millions of needs of the industry and the
patients afflicted with chronic curricula taught at various
diseases. Globally, stem cells are institutions needs to be addressed
used to treat over 130 diseases, and by cohesive actions from the
it is estimated that more than 500 Government, industry and
clinical trials are being done to academia.
develop therapies using stem cells.
Indian companies are becoming Basic Education &
an important part of this revolution, Health System
helping to treat patients with Amongst the most critical building
diseases ranging from eye problems blocks for biotechnology
to heart disorders. The Government development and its success, good
of India has supported more than 55 education and health systems are
programmes on various aspects of very important. India has been
stem cell research. Apart from this, positioned low in terms of both
the new initiative by the US these measures as reflected by the
administration in 2009 frees up UN Human Development Index.
22

24. India’s ranking is 132 out of a total plays a crucial role in ensuring the
of 153 countries, and also the culmination of a concept into a
lowest as compared to other commercially viable product. Global
competing countries in this sector. financial crisis has affected the
Part of this can be attributed to the funding prospects of biotech
low healthcare expenditure by the companies, as risk aversion
Government. increased among venture
capitalists, angel investors as also
Government Health Expenditure financing institutions. These have
Most Governments in developing been further exacerbated by the
countries usually finance slow activity in the IPO market due
programmes that support child to anaemic stock market. According
immunization against various to the Biotechnology Industry
diseases as part of the basic public Organization (BIO), prospects for
health package. India too has such biotech IPOs are likely to remain
immunization programmes, but, due dim in the year 2009, on the heels
to relatively high birth rate and of a very weak base (the year
population, the share of 2008), with amounts raised in 2008
Government health budget in total through this instrument being only
healthcare expenditure is relatively US$ 116 million, as against US$
low (25% in 2009). In comparison, 2.3 billion in 2007.
other emerging countries like Brazil
(47.9%), Russia (63.2%), China Ethical Issues in Genetic
(40.7%) and South Africa (37.7%) Research
portray a better management of Biotechnology has been confronting
Government healthcare system. It the world with some ethical issues,
may also be noted that as a which have raised numerous
percentage of the GDP, the total challenges with no definite
health expenditure in India is only solutions. Genetic research and its
3.6%, far below than that of other applications like genetic
emerging economies. Thus, there engineering, manipulation, testing,
is an urgent need to augment therapy, eugenics, selective
budgetary allocation to the health abortion, GMOs, stem cell
sector, particularly in improving research, and cloning, opened
primary health care facilities. significant ethical and consumer
issues, including the potential risks
Funding that may be adversely impacting
The inherent characteristics of the the environment. The issue of
biotechnology makes the industry a genetically modified food appears
high investment one with long to be of a particular concern. A
gestation period. Thus, funding challenge for the Indian
23

25. biotechnology industry will be to Biosecurity
work and liaise widely with the Biosecurity is another challenge
community and earn its confidence and there is a growing debate and
and investors. Awareness may be discussions among the academic
generated among the consumers and policy spheres with regard to
through provision of detailed bioterrorism, biosafety, and
information, ranging from the basics emergence and re-emergence of
of gene technology to details of the infectious diseases as concerns to
regulatory processes. the society as a whole. The threats
associated with misuse of
Concentration of IPRs biotechnology affect the growth
Intellectual property rights (IPRs) prospects of this industry, which
are intended to promote research otherwise present potential benefits
and development by allowing for global populace at large,
researchers to generate revenue to especially in area such as health,
meet the development costs. food and environment.
However, there are concerns that
the current level of biotechnology Bio-hacking
IPRs are concentrated mainly in the Biohackers are a group of
hands of the private sector. It is enthusiasts who are involved in
reported that globally, few working with cells and genes
companies are responsible for the without any sound knowledge. With
vast majority of agri-biotech the fall in the cost of equipments
research. These companies have capable of manipulating DNA, the
focused on crops and traits (such threat of growing number of
as herbicide resistance) that are biohackers is significant. The work
having commercial significance, raises fears that people could
and thus, may not be willing to create a deadly microbe on
transfer it to others. Globally, purpose, just as computer hackers
Mergers & Acquisitions trends have unleashed crippling viruses or
among biotechnology companies hacking into various websites. Such
have also been on similar lines, a scenario may lead to “bio-spam,
encouraging the concentration of bio-spyware, bio-adware” and other
IPRs, which may affect the ability bio-nuisances. An unrestricted
of developing countries like India, biohackery scenario could put the
to negotiate for access to health of the biohackers, the
proprietary technologies at a community around them, and the
reasonable price. This challenge environment, under unprecedented
stems largely from patents that risk, and poses significant
confer broad rights over GMOs and challenge that needs to be suitably
plant varieties. addressed.
24

26. Patenting of Micro-organisms by various authorities providing
Another associated challenge to the numerous specialised science
biotech industry is patenting of degrees at the Masters’ level.
micro-organisms and associated These institutions also provide an
biosafety requirements, as strict effective network of research
biosafety norms have to be laboratories. Efforts should be
followed while handling micro- made to bring in a seamless
organisms. The regulations for transfer of knowledge and people
accessing strains from a depository among these universities, institutes,
have to be carefully worked out to and corporates for better
ensure that these do not land into coordination, and to share their
wrong and/ or technically research-based information on an
incompetent hands. India too needs ongoing basis. Corproates could
to bring in a patent law for have preferential access to the
protecting micro-organisms and intellectual property generated in
rules for accessing strains from a such jointly funded projects.
depository. In this context, the Another alternative could be
Department of Biotechnology, encouraging public-funded
Government of India, has proposed successful R&D institutions to
to build an internationally establish ‘not for profit’ companies
recognized depository in the to facilitate collaborative work with
country. It is hoped that following industry. There should be an
the establishment of the depository, industry-academia alliance wherein
a law in this regard would be the industry could have an active
enacted based on similar laws participation when it comes to
prevailing in other countries. planning curriculum and methods of
evaluation. Private firms may also
Strategies share the responsibility to promote
academic excellence by creating
Public-Private Partnerships Chairs in Universities and further
Public-private partnership needs to strengthen the industry – academia
be encouraged and supported in relationship.
areas that are vital to national
development, from a scientific, Need for enhancing Venture
economic or social perspective. The Capital funding in India
focus needs to be on technology One of the biggest challenges for
and product development. India has the Indian biotech industry is
a wide network of universities, attracting investment through
departments and specialized venture capital mode. With the
institutes that have been promoted corporate sector being risk averse
25

27. to investing in biotechnology solutions in drug discovery and
projects, especially in their validation based on genomics,
gestation and early phases, the proteomics, pathway analysis
need of VC funding becomes (determining how toxic or
critical for the growth of the biotech radioactive substances reach
industry in India. Venture capital humans), and clinical trials on
firms typically source majority of humans. Drug discovery and
their funding from large investment innovations in drug delivery,
institutions such as pension funds especially in areas like diabetes,
and financial institutions, who like cancer, and inflammatory ailments
to invest long term only with could take the industry into greater
assurance of high returns. Thus, heights. Indian biotech industry
venture capitalists make careful should also look forward to moving
investment decisions, which leads up the value chain in terms of
to high risk aversion rates. Instead, geographies so that India is present
India may consider promoting in more premium markets.
venture capital investment on the
lines of Russian model. Russia has Enhancing Biotech Applications
been boosting venture capital Modern research finds application
sector from scratch, by seeding of biotechnology in various
funds with Government support, industries, and thereby adds value
through the Russian Venture to the products and processes of
Company (RVC). Israel has also such industries, including
adopted similar approach of state- agriculture, forestry, marine,
backed venture capital model to environmental management, pest
boost the investments in knowledge management, and management of
based industry. human and animal healthcare. To
capitalize on the potential benefits
Strategy to Move to a Higher and to ensure international
Value Chain competitiveness, it is important to
Indian biotechnology industry, over promote speedy and widespread
the years, has developed a number diffusion of biotechnology to the
of biotech products, but has been broader industrial community, while
found to perform tremendously well maintaining its responsible and
in the vaccine segment. The sustainable use. Industry initiatives
players in this industry as well as and entrepreneurship commitments
the research institutions should are particularly essential in this
increasingly focus upon moving up regard. The Government could
the value chain by enhancing promote research-industry linkages
strengths in new products and and facilitate market information
applications, and by offering R&D including technological and
26

28. commercial trends and manpower. India has already made
opportunities. Integration of its mark in scientific research in the
biotechnology with various world, with a large pool of scientific
manufacturing sectors could also manpower. The education system
be encouraged through better in India, with its wide network of
synergy and coordination of universities providing quality
activities among various science education has helped
departments / institutions, with the immensely in this regard. However,
Department of Biotechnology, with the changing composition of
Government of India, serving as economic growth there is an
focal point. emerging trend of students not
preferring science stream for career
Lucrative Domestic Market opportunities. This may lead to
The domestic biotech market is shortage of qualified manpower in
expected to post robust growth with highly research oriented activities
rising income levels, improving such as biotechnology. Thus, it is
living standards, growing medical important to devise policies that
infrastructure, increasing health would attract more students to the
insurance penetration, enabling science stream. Many countries
regulatory framework and give both financial and fiscal
institutional infrastructure, and the incentives in the form of grants and
growing number of organized preferential loans, to encourage
pharma-retail chains. For example, students to opt for science streams.
in a country like India (which is A similar scheme could be thought
often referred to as the diabetic of, particularly for encouraging
capital of the world), it is certain to students to take up biotechnology
find a market for products like as a subject of their specialisation.
insulin. With more and more people
leading a sedentary lifestyle, there Reversing Brain Drain
may be opportunities for the Indian Shortage of manpower due to
biotech industry to innovate brain-drain is another challenge
products that cater to the demand faced by the Indian biotech industry.
for controlling such chronic The expected shortage of
diseases. scientists / skilled professionals in
OECD countries may enhance the
Biotech Skill Development brain-drain from India in the coming
Biotechnology industry is highly years, unless suitable policy
R&D intensive. In order to remain measures are taken to reverse the
globally competitive, the industry trend. There is an urgent need to
requires a pool of highly skilled expand the current research
27

29. programmes with attractive concentrate their business models
compensation package in order to in covering a part of the product
attract world-class talent. In this development value chain. Biotech
context, it may mentioned that firms are often not much engaged
Government has initiated a in entire product development value
programme ‘Ramalingaswamy chain due to shortage of funds and
Fellowship’, aimed at bringing back necessary know-how.
scientists of Indian origin working Pharmaceutical firms could
abroad in various fields of complement the biotech sector
biotechnology, and who are through their knowledge and
desirous of pursuing R&D in Indian financial power. Also,
institutions. It may be mentioned pharmaceutical firms, which require
that China Academy of Sciences continuous innovation, could benefit
(CAS) has established cooperating with biotech firms who
programmes, such as Specially provide new product concepts and
Hired Foreign Research Fellows, innovative technologies.
and Young Foreign Scientist
Project, through which the country Strengthening North-South
would arrract over 600 Chinese Collaborations
scientists working abroad, annually; Many Indian firms use services
each returning scientist would contracts with foreign firms to fund
receive funding of around their operations, develop
US$300,000 per annum. Corporate commercialization capabilities and
entities too may get involved by access valuable international
providing adequate exposure to the technology and expertise. Services
budding talents through training and provided include R&D, clinical trials
placements. This would also and manufacturing. Multinational
provide the Indian biotechnology corporations are increasingly
industry a tremendous manpower conducting clinical trials in India and
advantage over its competitors. rely on Indian contract research
organizations to manage these
Symbiotic Relationship between trials. It will be vital for the Indian
Pharma and Biotech Sectors biotech firms to expand their
Use of organisms for the capabilities in clinical trial
improvement of medical processes management, and pay close
constitutes one of the major attention, not only to good clinical
business segments of the practice guidelines, but also to
biotechnology industry. This bioethical principles, providing a
provides significant opportunities for high level of care and protecting the
pharmaceutical firms also. In rights of patients. This will not only
general, biotech firms would facilitate achieving of global
28

30. standards for the Indian contract Emerging Biosimilar Market
research firms, but will also help to Biotechnology industry in India has
bring in more foreign exchange a well-developed foundation with a
earnings, through enhanced exports
strong pharmaceutical and
of services. Though the
biosupplier sectors. The global
Government of India in this regard
market for biosimilars is expected
has taken a number of steps by
to grow significantly in the next few
collaborating with a number of
years as several ‘blockbuster’ drugs
institutions in various countries
abroad, a lot more needs to be lose patent protection. A record
done in furthering this initiative. number of drug patents expire over
the next few years, which should
Encouragement to Innovative lead to stiff competition from
Funding Models generics and a drop in prices.
Evaluate Pharma, an industry
Pharma / biotech firms could set
consultancy, estimates that about
up Special Purpose Vehicles
half of the US$ 383 billion-worth of
(SPVs) which could be contracted
by the parent firms for product patented drugs to be sold in the
development work in areas such as world in 2009 may lose patent
specialty generics, topicals, protection within five years. In 2010
steroids, hormones, and alone, the industry is likely to be
biopharmaceuticals, which may put at risk with nearly 15% drop in
have high initial product its revenues from patented drugs.
development costs, and which are Indian companies appear well
non-infringing process, based on positioned to leverage upon their
regulatory compliances. Such cost-effective manufacturing
funding models may not stretch the capabilities to compete on a global
balance sheets of the parent scale and garner some of this
companies, nor result in equity market.
dilution. An agreed percentage of In the context of patent expiry on
revenues from the SPV funded bio-pharmaceuticals, it may be noted
projects could be returned back to that USA would emerge as one of
the parent company, or funding the largest biosimilar markets after
bank, towards the investment. In approval of Waxman Biosimilar Bill,
the case of institutional financing, providing opportunities for Indian
once the funding bank recovers its firms. Biosimilars is a term used to
investment or IRR, the ownership assign a sense of similarity between
of the products would flow back to the originator biologic and a generic
the company without any version. According to industry
complications what so ever. sources, there are at least 75
29

31. proteins and peptide therapeutics the economic, entrepreneurial and
identified in the US as potential social fabric of the region.
profitable targets for new products.
Most of these were approved as New Leveraging International
Drug Applications (NDAs) to facilitate Partnerships
biopharma companies to develop Biotechnology is globally
biosimilar products. It is expected recognized as a rapidly emerging,
that stringent regulatory approval complex and far reaching
would be put in place to permit technology, and therefore a strong
marketing of biosimilar products at international partnership, both at the
an affordable costs. levels of research institutions and
at corporate front, is essential.
Catalysing Coherence in International cooperation and
Clusters partnerships can be leveraged to
Cluster development is a key achieve global best practices in the
strategy to promote innovation, country’s science and technological
accelerate technology transfer and efforts for joint intellectual property
facilitate product development. generation, harmonization of
Biotechnology, being inter- regulatory processes, smooth cross
disciplinary in nature (encouraging border movement of biological
scientific and engineering materials, and access to global
research), requires enabling markets for the country’s products
infrastructure for promoting and and processes. Such an approach
nurturing innovation for building would not only bring in better
successful enterprises. The technical know-how, but would also
clustering concept maximises help in enhancing India’s research
synergy and efficiency of firms and development resulting in
located in the cluster. Although this quicker and faster outcomes.
approach has already been Efforts have already been taken at
emerging in the country, it is the Government level to leverage
important to ensure that such the institutional strengths across the
strategies deliver desired results countries. Such efforts should be
through a coherent effort of all the enhanced with collaboration
stakeholders. Existing biotech measures on continuous basis.
clusters could also be examined
with respect to any voids that could Biotechnology Usage in
be plugged to achieve the desired Biofuels
results. Efforts could also be made Biotechnology could also be one of
to set up clusters around the the most effective and innovative
existing institutions of excellence, tools to make sustainable use of
and to integrate them deeply into biofuel, reducing the adverse
30

32. environmental impacts of green industry. With a huge base of
house gas emissions, and limiting talented, skilled and cost
the diversion of land from food competitive manpower, and a well-
crops to fuel crops. Biotechnology developed scientific infrastructure,
could also be critical to increase India is poised to become a leading
land productivity both in fuel crops global player in biotechnology. The
and food crops, through plant vast population of India helps not
science, modern plant breeding only in creating significant domestic
techniques and with state-of-the-art demand, but also provides biotech
application of crop protection. Since research companies with a vast
the introduction of biotechnology in gene pool. The institutional
agriculture and food production in infrastructure in the country offers
the early-1990s, biotechnology has a strong foundation for these
been utilized to develop new tools strengths to get transformed into
for improving productivity. In 2005, business opportunities. Indian firms
twenty-one countries planted could focus on acquiring overseas
biotech crops covering a total of biotechnology units in countries like
222 million acres. These crops the US, which have seen plunging
include soybeans, corn, cotton, valuations due to the global
canola, papaya, and squash that meltdown. Though India has a long
are improved versions of the way to go in terms of innovations
traditional varieties. In addition, in processes, instruments, and
rapid-rise yeast, and an enzyme funding, the future looks bright for
used to make cheese, are both the industry with India poised to
commonly produced through become one of the global leaders
biotechnology. in this industry. India, with all its
inherent strengths, can definitely
SUM UP use biotechnology as a vehicle to
India is already being reckoned as improve the lives of billions across
a frontrunner in the biotechnology the world.
31

33. 1. INTRODUCTION
Biotechnology is a generic term industry has assumed increasing
that encompasses a wide spectrum significance. The industry today
of scientific and technological possesses the ability to provide
applications used across a variety of crucial leads, which could help in
sectors. Biotechnology therefore curing critical diseases, as also
must be seen in the context of a reducing widespread hunger. With a
continuum of other disciplines and strong and consistent research and
technologies where its synchronized development thrust, the industry is
application drives new products and increasingly being viewed as a
technologies. solution provider to diseases such as
cancer and AIDS; as an instrument
To quote Former US Senator,
to enhance agricultural productivity;
Robert F Kennedy, “we live in
and in providing solutions to climate
interesting times” - it is indeed a
change and promoting sustainable
matter of great awe that an industry
development through the use of
as nascent as Biotechnology (i.e.
biofuels.
during the 1970s) has come a long
way by changing the way living With such a wide array of end
beings across the globe perceive and use, and more still under study, the
live life. It is worth noting that the realms of biotechnology today are in
biotechnology industry began amidst an expansion mode, entering into
a lot of regulatory hurdles, but in due other emerging contours like
course of scientific breakthroughs, it nanotechnology, stem cell research,
proved its mettle and has today etc. The global biotechnology
settled the doubts of most sceptics, industry today is at the beginning of
to emerge as a successful a technology curve whose limits are
instrument in fostering the still being explored and
endeavours of the scientific comprehended.
community for the betterment of the
Realising the potential of the
human populace at large.
biotech industry, the Indian players
In the present day context, the have been prompt in embracing
importance of the biotechnology biotechnology. Today, Indian
32

34. Box 1:
DNA – CORNERSTONE OF BIOTECHNOLOGY
DNA, or deoxyribonucleic acid, is the hereditary material in humans and almost all
other living organisms. Nearly every cell in a persons body has the same DNA.
Most DNA is located in the cell nucleus (where it is called nuclear DNA), but a
small amount of DNA can also be found in another part of the cell called the
mitochondria (mitochondrial DNA or mtDNA)
Considering that all cells virtually speak the same genetic language, DNA from
one cell can be read and acted on in another one—even a different cell type from
a different specie. This feature is what makes DNA the cornerstone of modern
biotechnology. Scientists can, for example, use a yeast cell to make human insulin
by inserting the human insulin gene into the yeast.
DNA is also the foundation for hundreds of diagnostic tests for genetic diseases
and predisposition to disease. Some new tests can even identify which treatment,
and what dosage, is best for a particular patient.
Because DNA and related cellular processes are so specific, biotechnology
products can often solve problems with fewer unintended consequences than
other approaches. In fact, the best words to describe today’s biotechnology are
specific, precise and predictable.
biotechnology industry is one of the 21 st century, the pressure on the
high performing knowledge-based country’s resources would be
segments. The industry has immense. Under such
achieved a global status through firm circumstances, biotechnology is
level strategies, active industry expected to act as a powerful enabler
participation, and most importantly, that can revolutionize agriculture,
due to the proactive and enabling healthcare, industrial processing,
policies of the Government. In fact, while promoting environmental
the various policies of the sustainability.
Government over the last two
It must be noted that while India
decades have helped the Indian
currently has a demographic
biotechnology industry to carve out
advantage, being home to young
a niche in the globally competitive
population, who are less than
environment and consolidate its
25 years of age, in due course (by
position.
the year 2050), they would graduate
With the country emerging as to the old-age group (of around 65
one of the fastest growing years) which would have its own
economies and projected to be pitfalls and challenges. A robust
ranked among the top three biotechnology industry, under such
economies by the middle of the circumstances, can act as a strong
33

35. and critical medium to help gear the expected to feed India’s burgeoning
country to face such challenging population and ensure the nutritional
situations. security of the nation.
Another important aspect of In India, an admirable start has
India’s demography is the already been made through
burgeoning population, for whom the measures like a well-conceived
country has to find possible avenues regulatory framework being put in
of feeding. This is where the role of place to approve bioagricultural
the biotechnology industry becomes crops and recombinant DNA
even more critical. Biotechnology is products for human health. Based on
ideally positioned to help improve the sound ethical guidelines, a policy that
efficiency and profitability of the allows stem cell research is also in
agricultural sector through higher place. Some of the recent initiatives
yields and reduced dependence on by the Indian government to promote
pesticides. This is crucial in an age biotechnology such as 100% rebate
when despite progress in agriculture, on R&D expenditures, and allowing
millions of people in India still do not 100% foreign direct investment in the
have access to adequate food biotech industry, are also contributing
supplies. In the coming years,
to the growth of the industry.
enhanced yields and increased
nutritive value of crops using The patent reforms have
agricultural biotechnology is exposed the domestic firms to
Exhibit 1:
SHARE OF POPULATION ABOVE 65 YEARS IN SELECT COUNTRIES
(in%)
SOURCE: World Population Prospects 2008, Exim Bank Research
34

36. compete with foreign firms and this growth in this industry is inevitable.
has enhanced innovation. Western The biotechnology industry therefore
companies, lured by strong skilled can act as a long-term sustainable
manpower and lower cost research, competitive strength for India with its
have boosted investments into the enormous potential to improve
industry along with strong linkages agriculture, food, health,
and partnerships. With the environment and energy
announcement of the National requirements of the population.
Biotechnology Development Further, the shrinking physical
Strategy, and the likely establishment boundaries enable biotech
of a nodal authority, National companies to tap large markets
Biotechnology Development around the world.
Authority, the emergence of strong
35

37. Box 2:
RECOMBINANT DNA TECHNOLOGY
Recombinant DNA is the foundation of modern biotechnology. The term
recombinant DNA literally means the joining—or recombining— of two pieces of
DNA from different sources, such as from two different organisms.
Human beings began to change the genetic material of domesticated plants
and animals thousands of years ago by breeding individuals with valuable genetic
traits while excluding others from reproduction; as a result, the genetic makeup of
the plants and animals was changed. Now, in addition to using selective breeding,
genes at the molecular level are recombined using more precise techniques of
recombinant DNA technology. Making manipulations more precise and outcomes
more certain, biotechnology decreases the risk of producing organisms with
unexpected traits and avoids the time-consuming, trial-and-error approach of
selective breeding.
Genetic modification through selective breeding and recombinant DNA
techniques resemble each other, but there are important differences:
Genetic modification using recombinant DNA techniques allows movement
of single genes whose functions are known from one organism to another.
In selective breeding, large sets of genes of unknown function are transferred
between related organisms.
Techniques for making selective breeding, more predictable and precise, have
been evolving over the years. In the early 1900s, Hugo DeVries, Karl Correns and
Eric Tshermark rediscovered Mendel’s laws of heredity. In 1953, James Watson
and Francis Crick, deduced DNA’s structure from experimental clues and model
building. In 1972, Paul Berg and colleagues created the first recombinant DNA
molecules, using restriction enzymes. Ten years later, the first recombinant DNA-
based drug (recombinant human insulin) was introduced to the market. By 2000,
the human genome had been sequenced and today recombinant DNA techniques
are used in conjunction with molecular cloning to:
Produce new medicines and safer vaccines;
Enhance biocontrol agents in agriculture;
Increase agricultural yields and decrease production costs;
Reduce allergy-producing characteristics of some foods;
Improve food’s nutritional value;
Develop biodegradable plastics and other biobased products;
Decrease water and air pollution; and
Slow food spoilage.
36

38. 2. GLOBAL BIOTECH INDUSTRY
The 21st century is witnessing entity, has the largest number of
consolidation and expansion in the biotech firms in the world,
global biotechnology industry, with estimated at 1836 in 2008.
new inventions of its wider
applications and use. Biotechnology, GLOBAL FINANCING
if used to its optimal capacity, is The ongoing economic meltdown,
expected to have a significant impact amongst the severest in recent
on the healthcare and agriculture
times, has had a visible impact on
sector for the betterment of the world
a number of industries across the
population, in addition to providing
globe. The main manifestation of
commercial and industrial benefits.
the crisis, especially in 2008 and
This untapped potential in this
industry has been encouraging early 2009, has been a total credit
countries across the world to invest squeeze and liquidity crunch in the
and design programmes promoting global financial markets. This
the industry, especially in research resulted in deferment of expansion
and development. plans of various companies,
including those in the biotech
GLOBAL RANKINGS sector. In fact, in 2008, it was for
the first time in five years that the
Major countries, based on the
global biotech industry witnessed a
number of biotechnology
companies, both public and private, decline in funds raised. It has been
are illustrated in Exhibit-2. USA tops observed that the major sources of
the list with over 1750 companies, financing the biotech sector was
followed by France (824), South largely through initial public
Korea (773) and Spain (659). India, offerings (IPO), follow-on, private
with 325 biotech companies in investment in public equities
2008, was ranked 11th in the world (PIPEs), partnerships or through
and fourth in the Asia-Pacific region debt and other instruments. Clearly,
after South Korea, Japan and the economic crisis has had a
Australia. However, it may be noted major bearing on these instruments
that European Union, as a single of raising funds, reflected by a
37

39. Exhibit 2:
TOP BIOTECHNOLOGY NATIONS, 2008 (BY NUMBER OF FIRMS)
SOURCE: Ernst & Young 2009, OECD Report 2009; JETRO; UK Trade and
Investment; Exim Bank Research.
sharp fall in actual funds raised by US$ 34 bn in 2007 to US$ 23 bn in
firms in the biotech industry. 2008. Venture funding, constituting
According to BioCentury (a US- over 9% of the total capital raised by
based publishing house), the overall global biotech industry in 2008,
capital raised by biotech companies declined modestly in absolute values
across the globe declined by around globally, by around US$ 1.6 bn in
36% from US$ 52.79 bn in 2007 to 2008, to touch US$ 3.1 bn.
US$ 33.76 bn in 2008. It was quite
However, it may be noted that
evident that the most drastic fall was
the decline in funding is expected to
in funds raised from public investors.
Data for the year 2008 revealed that continue in the coming few years and
in spite of the drastic market thereby creating a challenge for the
conditions, IPOs constituted over biotech firms to source funds for
60% of the total funding of the sustaining its growth. Though
industry. However, the total amount venture capitalists are still in the
of capital raised from IPO, combined market, they are expected to be more
with follow-on, dropped by 32%, from selective in their ventures.
38

40. Exhibit 3:
TREND IN FINANCING OF GLOBAL BIOTECH INDUSTRY (US$ BN)
SOURCE: BioCentury, Nature Biotechnology Journal 2009.
MERGER AND ACQUISITION increase in M&A activity among
(M&A) DEALS biotechnology firms of similar size to
M&A activity in Biotech industry was improve cash positions, but does not
necessarily see increased M&A
robust in the US and Europe in
activity in the Biotech industry by
2008. According to a Ernst & Young
pharma firms. However, it is believed
report, there were 53 M&A
that large companies may not start
transactions involving US
buying assets in large numbers that
biotechnology companies in 2008,
do not fit their strategic objectives just
representing a total value of US$
because the valuations are relatively
28.5 billion, a record high, not
cheaper. Instead, the pharma firms
counting megadeals in recent years
may remain interested in more
(the previous megadeal was in
mature biotech companies, on the
2007 with the acquisition of
lines of the recent biotech
Medlmmune by AstraZeneca). In
acquisitions such as Genentech,
Europe, M&A activity in Biotech
MedImmune (Gaithersburg, MD),
industry was valued US$ 5.0 billion;
Millennium Pharmaceuticals, and
the value of strategic alliances have
ImClone. Roche acquired
also increased. Overall, the
Genentech in 2009, and
potential value of strategic alliances
AstraZeneca (London) acquired
involving companies in US and
MedImmune in 2007. Takeda
Europe still remains immense.
acquired Millennium in 2008, and Eli
The Ernst & Young 2008 report Lilly acquired ImClone in 2008. It may
observes that there has been an also be observed that owing to the
39

41. expiry of many patented products in economies, these companies
the next couple of years, the increasingly seek new locations in
propensity of big pharmaceutical the emerging countries to tap the
firms acquiring biotech companies wide knowledge base that are
may increase. available at competitive prices.
Even in difficult market
GLOBAL DIRECT
conditions, cross-border investment
INVESTMENTS
in biotechnology continues to grow,
Unlike the funding scenario, direct and has not shown a decline from
investments, especially the the investment level of the year 2008.
Greenfield investments, in the The number of greenfield FDI
biotech sector have maintained projects in the biotech sector has
their pace even in the current been increasing over the last five
economic turmoil. With years. In 2008, an estimated US$ 2.9
governments across the world bn of biotech investment was
striving to develop the recorded.
biotechnology industry, and
perceiving it as a basis for long- Growth is also being fuelled by
term development, multinational investment to, and from, emerging
companies in the biotechnology markets. This trend is expected to
arena have been actively exploring continue as emerging market
newer markets. While the R&D countries are likely to display their
activities of global multinationals in advantages over the developed
life sciences still remain countries, in terms of cost
concentrated in the developed competitiveness and availability of
Exhibit 4:
NUMBER OF GREENFIELD FDI PROJECTS IN BIOTECH INDUSTRY
IN THE WORLD - 2004–2009
SOURCE: World Investment Report 2009, Exim Bank Research
40

42. talent pool. However, developed sales, which was much lower as
countries (especially USA) still compared to the 11.3% growth
dominate the world in innovation in witnessed in 2007, and significantly
the biotech sector, and thus would lower than the industry’s
remain as attractive destinations for compounded annual growth rate
R&D investments. Asia-Pacific (CAGR) of about 17% during the
showed prowess as a location for period 2003-2008. This lowering of
biotechnology investments in 2008 - the overall revenue in the US was
overtaking Western Europe to largely because of the acquisitions
become the number one region in the of many successful biotech firms by
world for investment projects. From companies which cannot be strictly
an Indian perspective, FDI would classified as being within the realms
pave way for increased of biotech industry. Revenues also
infrastructure, scaling up of local diminished because of slower growth
facilities, increased market size and of a number of top firms in the US,
facilitate R&D, which translates into such as Amgen, and Thousand
more “local content”. Oaks.
Revenues of European biotech
INDUSTRY PERFORMANCE
firms increased by 13% in 2008, to
Most countries today have well- touch Euro 15.3 billion as compared
developed biotechnology programs to the revenue level of Euro 13.5
and a proactive strategic vision billion in 2007. The growth in the
which has, to a certain extent, European biotech industry was
negated the fall in capital funds boosted by a top-line growth in
during the current times of excess of 20% by Elan (Ireland),
economic meltdown. The revenues Eurofins Scientific (France), Meda
of the public biotech companies (Sweden) and Qiagen (the
across the world increased from Netherlands), while Switzerland
US$ 84.7 bn in 2007 to US$ 89.6 based Actelion, and UK based Shire
bn in 2008, an increase of 5.7%, Pharma grew by 16% in 2008. As
according to a report by Ernst & regards the performance of Asian
Young. It is worth noting that this (including Pacific) biotech industry is
growth was witnessed in spite of concerned, revenues have recorded
the global financial crisis hitting a growth of 25% in 2008. This healthy
economies across the world. growth was mainly led by strong
However, this modest growth was growth in Australia, where revenues
unevenly distributed across the
grew by 26% in 2008.
globe with varying performance in
regions.
Total Income
USA’s public biotech firms grew Despite the 5.7% surge in global
by 8.4% in 2008, in terms of product biotechnology revenues in 2008,
41

43. Exhibit 5:
SHARE OF REGIONS IN GLOBAL BIOTECHNOLOGY REVENUES - 2008
(Public Company Data)
SOURCE: Ernst & Young 2009
Table 1:
GLOBAL BIOTECHNOLOGY DATA FOR 2007 AND 2008
Units Parameter Year % Change
2007 2008 2008 over 2007
Public Company Data
USD Billion Revenue 84.7 89.6 5.7
USD Billion R&D Expense 31.8 31.7 -0.3
USD Billion Net Income (Loss) -2.6 -1.4 - 46.1
Number Employees 204930 200760 -2.0
Number Public Sector Companies 798 776 -2.8
Number Private Sector Companies 4001 3941 -1.4
Number Total Companies 4799 4717 -1.7
SOURCE: Ernst & Young 2009
over the revenues generated in the in losses in 2008; the global net
year 2007, the profit remained loss that had climbed to US$ 2.6
negative for the global billion in 2007 abated to US$ 1.4
biotechnology industry as a whole. billion in 2008. This reduction in net
However, there has been a decline loss in 2008, over 2007, was
42

44. Table 2:
REGION-WISE BIOTECHNOLOGY DATA, 2008
Units Parameter USA Europe Canada Asia-Pacific
Public Company Data
USD Billion Revenue 66.12 16.51 2.04 4.96
(73.7) (18.4) (2.2) (5.5)
USD Billion R&D Expense 25.27 5.17 0.70 0.60
(79.7) (16.3) (2.2) (1.8)
USD Billion Net Income (Loss) 0.41 -0.70 -1.14 0.01
Number Employees 128200 49060 7970 15530
(63.8) (24.4) (3.9) (7.7)
Number Public Sector 371 178 72 155
Companies (47.8) (22.9) (9.2) (19.9)
Number Private Sector 1383 1658 286 614
Companies (35.0) (42.0) (7.2) (15.5)
Number Total Companies 1754 1836 358 769
(37.1) (38.9) (7.5) (16.3)
Figures in the parantheses are share in world.
SOURCE: Ernst & Young 2009
helped by the reduction in net The life-science companies in
losses in Europe, and turnaround the Asia-Pacific region on an average
to profit in USA. However net loss spent 12% of their revenue, on R&D
has grown in Canada, with the in 2008. China led the region with the
industry witnessing more than 50% average R&D spend of 19.14%. In
rise in net losses in the year 2008. China, the companies in the revenue
range of US$ 1 million – US$ 5
R&D Expenditure million spent almost 30% of their
revenues in R&D. South Korea
The R&D expenditure in the biotech ranked second with an average R&D
industry, due to the financial crisis, spend of 17.8% of revenue, with the
registered a marginal decline of companies in the revenue range of
around 0.3%, in 2008, over the US$ 1 million – US$ 5 million were
year 2007. The R&D expenditure in spending an average of 24% on
the biotech industry was the highest R&D. India followed at the third
in USA (accounting for a share of position with average R&D spending
80%), followed by European region of 10.55%. The average R&D
(16%), and Canada and Asia- spending for Taiwan, Singapore,
Pacific (2% each). Malaysia and Australia was in the
range on 1% - 6%.
43

45. Analysis of R&D expenditure per US$ 158,120. Interestingly, USA had
employee for the globe and across the highest R&D expenses per
regions yielded interesting results. In employee, of US$ 197,110, followed
the year 2008, the R&D expenditure by Europe (US$ 105,400) and
per employee for the global Canada (US$ 88,210). R&D
biotechnology industry was expenses per employee in
Exhibit 6:
SHARE OF REGIONS IN GLOBAL BIOTECHNOLOGY
R&D EXPENDITURE - 2008 (Public Company Data)
SOURCE: Ernst & Young 2009
Exhibit 7:
R&D INTENSITY (%) AND R&D EXPENSES PER EMPLOYEE
(US$ 000), 2008 (Public Company Data)
SOURCE: Ernst & Young 2009
44

46. Asia-Pacific was modest at US$ in USA, by 2.4%; however, the
38,700 in 2008. Global R&D number of employees in both
expenditure as a percentage of Europe and Canada increased by
global revenues (R&D intensity) was 3% and 9%, respectively. In the
as high as 35% in the year 2008. year 2008, 64% of the employees
USA again topped the list with its engaged in the biotechnology
R&D intensity at 38%, while Canada industry belonged to USA, followed
and Europe had R&D intensity of by Europe (24%), Canada (4%),
34% and 31%, respectively. R&D and Asia-Pacific (8%).
intensity of Asia Pacific Region was
only 12% in the year 2008. Number of Players
The Ernst & Young report states
Employee Numbers
that during 2008, there were more
The total employees engaged in than 4700 companies operating in
the public biotechnology companies biotechnology industry across the
decreased marginally by 0.5% in globe with most of them (83%)
2008 over the year 2007, to reach controlled by private entities.
a little over 2 million. This decrease Interestingly, bulk of these private
in growth was essentially due to a controlled companies belonged to
decrease in number of employees Europe, with a share of 39% in the
Exhibit 8:
SHARE OF REGIONS IN GLOBAL BIOTECHNOLOGY
EMPLOYMENT – 2008
(Public Company Data)
SOURCE: Ernst & Young 2009
45