BY OUR CORRESPONDENT
17 October,2006: Today companies world over are looking at these fast emerging economies of China and India with awe. They realize that one can ignore them only one’s own peril. That could be one reason why life science firms from the US and European region are getting curioser and curioser about these Asian giants, some even preferring India to China for alliances and partnerships.
“We are a ‘Sleeping Giant’ in biotech. But don’t hesitate to cooperate with a Sleeping Giant,’’ pleaded the director general of China National Centre for Biotechnology development, at annual Biotech Industry Organisation convention in Chicago, recently. The appeal was aimed at the potential entrepreneurs in the West who still remained reluctant to pull the purse strings as they feared Asian countries like China or India still lacked adequate infrastructure or guarantee to safe-guard their intellectual property.
Of course there was a time when investors based in the richest capitals did really fear to tread these terrains. With China and India liberating their massive economies offering protection of intellectual property and opening their borders for free commerce, the scenario has reversed.
Though India joined WTO many years after China’s entry, the process of market liberalisation in India has been comparatively faster. Like Life science, several industrial sectors have got a shot in the arm boosted by free trade with fewer barriers and infusion of fresh funds. India's biotech sector reported a phenomenal 37.5 per cent growth with total revenue of $1.45 billion in 2005-06. Major chunk of the revenues – more than 70 percent—came from biopharmaceuticals.
India is the country outside the US that has the world’s highest number of FDA approvals. This amply illustrates the world-class standards of quality maintained by the Indian drug makers.
Foreign direct investments (FDI) in the industry have increased to 216 million USD in 2005. As mentioned, bio pharma is the single largest contributor to the total business in the biotech industry. Bio pharma registered close to 30 percent growth, primarily driven by the vaccines business. The bio services sector, which accounts for 9% of the total business, is the second largest sector. The bio services reached a turnover of 95 million USD in 2004-2005, which equals a 55% growth compared to last period. In 2004-05 the bio agri sector, which accounts for 7% of the total business, was the fastest growing sector. Bioinformatics at 25% growth recorded total business of USD 23 million and accounted for 2.11% of the market.
The diagnostic business is poised to become a Rs 700 million industry by 2010 going by the tremendous development in the areas of kits and chips for early disease detection.
Biotechnology has also witnessed 25 partnerships in the last two years.
The Union government has been supporting the upstart firms with seed funds through the New Millennium Indian Technology Leadership Initiative (NMITLI) and Special Drug Development Research Initiatives.
The private sector and venture capital investments have been low. However, when compared with previous years, more number of companies received venture capital funding during 2005, according to Nitin Deshmukh, of Kotak Mahindra Bank and Honorary Director, Association of Biotech Led Enterprises (ABLE).
India also follows the global cluster model for biotech industries. A total of 6 biotech parks are functioning in various states and under the public-private partnership and 10 parks are in different stages of development across the country. Several world-class scientific institutions like the National Centre for Biological Sciences (NCBS) and the Indian Institute of Science (IISc), Center for Cellular and Molecular Biology (CCMB) in Chennai, further lend support to the sector.
Leveraging the strengths of trained manpower, low operational costs, cost-effective technologies, and cheaper raw materials India’s biotech sector is showing the potential to generate one million jobs by 2010 and achieve revenue to the tune of $5 billion, pointed out Aditya Sapru, managing director, Frost & Sullivan South Asia & Middle East.
Traditionally, Indian biotech sector is well-recognised for low cost fermentation technology and generic biologicals. Bangalore-based Biocon is a leader in industrial enzymes and a key player in statins. Statins are currently the largest selling drugs world over.
Indian firms could produce generic versions of majority of biopharmaceuticals launched in the global market. Biocon, Dr Reddy’s Laboratories, Panacea Biotech, Natco Pharma, Wockhardt, Ranbaxy have proven strengths in making generic equivalents of bio drugs. This will give it an edge in the biogenerics market once the bio similar products come into acceptance. Campaign to develop a regulatory frame work for generic equivalents of innovative biotech products once they go off patent has intensified, following the approval of biogeneric version of human growth hormone (Omnitrope) in the US.
In the area of contract research, there has been a 55 per cent growth and a nine per cent contribution to the total industry turnover. Biocon, Bharat Biotech, Biological Evans, Serum Institute and Shantha Biotech have world-class facilities for bio pharmaceutical contract manufacturing.
Surely, these proven and known capabilities catapult India’s bio firms into the league of sought-after collaborative partners.
India- the new partner
The countries world over are curious on the recent rising of Indian biotech industry and naturally, they also wanted to take part in the process.
Germany happens to be one among the pioneers who made genuine attempts to explore the Indian biotech landscape. German firms initiated few successful alliances with the Indian counterparts. Rhein Biotech’s technology tie-up with the Mumbai-based Wockhardt Ltd, is an example. Wockhardt forayed into life science segment through a collaboration with Rhein Biotech's Hansenula polymorpha technology for the production of hepatitis-B vaccine in India. Wockhardt later restructured by acquiring 100% ownership in the 50:50 joint venture and Rhein Biotech is now a part of Berna Biotech.
Home of major pharma corporations such as Aventis Pharma (now sanofi-aventis), Degussa, Fresenius, Biotest and Merck, the German biotech is still in active chase for Indian firms.
In April last year C B Chemie, Germany started a partnership with Regent Ecitech, Coimbatore. The new entity, Regent Biochem India Pvt Ltd aims to establish the production of biochem range of products in India.
Notwithstanding individual efforts, facilitation of bio partnering is done through organised efforts, as well. The Frankfurt Biotechnology Innovation Centre (FIZ) in association with the International Technology Cooperation Network (INTEC) signed a memorandum of understanding with Karnataka Biotechnology Development Council (KBDC), recently. The Indo German Biotechnology Cooperation enables India’s leading biotech hub Bangalore to have suitable partnership with suitable regions in Germany such as Hessen/Frankfurt.
A portal on Indo-German biotechnology was also launched last year to help familiarise the partners and joint objectives.
“India is today much more visible in the German media and general consciousness. Its capabilities, advantages and the image of modern India is well broadcasted. The presence of a strong and qualitative German Biotech Delegation in the recently concluded Bangalore Bio 2006 underscores this new image of India,’’ said Anandi Iyer, advisor, Intec.net.
The recently taken place Bangalore Bio, witnessed the crowd of executives from MNCs to be part of Indian biotech boom. Bangalore Bio is the biggest trade show on life science industry promoted by the Department of IT and Biotechnology, Government of Karnataka and the Vision Group on Biotechnology.
Biobase, SENOVA, BASF Plant Science, BIO NORD, Invest in Germany, University of Hannover, Department Plant Molecular Biology, Roche Diagnostics, Deininger Unternehmensberatung, Federation of German Research Institutions and Research Centre for Infectious Diseases were among the team. German chemicals and pharmaceutical giant Atlanta AG is reportedly setting up facility at Bangalore.
We have companies from the United Kingdom who successfully inked alliances with two Bangalore-based bio firms, a month back. Genetix, a leading robotics manufacturer, appointed Labmate (Asia) Pvt Ltd as their marketing partner for micro arrays and a leading analytical services provider M-Scan reached a partnership agreement with Bioinnovat Research Services Pvt. Ltd, a drug development research services consultancy firm.
GlaxoSmithKline’s vaccine filling and packing unit at Nashik is expected to be operational this year. UK’s Radox Laboratories is planning to set up a diagnostic kit manufacturing facility in Bangalore. Apart from this, several regional life science companies from Scotland, Wales, the Midlands, London & the North East have shown definite interest to join hands with the firms here, stated Gita Krishnankutty, senior Inward Investment Adviser, British Trade Office.
Another country who is in earnest biotech pursuit with India is The Netherlands. Nearly a dozen of firms from the Dutch life science industry visited India’s Biotech City, last summer. And a couple of them are learnt to be in negotiations with firms in Bangalore.
France, having 400 biotech companies, is another country keen on bio partnering with India. These comparatively younger firms have strong R&D pipelines and several of their new drug candidates are in various phases of clinical research. However, none of them has reached marketing stage, so far.
They are looking for alliances for co-development of molecules at various stages and in-licensing. And the French life sciences industry feels that since the Indian biotech companies, on the other side, are also seeking collaboration strategies with overseas life science firms with a need to fill the pipelines and technical know-how, a mutual collaboration will make perfect sense.
Eric Farcette, commercial attaché, Consulate General of France - Economic Mission, Mumbai, says, “The potential of life sciences sector in India remains hugely untapped. If you start utilising existing opportunities to the desired levels, it will bring tremendous reward for both the countries,”
France led the biggest delegation of 19 companies and 50 professionals from the life science segment including Institut Pasteur, Pierre Fabre, LFB, Lessaffre International, Peaccel, Cerep,Chem Tox,Clestra, i3 Research, ID bio and Transgene for the Bangalore Bio 2006, in June.
When it come to US, the bio firms look more open to Indian ventures than in China. A recent survey conducted jointly by the US-based ATS Venture Advisors and Hyderabad-based Cygnus Business Consulting and Research suggest that India has been preferred to China for immediate expansion plans by the US-based bio-pharma companies, as they want to establish alliances for research.
The report titled ‘Cross border alliances in the biopharmaceutical industry: The US and the Indian companies’, notes the US companies want to tie up with Chinese counterparts only after two years period when they have reached the stage of commercialisation of products.
Of the 70 US companies that took part in the survey, about 66 per cent responded positively on outsourcing to India for immediate expansion plans to take a firm foothold in the market. Sigma-Aldrich, a $1.2 billion high technology life science firm from the US is planning to set up a unit at Shappoorji Pallonji (SP) Biotech Park, Hyderabad.
Also, the government of Denmark signed an agreement with India within the field of biotechnology following a visit from a high level delegation of IT & biotech companies led by the Minister of Science & Technology from Copenhagen in 2004.
Denmark’s leading players such as Novo Nordisk is already in alliance with Ahmedabad-based Torrent Pharma for manufacturing and packaging of insulin formulations. Novo has also got a distribution tie-up with Abbot India on insulin.
Not only in high sounding Europe and the US, biotech companies from India have successfully worked out deals with companies from the `lesser known’ regions of the world, as well. For instance, Biocon’s technology collaborations with Cuban Institute (CIMAB (Centre for Molecular Immunology) on monoclonal antibodies and Karolinska Institute of Sweden in the field of medical biotechnology.
Australia, a dominant biotech player in Asia-Pacific, too desires to associate with India in therapeutic as well as agri biotech. Garry Draffin, CEO, Invest Australia, said in a recent interview that Australian companies need to be looking towards key Asian countries like India as its strengths are complementary to Australia’s.
Evidently, the fledgling life science industry is in focus. There is undoubtedly tremendous interest generated to Indian bio sector all over the world not only for R&D but outsourcing jobs also.
True that Indian life science sector has all the necessary ingredients –the technology, the people, the skill sets, the attitude---that can attract a seeking partner. It is really buoyant too. Nevertheless, it requires to move a little way forward in certain areas to make the possibilities real. There still remains a cloud of suspicion over IPR issues like patentability of new inventions and granting of data exclusivity (protection of information submitted by innovator companies while seeking approval for a specific period of time), amongst the overseas players.
“The interest towards India is incredible. The airlines travelling to India are full. The hotel rooms are packed. But to bring those aspiring venturists out of their hotel rooms Indian government has to do a bit. They are required to take some small steps,’’ said a representative from the Pharmaceutical Research and Manufacturers of America (PhRMA), the high profile conglomerate of pharmaceutical and biotech firms in the US.
These ‘small initiatives’ can go a long way to ward off the prevailing apprehensions and provide a global landscape friendly for investments, he opined.
BY OUR PHARMA CORRESPONDENT