INDIA’S biotechnology (BT) sector, which shows immense potential for growth, continues to expand at a hefty pace.
Earlier this month, some of the biggest names from the sector, both within India and from abroad, gathered in Bangalore – the Silicon Valley of India – for their annual love-fest.
The country’s BT potential has been spoken of in awe by industry insiders for years, but unlike the phenomenal growth of the information technology (IT) sector, there has been little headway so far, in terms of high-profile companies, major export orders, mergers and acquisitions, venture capital funding and the like.
India is also facing an acute shortage of trained personnel, and though there has been a mushrooming of scores of institutions offering biotechnology courses, there is a massive shortage of teaching faculty and experienced mentors.
Many state governments – notably the two southern ones, Karnataka and Andhra Pradesh, and Maharashtra in the west – have been offering incentives to attract the BT industry.
But for all the hype that has been built around the sector, it has only now reported total revenues of a paltry $2 billion – in contrast, the top three IT firms, TCS, Wipro and Infosys, are pushing ahead aggressively, with annual revenues of $4.3 billion, $3.5 billion and $3.1 billion respectively. Total IT industry revenues add up to a whopping $47.8 billion.
BT industry leaders, however, feel it is unfair to compare it with the more successful IT sector, which has had a head-start of nearly 20 years. BT industry revenues have doubled in a short span of two years; total revenues were around a billion dollars in fiscal 2004-05.
Kiran Mazumdar Shaw, the doughty chairwoman and managing director of Biocon India – and the chief spokesperson for the industry – is confident that the sector is on the right track to achieve the targeted turnover of $5 billion by 2010. According to Shaw, the bio-pharma sector accounted for $1.4 billion of the total revenues, while bio-services and bio-agri sector added about $250 million each. While the overall BT sector expanded at about 30 per cent, bio-agri saw a growth of 50 per cent.
Investments into the BT sector almost touched the $600 million mark, with Bangalore alone attracting investments of $245 million during financial year 2006-07 (ending March 31, 2007).
International consultancy Ernst & Young has ranked India number three, behind Japan and South Korea, in terms of biotechnology potential in the Asia-Pacific region.
According to Shaw, the biotechnology industry in India is “gaining critical mass.” India’s cost and skill base is supporting affordable drug development. The country is also gaining global leadership in BT (bacillus thuringiensis) cotton, and thanks to farmers adopting the genetically modified seed, India has emerged from a net importer of cotton to a net exporter in a short span of just a few years.
INDIA’S high-tech capital, Bangalore – which is also the capital of Karnataka – continues to hold sway in the biotechnology sphere. The government is promoting a sprawling BT park, the Bangalore Helix, which has already started attracting the attention of international firms.
According to government sources, over a dozen international companies made inquiries about the park, coming up near the Electronics City, another showpiece, which is fast developing on the outskirts of Bangalore. The first phase of Bangalore Helix is expected to be operational from next month, and will house the Centre for Human Genetics and the Institute of Bioinformatics and Applied Biotechnology.
The entire project is expected to be ready in about five years, and will ensure Karnataka’s lead in the BT sector. The state already accounts for more than half of India’s BT revenues, and there are nearly 200 firms involved with BT operating out of Bangalore.
Companies like Biocon – based in Bangalore – are busy signing agreements with international partners. It recently signed a memorandum of understanding with the Deakin University, Victoria, Australia, for joint multi-disciplinary research focused on BT and biosciences.
According to Crispin Kirkman, managing director, Emerging Technologies Network Agency, UK, “the opportunities for Asian and Indian companies in the biotechnology sector are immense. The key to their success is their ability to retain their cost advantage while matching the quality standards of the west.”
India, he points out, is an increasingly attractive destination for R&D activities in the pharmaceutical and biotechnology industry. “Western companies are looking to partner with Indian companies because of their low cost, flexibility, high proficiency in health care and science, and excellent talent pool,” adds Kirkman.
The biotechnology (or life-sciences) business has of course attracted all the top Indian corporates. The Tatas, Reliance Industries and the Aditya Birla group have set up separate life-sciences divisions and groups to take advantage of the expected explosive growth in the sector.
All these three top business groups aim to focus on research and development, which could lead to global patents on new drugs. Reliance Life Sciences has filed over 200 international patents on various innovations, and recently acquired UK-based biotech start-up, Genemedics. Reliance has also gone in for strategic investment in a US-based BT fund.
The Tatas have also been investing in research firms, including Avesthagen and Advinus Therapeutics, both of Bangalore, and Indigene Pharma of Hyderabad. The Aditya Birla group is also focussed on R&D in the BT arena.
THE most significant gain recorded by the BT sector has been in cotton production. Finance Minister P. Chidambaram wants the industry to replicate the success in the area of food crops, which would help make India self-sufficient.
Emphasising the importance of BT in agriculture, Chidambaram told scientists that “what has been done with Bt cotton must be done with foodgrains.” Referring to the opposition to the use of genetically modified seeds and produce by some environmentalists, Chidambaram says these are issues that need to be tackled by scientists, and not “brushed aside by emotion and political arguments.”
K.K. Narayanan, president, Association of Biotechnology-led Enterprises (ABLE), who is also managing director of Metahelix, an agri-biotech firm, points out that India’s cotton production soared from 14 million bales in 2002 to 27 million bales last year, thanks to BT.
From being a net importer of cotton, India emerged as a net exporter in a short span of three years. Yields have gone up from 300 kg a hectare to 500 kg at present. And India has also surpassed China as the country with the largest acreage of Bt cotton – 9.5 million acres – points out Narayanan.
Metahelix, which has launched transgenic seeds for wheat and vegetables, is also active in contract R&D, and has obtained early stage funding from venture capital funds.
India is today the world’s third largest producer of cotton, and production is expected to grow by seven per cent in the new season beginning October. Industry analysts expect total cotton production to reach 28 to 29 million bales next year.
India’s cotton exports have soared to 4.7 million bales, with China being the major consumer. The use of genetically modified seeds has helped improve the quality of Indian cotton as well.
The agriculture sector in India has been seeing anaemic growth in recent years. At a time when the services and manufacturing sectors have grown by 13 per cent and 12 per cent respectively, agriculture has been plodding at a mere 2.3 per cent. India’s gross domestic product (GDP) grew by 9.4 per cent in the year ended March 31, 2007.
BT has had a tremendous impact on one crop – cotton – in recent years. The BT industry believes there is enough scope to repeat a similar success story in other crops and even food grains.
INDIA’S biotechnology (BT) sector, which shows immense potential for growth, continues to expand at a hefty pace.
