Indian Biotech Industry Report 250608

Biotech MARKET & OPPORTUNITIES

Biotech MARKET & OPPORTUNITIES

CONTENTS Market Overview

2

Key Opportunities

6

Bio-Agri

12

Bioinformatics

14

Bio-Industrial

16

Key Growth Drivers & Trends

17

Policy & Regulations

23

Key Players

26

Advantage India

33

A report by Ernst & Young for IBEF



MARKET & OPPORTUNITIES

Market Overview

Indian biotech industry crosses the US$ 2 billion mark

Bio-Pharma continues to lead; Bio-Agri and Bio-Services show impressive growth

The Indian biotech market has doubled in size in the past two years, reaching a value of US$ 2.08 billion in 2006-07, compared to US$ 1.45 billion in 2005-06. The industry grew by a remarkable 31 per cent, fuelled by the rise in domestic business, exports, mergers and acquisitions and new product innovations. Over the past five years, the industry has sustained a 30 per cent growth rate, indicating a rapidly maturing market. The sector at present, employs approximately 20,000 scientists, who continue to drive it towards further growth.

The Biotech sector in India listed over 325 companies in 2006-07, across the industry value chain. Larger number of biotech companies are involved in Bio-Pharmaceuticals, followed by Bio-Services and Bio-Agri. Bio-industrial companies are still a minority in the Indian market at 5 per cent.

Biotech Industry Revenues

Segment

2006-07 (US$ million)

2005-06 (US$ million)

Change

Bio-Pharma

1453

1145

26.87%

Bio-Services

268

175

53.06%

Bio-Agri

225

145

54.85%

Bio-Industrial

96

91

5.33%

Bio-informatics

35

29

20.83%

2078

1587

30.98%

Total

Companies (in percentage) involved in each Biotech Segment 2006-07 Bio-Pharma

40%

Bio-Services

21%

Bio-Agri

19%

Bio-informatics

14%

Bio-industrial

6%

Sourc: Biospectrum-ABLE Annual Survey 2007

The Bio-Pharma segment, continues to contribute more than two-thirds of the biotech sector revenues. It recorded sales of around US$ 1.46 billion in 2006-07 and a growth of about 27 per cent and accounts for 71 per cent of the total industry revenues Contribution of Various Segments to the Total Biotech Revenues 2006-07

Number may appear inconsistent because of rounding off Source: Biospectrum, June ‘07

The Indian market currently accounts for a little over 1.1 per cent of the global biotech market. However, its rapid growth is likely to position it as a leading player in the years to come. India already ranks third in Asia-Pacific, after Japan and Korea and among the top 12 globally.

Bio-Pharmaceuticals

71.00%

Bio-Services

13.10%

Bio-Agri

10.84%

Bio-industrial

4.70%

Bio-informatics

1.72%

Source: Biospectrum -ABLE Annual Survery 2007

Bio-Agri and Bio-Services, showed the most robust growth among the Biotech segment and recorded 55 per cent and 53 per cent growth respectively. The BioIndustrial sector grew by a relatively modest 5 per cent.

B IOTECH

Biotech exports account for US$ 1.2 billion in revenues The Indian biotech industry generated US$ 1.2 billion from exports alone. Almost, 58 per cent of the industry revenues in 2006-07 came from exports, as compared to the 51.5 per cent in 2005-06. This indicates that, India-based companies have been focusing on expanding their global horizon. Biotechnology Sector Exports from India

Segment

Exports (US$ Million)

Segment Sales 2006-07 (US$ million)

Bio-Pharma

894

1,453

Bio-Services

256

268

Bio-Agri

11.4

225

Bio-Industrial

10.9

96

Bio-Informatics Total Industry Size

29

35

1,201

2,078

Number may appear inconsistent because of rounding Source: BioSpectrum, June ‘07

Bio-Pharma exports accounted for over 74 per cent of the overall export market share in 2006-07 and 61 per cent of the Bio-Pharma segment sales. Following Bio-Pharma, Bio-Services contributed about 21 per cent of the total export share. Bio-Agri and Bio-Industrial were the segments that contributed the least to export revenues in 2006-07.

Biotech Industry Exports vs Domestic Sales 2006-07 83

Bioinform atics

17 11

BioIndustrial

89

Bio-Agri

5

Bioservices

5

95 95

Bio-pharm aceuticals

61 39 0

10

20

30

40

Bio-Services

21%

Bio-informatics

2%

Bio-industrial

1%

Bio-Agri

1%

Source: Biospectrum -ABLE Annual Survery 2007

Bioinformatics and Bio-Services revenues primarily ride on exports Out of the total Bioinformatics sales, 83 per cent of the revenue came from exports, while 17 per cent were accounted by domestic sales. In the Bio-Services segment, a similar trend was observed with sales from exports accounting for 95 per cent of the total segment sales.

60

70

80

90

100

n Exports

n Domestic

Sourcs: Biospedrum June ‘07

However, for the Bio-Agri and Bio-Industrial segments, domestic sales contributed a major share of revenues. In Bio-Pharma, almost 40 per cent of revenues came from domestic sales

Biotech activity concentrated in key clusters The research intensive and knowledge driven Indian biotech industry is predominantly distributed over six major

• • • •

• Food biotech park (proposed)

74%

50 per cent

Segments Contribution to total exports 2006-07 Bio-Pharmaceuticals



Panjab • Food biotech park (proposed)

Haryana

Department of Biotechnology Center for Biotechnology The National Institute of Immunology Institute of Genomics & Interative Biology • National Brain Research Centre • National Centre for Plant Genome Research

New Delhi Lucknow Vadodhara • Savli biotech Park (proposed)

• Food biotech park (proposed) • Central Drug Research Institute Kolkata

• India Institute of Chemical Biology

• Tata Institute of Mumbai Fundamental Research • National Chemical Laboratory Pune • N  ational Center for Cell Sciences • Hinjewadi Biotech Park • N  ational Center for Bengaluru Biological Seiences • Jawaharlal Nehru Center for Advanced Scientific Research • India Institute of Science • Institute of Bioinformatics and Applied Biotechnology

Hyderabad

• C  enter for Cellular & Molecular Biology • Center for DNA Fingerprinting & Diagnostics • Indian Institute of Chemical Technology • National Institute of Nutrition • Shapoorji Pallonji Biotech Park • ICIC Knowledge Parke • Ticel Biotech Park



MARKET & OPPORTUNITIES

regions in India - Bangalore, Hyderabad, Chennai, PuneMumbai, Delhi and Ahmedabad-Vadodara. Out of these, Bangalore, Hyderabad, Pune-Mumbai, and AhmedabadVadodara have been natural biotechnology strongholds. Recognising the large concentration of biotech companies and institutions in these regions, the respective State Governments have provided an impetus for accelerated growth to the local biotech industry, by establishing biotech parks and offering incentives to biotech enterprises. On the other hand, several states in India have induced cluster formation, by establishing biotech parks, as a first step.

Western region accounted for highest share of revenues in 2006-07 The western part of India accounted for 48 per cent of the country’s biotech business in 2006-07, with revenues at US$ 998 million. This was followed by the southern region with revenues at US$ 831 million and the northern region with US$ 249 million. The western part of the country is home to most of the top diagnostics companies. Bio-Pharma companies accounted for 44 per cent of the total companies in the western part, and Bio-Agri companies followed next with a 31 per cent share. most of the 50 per cent of Bio-Industrial companies and over half the country’s Bio-Services companies are concentrated in the Western region. The Pune-Mumbai and AhmedabadVadodara clusters are the predominant centres of biotech activity in the west.

revenues worth approximately US$ 488 million, recording a growth of over 35 per cent over the previous year. Out of the Total Revenue Generated, US$245 million came solely from exports. Over 183 biotech companies in India are based in Karnataka, out of which around 137 are located in Bangalore, alone. Hyderabad’s ‘Genome Valley’ is in fact, a natural bio-cluster, that was later officially demarcated as a biocluster, by the Government of Andhra Pradesh. Genome Valley, comprises the Shapoorji Pallonji Biotechnology Park and the ICICI Knowledge Park, among several other leading biotech R&D institutions and dynamic biotech companies.

R&D and infrastructure investments in 2006-07 more than US$ 552 million During 2006-07, the Indian biotech sector saw investments of around US$ 552 million in both R&D and infrastructure, a remarkable growth of 38 per cent over the previous year and the second largest percentage increase in the past 5 years. Investments into the Indian biotech industry are expected to increase at a robust pace. Many international biotech firms are laying out plans for direct investments in India. In addition, international organisations such as the World Bank, have been funding the Indian biotech sector and Indian companies have been able to attract investors, such as hedge funds. Despite these positive indications, there however appears to be a lack of adequate funding Investments in the Biotech Sector

Biotechnology Revenues by Regions

Region

2006-07 (US$million)

Share

North

249

12%

South

831

40%

West

998

48%

Total

2,078

100%

Number may appear inconsistent because of rounding off Source: Biospectrum ,July ‘07

Year

US$ million

Growth

2002 - 03

155

N/A

2003 - 04

207

33.86%

2004 - 05

296

42.94%

2005 - 06

401

35.80%

2006 - 07

552

37.58%

Number may appear inconsistent because of rounding off Source : Biospectrum, June ‘07

Karnataka - India’s single largest bio-cluster The Biotech clusters in southern India comprise mainly of the Bangalore (Karnataka) and Hyderabad (Andhra Pradesh) clusters. During 2006-07, Karnataka brought in

for early-stage biotech ventures. According to industry experts, seed capital to fund start-ups, will be a critical factor influencing the growth of India’s biotech sector and Government incentives/initiatives to spur seed capital, hold the key to the much needed investments.

B IOTECH

Biotech Industry Growth (2002-06) Year

Bio-informatics

Bio-Industrial

Bio-Agri

Bio-Services

Bio-Pharma

2006

1453

268

225

96

35

2005

1146

175

146

91

29

2004

869

103

80

78

24

2003

670

67

58

32

19

2002

436

57

33

27

18

Source: Biospectrum-ABLE Annual Survey 2007

Industry revenues pegged at US$ 5 billion by 2010 India is estimated to be home to more than 400 biotech companies by 2010, with nearly 10 of them going public and another 50 on a high growth curve. The overall size of the Indian market is expected to touch US$ 5 billion by the end of this decade, and US$ 25 billion by 2015. There are almost 17 recombinant products, which have been approved for marketing in India as of today, compared to the 12 products present in 2005-06. It is expected that this number will move up to approximately 100 biotech products. (both domestic and imported) The industry has tremendous employment potential and about 50,000 scientists would be working in Indian biotechnology labs in 2010.





MARKET & OPPORTUNITIES

Key Opportunities

Bio-Pharmaceuticals Bio-pharma generates revenues of US$ 1.45 billion; Vaccines driving growth The Bio-pharma sector, comprising vaccines, therapeutics and diagnostics, generated revenues of around US$ 1.45 billion in 2006-07, with a growth of almost 27 per cent over the previous year. Bio-Pharma Sector-wise Revenues

Sector

2006 (US$ m)

2005 (US$ m)

Change

Share in 2006

Vaccines

743

570

30.41%

51%

Diagnostics

231

220

4.97%

16%

Therapeutics

176

156

13.28%

12%

Others

303

200

51.46%

21%

1,453

1,146

26.87%

100%

Total Bio-pharma Revenues

Of the top ten bio-pharma companies in India, seven were vaccine manufacturers The top five companies accounted for approximately 45 per cent of the entire bio-pharma segment and contributed a total of about US$ 626 million in terms of revenues. Indian bio-pharma is export-driven, with 61 per cent of revenues coming from exports.

Vaccines At US$ 743 million in revenues, vaccines accounted for 51 per cent of the bio-pharma market in 2006 (accounting for both human and animal healthcare). Serum Institute was the leader among vaccine players with a turnover of US$ 231 million. Top 5 Vaccine Companies 2006

Company

Revenue (US$ million 2006)

Serum Institute of India

231

Number may appear inconsistent because of rounding off

Panacea Biotec

146

Source : Biospectrum, June ‘07

Venkateshwara Hatcheries

46

Indian Immunologicals

38

GlaxoSmithKline

29

Top 5 Bio-Pharma Companies 2006

Company

Revenue (US$ million 2006)

Per cent change from 2005

Serum Institute of India

231

35.27

Biocon

177

20.73

Panacea Biotec

146

37.04

NovoNordisk

54

26.86

Venkateshwara Hatcheries

46

N/A

Number may appear inconsistent because of rounding off Source : Biospectrum, June ‘07

Total Vaccines Market

743

Number may appear inconsistent because of rounding off Source : Biospectrum, June ‘07

India recognised as the “Vaccine Capital” of the world The Indian vaccines market is experiencing strong growth The country posseces the ability to produce large volumes of traditional vaccines at low costs. Several vaccines are being procured from India in large volumes by multinational

B IOTECH

organisations such as GAVI, UNICEF, PAHO etc. According to UNICEF, India supplies more than 60 per cent of the world’s requirement of basic vaccines. Presently, India is one of the largest producers of traditional vaccines in the world comprising mainly of pediatric vaccines such as Anti Rabies Vaccine, Oral Polio Vaccine, Hepatitis B Vaccine and Hib. Furthermore, a large number of companies have received approval from UN, enabling them to supply larger vaccine quantities. Enhanced capacities in vaccines have also made India an active global exporter of vaccines. Pediatric vaccines such as DTP, MCV, polio, MMR etc. form a major part of the Indian vaccine market. There are several domestic companies and international players manufacturing and marketing vaccines at affordable prices. Early domestic movers in the vaccines business are Serum Institute of India, Biological E, Panacea Biotec, Bharat Biotech and Shantha Biotec. Multinational companies such as GSK and Sanofi Aventis have been manufacturing and supplying vaccines from India for a considerable time. Since 1975, the country has seen an impressive decline in the incidence of diseases such as diphtheria, whooping cough, and measles due to a strong domestic vaccine industry. Polio is another area where major breakthroughs have been made by researchers in India. Despite the immense progress in these areas, there are many under-served markets in India. Among these are Japanese Encephalitis and HIV/AIDS. India has one of the highest rates of HIV/AIDS incidence in the world. As a result, many biotech companies are focusing on developing an HIV vaccine not just for the global market, but also for the large domestic market.

India recognised as an ideal partner for global companies Global companies have recognised the Indian expertise and engage the services of Indian companies as pre-qualified vaccine manufacturers. Global companies than Purchase vaccines from them at highly competitive prices. Cutting-edge research is being carried out by Indian companies in close collaboration with leading research institutions and companies around the world. For example, Bharath Biotech has partnered with US-based Novavax to develop an Avian Influenza Vaccine, and also tied up with Acambis to develop a vaccine for Japanese Encephalitis. Chiron is partnering with Serum Institute for a Meningitis Vaccine. Serum Institute is also collaborating with the Gates

Foundation and the Program for Appropriate Technology in Health (PATH) for accessing testing technology for a pneumococcal vaccine. The company also has agreements with ICMR and WHO for an improved delivery system for an aerosol measles vaccine. Serum Institute is also collaborating with ICMR and John Hopkins University for the development of the Hib vaccine Indian Immunologicals has been working closely with the Indian Institute of Science (IISc) to develop a DNA vaccine for rabies. In a similar manner, Shantha Biotech is currently developing a cholera and typhoid vaccine in collaboration with the International Vaccine Institute of Korea. Shantha Biotech is also working with the National Institute of Health (NIH) for a rotavirus vaccine. Select Indian Collaborations

Indian Company

Alliance Partner

Description

Bharat Biotech International Limited

Acambis plc (UK)

Manufacturing & marketing agreement for Acambis investigational vaccine against Japanese Encephalities

Panacea Biotec

Chiron Vaccine (USA)

To provide breakthrough combination vaccines to the Indian market

Panacea Biotec

Combridge Biostability (UK)

In-licensing of CBL’s stable, liquid vaccine technology

Ranbaxy

Sanofi Pasteur

Marketing of Vaxigrip, a global preventive vaccine against Influenza

Rabies vaccine market in India is valued at about US$ 93 million In India, three million people undergo anti-rabies treatment and 30,000 deaths are reported every year- accounting for 50 per cent of mortality from rabies worldwide. The domestic market for rabies vaccine is approximately US$ 93 million, and the export market is valued at about US$ 349 million. Imported vaccines dominate the market currently, with prices ranging from US$ 8-9 per dose. A full course of rabies vaccine costs about US$ 32 in India. Indian companies are increasingly focusing on producing affordable rabies vaccines locally. Bharat Biotech is one such company that plans to supply Rabirix, a rabies vaccine developed by the company, at a price that is 30 per cent lower than the existing vaccines in India.





MARKET & OPPORTUNITIES

Hepatitis B vaccine market continues to grow The Indian Hepatitis B vaccine market comprises of both Indian and multinational players. One of the leading players, Bharat Biotech, has developed the world’s first recombinant Hepatitis B vaccine (Revac B) without the use of Cesium Chloride. Industry experts predict that there will be a boost in demand for the Hepatitis B vaccine, due to the Union Health Ministry’s decision to include the vaccine in the National Immunisation Program.

Combination vaccines attract industry’s attention A recent trend in the Indian vaccine industry is towards high-value combination vaccines. Combination vaccines are meant to provide protection against multiple diseases, with lesser number of doses. Companies such as Shantha Biotechnics and Serum Institute have already produced combination vaccines and other players are increasingly showing interest in this area.

Diagnostics The diagnostics segment at US$ 231 million, constituted 16 per cent of the Indian bio-pharma market during 2006-07. The diagnostics market showed a relatively low growth rate of about 5 per cent, mainly due to the stiff competition existing in the Indian market. There are over 50 companies including MNCs involved in the diagnostics market in India. The top companies have consolidated their market presence and are growing between 15 to 20 per cent. Top 5 Diagnostics Companies 2006-07

Company

Revenue (US$ million 2006-07)

Tulip

40

TransAsia Biomedical

37

Bayer

18

Span Diagnostics

13

Becon Diagnostics

5

Others

118

Total Revenues

231

Number may appear inconsistent because of rounding off Source : Biospectrum, June ‘07

The leading Indian diagnostics company is Tulip with a turnover of about US$ 40 million in 2006-07. With the spread of health consciousness and increasing awareness amomg Indians about diseases such as AIDS, Hepatitis, etc on one hand and active steps taken by the Government on the other in promoting community health, such as compulsory testing by blood banks for AIDS and Hepatitis, the potential of the diagnostic industry is very promising. Large players from across the world have found the Indian market very attractive and set up their operations in India. Many of the diagnostic products are being imported, however, an increasing number of local players and an expanding customer base have made the market competitive in the recent past.

Therapeutics Therapeutics revenues stood at US$ 176 million in 2006, with a growth rate of around 13 per cent. Human insulin is the largest contributor to the therapeutics market with revenues of approximately US$ 88 million. Novo Nordisk was the leading human insulin company generating revenues of about US$ 54 million. Novo Nordisk also ranked fourth among the top bio-pharma companies. Therapeutics have remained the thrust area in India’s R&D efforts, with human insulin being the most common area of research. Plasma proteins have also carved their own niche in the Indian bio-pharma industry.

Human insulin continues to be an attractive prospect There are many brands available in the Indian insulin market by both local and multinational companies. However, the market is dominated by multinational companies such as Novo Nordisk, Eli Lilly and Aventis Pasteur. This is mainly due to the fact that diabetes patients have been using brands of multinationals for many years. There is a large opportunity for insulin manufacturers due to high incidence of diabetics in the country. Over 37.5 million people suffer from diabetes in India. Based on dietary habits and the sedentary lifestyle that many Indians follow, the country is expected to experience an increased incidence of about 48 million by 2016. Having recognised the growth potential for anti-diabetic products, Indian companies have invested considerably in developing indigenous human

B IOTECH

insulin. Indian companies have also entered into various tieups with multinationals to market human insulin products in the country. In the last few years, Indian companies have launched rDNA Insulin products under different brands at lower prices. This intense competition has further pushed down the price of insulin products, thus making it affordable for a larger segment of the Indian population.

Major potential for plasma proteins in India Hemophiliacs are the target population for players interested in plasma protein R&D. India has over 100,000 people who are affected with hemophilia, contributing 25 per cent to the world hemophiliac population. As a result of this high incidence, India needs about 900,000 liters of plasma proteins per year. India has been meeting this requirement so far by sourcing these proteins from MNCs such as Baxter. However, India has the potential to manufacture plasma proteins locally. Reliance Life Sciences has been the first company to tap into this potential. RLS uses a combination of raw materials from the US, Europe, and India to develop the plasma products indigenously. In 2005, the company was able to successfully launch its first set of five plasma proteins, namely Albumin (AlbuRel) Immunoglobulin (ImmunoRel), Anti Hemophilic Factor VIII (HemoRel), Fibrin Sealant (ReliSeal) and Virus inactivated plasma (ReliPlasma) at prices 30 to 40 per cent lower than the imported products. Anti-hemophilic factor is the lifeline of hemophiliacs, however, only one protein type is manufactured by RLS. None of the other Plasma protiens is being manufactured in India as yet (most are imported from Baxter). Manufacturing these proteins locally would mean that patients can get the products at short notices and at a much cheaper price.

Monoclonal antibodies are becoming a fast growing segment in India A large number of Monoclonal Antibodies (mAbs) have already been introduced in India by innovator companies, either through distribution agreements with local companies, or through their own subsidiaries. The mAbs market is becoming a fast-growing segment in India, especially in oncology and auto-immune diseases such as Rheumatoid Arthritis. At present there are approximately 3 million cancer patients in the country and about 700,000 new cases are added to this every year. Linked to urban

lifestyles, Arthritis and Inflammatory Immune Disorders (AIID) are becoming increasingly prevalent. At present only a few therapies for oncology are available and the existing therapies have a high side-effect profile. AIIDS drugs primarily treat symptoms, representing a large unmet medical need in the country. Due to the technological complexity, Monoclonal Antibodies Development is at a nascent stage in India. However, having recognised the commercial and the rapeutic potential, biopharma companies have begun to take steps for development, either in-house or via collaborations. India’s Biocon has partnered with the innovator for an anti-EGFR (Epidermal Growth Factor Receptor) mAb. It is indicated for the treatment of head and neck cancer, non-small cell lung cancer, brain tumors, colorectal cancer and pancreatic cancer. The drug was approved in India in 2006 for head and neck cancer. In April 2007, Dr. Reddy’s Laboratories launched Reditux, in India the generic version of Rituximab, at a price 50 per cent lower than the innovator’s price. Reditux has the distinction of being the first generic mAb to be launched in the world. Zenotech, a Hyderabad-based biopharma company, has started to build capabilities in the development of monoclonal antibodies. Serum Institute of India is another Indian company witch has taken steps towards development of mAbs. The company has entered into an agreement with Akorn of USA for definitive development and exclusive distribution rights for a rabies monoclonal antibody.

Biosimilars As the patents for several successful biologicals expire globally, the manufacturing of biosimilars offers an increasingly attractive opportunity to Indian biotech companies. Recombinant proteins and Monoclonal Antibodies (mABs) are the major targets for biosimilars being developed globally. More than 95 per cent of total biotech sales between 2004-10 are expected to come from these two classes of products alone. More specifically, Epoetin, Human Insulin, Human Growth Hormone (HGH), Colony Stimulating Factors (CSFs), Interferon Alpha and Beta are the key biopharma products coming off-patent . These products offer a large market size to justify the cost of biosimilar development. These classes of molecules are



10

MARKET & OPPORTUNITIES

expected to touch annual sales of US$ 12 billion in USA and US$ 25 billion in Europe by 2015. The regulatory pathway for approval of biosimilars has been slow to evolve globally. Risks related to clinical efficacy and safety of biosimilars have resulted in a cautious approach adopted by developed countries towards approving biosimilars. The European Medicine Evaluation Agency (EMEA) has had a legal framework in place for approval of biosimilars since 2004. It has introduced guidelines for select biosimilars in order to ensure a cost-effective and speedy regulatory process. While the US still does not have a defined abbreviated regulatory pathway for biosimilars, the FDA in May 2006 took a significant step in by allowing the first follow on version of a Recombinant Human Growth Hormone, Omnitrope. FDA however stressed that this precedent does not establish a pathway for approval. Biosimilars gained momentum in the US in September 2006, with the introduction of the Access to Life-Saving Medicine Act, this will give FDA the express legal authority to approve safe biosimilars. The bill has attracted the wide support of a diverse group of lobbyists, health plans and pharmacy benefit managers. This indicates a strong likelihood of the regulatory pathway being in place soon. The establishment of regulatory processes for biosimilars in both Europe and USA open doors to a huge export opportunity for the Indian biotech industry. Many Indian companies have already focused their efforts on developing biosimilars. Biocon has recently divested its enzyme business by selling it to Denmark-based Novozymes for US$115 million. The company aims to focus increasingly on bio-pharma, more specifically, on biosimilars, alliances, and discovery. Dr. Reddy’s Laboratories (DRL), India’s largest drug maker has eight biosimilars in its pipeline currently and plans to release one every year into the market. The drugs include Monoclonal Antibodies for cancer and medicine for arthritis. DRL expects that biosimilars will contribute as much as 30 per cent to the company’s revenues within the coming decade. Wockhardt in India has recently been seeking US sales of insulin and a genetically engineered version of Erythropoietin (EPO). Other major companies such as Nicholas Piramal, Glenmark, US vitamins, and Intas Biopharma have also been venturing into opportunities in biosimilars.

Bio-Services Bio-services, at US$ 268 million, second fastest growing sector Bio-services in India includes Clinical Research and Contract Research Organisations (CROs) and Custom Manufacturing. Top 5 Bio-services Companies 2006-07

Company

Revenue (US$ million 2006-07)

Syngene

38.0

Quintiles

36.0

Lambda

15.0

Vimta Labs

13.9

Veeda

13.8

Others

152.0

Total Revenues

268.0

Number may appear inconsistent because of rounding off Source : Biospectrum, June ‘07

At present there are more than 70 companies involved in activities such as data management, clinical trials, site management, bioequivalence, bioavailability studies and toxicology studies and also knowledge process outsourcing for the bio-pharma industry. The bio-services sector has growm by approximately 53 per cent in 2006-07. The sector contributed revenues of US$ 268 million to Indian biotechnology, second only to the bio-pharma sector. Bio-services is also the second fastest growing sector in Indian biotechnology after Bio-agri. Biocon’s subsidiary, Syngene, has collected the highest revenues at US$ 38 million in the bio-services sector during 2006-07. Syngene also recorded an exceptionally high growth rate of around 71 per cent over the previous year. Syngene is followed closely by Quintiles, it registered revenues of about US$ 36 million and a growth rate close to 65 per cent during 2006-07. Outsourcing of R&D to India is on the rise and is evident in the number of deals that have been concluded recently.vii

B IOTECH

Global companies find India an imperative for outsourcing services As clinical trials get larger and more complicated and the R&D expenditures escalate, global R&D outsourcing creates a huge opportunity for Indian players. According to industry sources, India offers a US$ 1 billion opportunity, in clinical research alone. Global firms, are using different models to leverage India’s advantage, either through acquiring stakes or notching a direct presence to hold a slice of the market pie. Abundant manpower, speedy trials, and high quality of service, make India a preferred destination for global clinical services outsourcing. Leading global CROs in India include Quintiles, ICON, PRA, Parexel, Chiltern, and ClinPharm, among others. Indian CROs include, Lambda Therapeutics, ClinInvent, and iGATE Clinical Research International. Many Indian players are expanding their operations by increasing their manpower and infrastructure, to develop capabilities and scale to serve their global sponsors reliably. India has also been involved in various outsourcing deals involving bio-manufacturing. Nicholas Piramal is one of the players which has tied up with numerous leading global biotech companies for bio-manufacturing.

Examples of Outsourching Deals in Bio-services

GlaxoSmithKline - Tata Consultancy Services GSK signed a multi-million dollar contract with TCS to establish an R&D Support center in Mumbai

Bristol -Myers Squibb - Syngene A research collaboration agreement has been signed to enhance capabilities and service offerings.

Acunova Life Sciences - Kiecana Clinical Research KCR (Poland -based) formed a strategic regional alliance with Acunova Life Sciences for leveraging operations in South Asia, Europe and Latin America.

GVK BIosciences - Drug Development Solutions Drug Development Solutions (UK -based) has signed a major longterm agreement with GVK Bio for providing clinical data management services for clinical trails.

11

12

MARKET & OPPORTUNITIES

Bio-Agri

Bio-agri a US$ 225 million opportunity, driven by Bt cotton seeds Bio-agri is the third largest contributor to Indian biotech industry during 2006-07 with a turnover of US$ 225 million, accounting for almost 11 per cent of the biotech pie. However, its growth rate of almost 55 per cent is the highest among all the biotech segments. The top three companies in the sector, Rasi Seeds, Nuziveedu Seeds, and Mahyco generated over 72 per cent of the segment’s total revenues. Top 5 Bio-agri Companies 2006-07

Company

Revenue (US$ million 2006-07)

Rasi Seeds

81

Nuziveedu Seeds

55

Mahyco

27

Ankur Seeds

17

Biotech International

6

Others

39

Total Revenues

225

Number may appear inconsistent because of rounding off Source : Biospectrum, June ‘07

Bt cotton continues to be in high demand The Bt cotton seeds market is estimated to be worth US$ 203 million. In 2006, India overtook China in the total area under Bt cotton cultivation - India had 3.8 million hectares as opposed to the 3.5 million hectares in China. Also, 62 Bt cotton hybrids were approved for planting in India in 2006 as opposed to the 20 in 2005 and four in 2004. By May 2007, 111 Bt cotton hybrids had were approved for commercial cultivation in India.

Maharashtra, Andhra Pradesh, Gujarat, and Madhya Pradesh are the major states cultivating Bt cotton. Karnataka and Tamil Nadu also grow Bt cotton. The year 2006 brought about another drastic change in Indian bio-agri from being an importer of cotton, the country became a net exporter of cotton. Cotton export revenues soared from 0.9 million bales in 2005 to 4.7 million bales in 2006. Biotech companies are working towards offering farmers a broader choice of Bt cotton products to choose from Bt cotton will continue to be in great demand in India in view of the substantial benefits realised by farmers. These developments offer many opportunities to the Indian bio-agri industry to introduce newer technologies. The thrust today is on moving towards cutting-edge R&D efforts in order to meet the increasing demand for food production in India.

Rising interest in other GM crops About 15 biotech products are under development by both the public and private sector in the country.These crops offer pest and disease resistance and delayed ripening. R&D work is also being carried out in the areas of mustard hybrids, nutritionally enhanced potatoes, and vitamin A-rich golden rice. Long term programmes focused on salinity and drought resistance in rice also hold immense promise for rice is one of India’s main staple food. Fruits and vegetables of interest in India with regard to GM crop biotechnology are eggplants, tomatoes, and lady fingers, among others.

Bio-diesel prospects are picking up India’s bio-fuels market is still in its infancy with only about 66 million gallons of ethanol being utilised in ten states in the country. India has just taken the initial step towards commercial production of bio-diesel. India’s current

B IOTECH

production of bio-diesel is not commercially significant, however the Indian Government has been actively promoting the use of ethanol. In November 2006, the Government declared it mandatory to blend five per cent of Ethanol with petrol in India. India has So far managed to develop high-yielding varieties of jatropha seeds, initiating jatropha nurseries, setting up pilot plants for bio-diesel manufacture, and testing bio-diesel in public transport locomotives and buses. There are a number of corporations in India that are venturing into bio-diesel production by initiating MoUs with state Governments to establish plantations on Government waste land or contract farming with small and medium scale farmers. Players such as Southern Online Biotechnologies and Naturol Bioenergy Ltd. have set up commercial production units for bio-diesel and established collaborations with companies in USA and Europe. Naturol Bioenergy is also negotiating with various tissue culture laboratories in India to provide participating farmers with the right materials in order to meet the increasing demands for jatropha seedlings. Domestic and foreign collaborations are expected to boost India’s bio-diesel production to 1 million tons per year in the next two to three years.

Biopesticides and biofertilizers are worth US$ 19.5 million Biopesticides and biofertilizers are estimated to have a market value of almost US$ 19.5 million. Leading players in this segment include Biotech International, Excel, and Multiplex. Phosphate-solubilising micro-organisms witnessed the highest growth among biofertilizers in India. Biofertilizer production is predominantly concentrated in the states of Maharashtra, Tamil Nadu, Madhya Pradesh, and Gujarat. The Indian Government has been promoting the concept of Integrated Nutrient Supply System (INSS) - the use of a mixture of mineral fertilizers, organic manures and biofertilizers. The INSS method improves soil health and crop productivity. Many research universities and institutes have been pursuing studies in biofertilizers. Among these are the University of Hyderabad, National Research Center for Plant Biotechnology, IARI, BARC Mumbai, and TERI.

13

14

MARKET & OPPORTUNITIES

Bio-informatics

Bioinformatics grows to an estimated US$ 35 million opportunity India’s Bioinformatics sector is at a relatively early stage; however dynamic activity in the segment indicates exponential growth in the near future. India’s long-existing IT expertise has contributed immensely to the bioinformatics segment in the country, giving it a strong base for growth. Though Bioinformatics has at persent a small share of the total biotech pie at US$ 35 million, it has sen considerable activity in 2006-07, and has witnessed launching of new tools, overseas expansion, acquisitions and funding. Financial institutions are giving closer attention to the potential of the bioinformatics sector. For example, Kotak Mahindra Bank, one of India’s premier banks has invested in Pune-based V Life Sciences. Besides, the International Finance Corporation (IFC), an arm of the World Bank, announced its intention of investing US$ 6.5 million of equity for a minority stake and debt in Ocimum Biosolutions. Ocimum Biosolutions also acquired Netherlands- based Isogen Life Science, and set up its German subsidiary with the intention of expanding its presence in the European market.

DBT taking initiatives to promote bioinformatics The BTISnet program of DBT has taken various initiatives for promoting networking of information resources, researchers and major infrastructure facilities all over India in an effort to promote R&D activities in bioinformatics. The network system comprises of an apex Center at the DBT headquarters in New Delhi. This Center is linked to 63 bioinformatics centers in India, including five Centers of Excellence (CoEs). The CoEs are in Bose Institute, Kolkata, Indian Institute of Science, Bangalore, Jawaharlal Nehru University, New Delhi, Madurai Kamaraj University, Madurai, and University of

Pune, Pune. The CoEs are currently participating in top notch research projects and are part of various collaborations on the domestic as well as international turf.

Indian Bioinformatics companies go global The international client base for Indian bioinformatics companies has expanded rapidly. These entities include the National Institute of Health (NIH), University of Mexico, National Institute for Cellular Biology, Dublin, National Research Council, Sequencing Center at Halifax, and David Eisenberg’s research lab at DOE Institute for Genomics and Proteomics, UCLA, among others. Pure-play bioinformatics companies in India such as Strand Life Sciences, Ocimum Biosolutions, Molecular Connections, Mascon Life Sciences, and Helix have created indigenous tools for various components across the drug discovery value chain that are being used in various parts of the world. Indian biotech companies have not only been careful in creating a set of products that are accurate, userfriendly, and inter-operable, but have also been meticulous about understanding the global industry needs and dynamics to devise aggressive market entry strategies. Strand Life Sciences, has created a program called Avadis, and has managed to sell over 300 licenses for the product across the world. This software has also received technology awards from both Red Herring and Frost & Sullivan, the World Economic Forum selected the company as a “technology pioneer” in 2007. Avadis is an integrated decision analytics program that deals with the data mining and analytics needs of various areas in the life sciences sector. Strands Life Sciences has also tied up with Londonbased Pharmidex to create yet another software that predicts the ability of molecules to cross physical barriers in the central nervous system. This software could have potential applications in the research and discovery aspects

B IOTECH

of brain disorders such as Alzheimer’s, Parkinson’s, stroke and brain cancer. This application could be particularly important because big pharma companies primarily develop small molecule drug, which have been found to be ineffective in treating brain disorders. NetPro, a program developed by Bangalore-based Molecular Connections, is one of the world’s most comprehensive and highly granular curated databases of protein-protein interaction and protein-small molecule interactions. The program consists of contextual data on the nature of interactions, pathways, diseases, and location. Tata Consultancy Services (TCS) signed a multi-million dollar contract with US-based Sequenom to develop software solutions. TCS is expected to provide the basic framework of validated components to Sequenom to support the company in developing and deploying the software products to its clients in a minimum time frame. Industry experts claim that there are three main areas of opportunities in Indian bioinformatics these include integrated research application service providers, providers of database services and discovery software, and the providers for software requirements of the biotech industry including micro-array analysis, sequence analysis, database software, visualisation software, array management and testing in silico.

DNA chips market shows rapid growth in India The emerging DNA chips market is valued at about US$ 1 million and has witnessed a growth of 50 per cent. DNA chips can tell researchers about the activity and sequence of many genes in a test sample with a single, short procedure. These chips are becoming increasingly important in academic and industry-based research as they increase the understanding of the influences of a multitude of factors on disease processes. More than 2000 chips are currently being consumed in India and the current market size for DNA chips is 4000-5000. The standard chips are priced anywhere around US$ 100 - 500, but the diseasespecific chips can be priced much higher. Because of the expansive range of research that is being done in India, the demand for DNA chips has also increased. With the increasing support of the Government for biotech R&D, it is expected that the demand for DNA chips will further rise, thereby providing a window of opportunity for entrepreneurs looking for a niche biotech area to focus on. The Leading companies in India involved in DNA chips are Agilent Technologies, Affymetrix, and Ocimum Biosolutions. These companies sell anywhere around 500 to 1000 chips a year and their clients are often key institutes that purchase DNA chips in bulk quantities.

15

16

MARKET & OPPORTUNITIES

Bio-industrial

Bio-industrial sector contributes US$ 96 million to Indian biotech The bio-industrial sector in terms of venue touched almost US$ 96 million with a growth rate of 5.33 per cent in 2006-07. Despite its modest growth, the volume of the sector has been on a healthy rise and the application spectrum of industrial enzymes has been increasing.vii The top five companies in the bio-industrial sector contributed 87 per cent to the sector’s total market value. Novozymes and Biocon, with revenues US$ 24 million and at US$ 23 million respectively, are the largest players in the sector followed by Advanced Enzymes, Rossari Biotech and Zytex. Novozymes and Biocon account for almost 50 per cent of the sector’s value. Top 5 Bio-services Companies 2006-07

Company

Revenue (US$ million 2006-07)

Novozymes

24

Biocon

23

Advanced Enzymes

17

Rossari Biotech

16

Zytex

4

Others

12

Total Revenues

96

Number may appear inconsistent because of rounding off Source : Biospectrum, June ‘07

About 15 companies in India are involved in the enzymes business with some into manufacturing and others into marketing. Traditionally industrial biotech companies have focused on chemicals, textiles, breweries and tanneries for applications of their products. However, existing companies are now looking closely into new areas of application such

as food processing, agriculture, animal nutrition, dairy, aquaculture, and marine products. Textile processing has shown a growing demand for enzymes, so in order to meet this demand, Rossari Biotech imports enzymes from the US and supplies formulations to the Indian companies

Potential in exports of enzymes Many opportunities exist in the manufacturing of industrial enzymes for export purposes. The Government of India has also supported this sector by funding many projects related to industrial enzymes, thus helping the industry to grow and compete with global players. Some companies such as Biocon and Rossari are already involved in exporting enzymes.

B IOTECH

Key Growth Drivers and Trends

A combination of several trends are steering the growth of the Indian biotech sector, the main trends are highlighted below:

Indian biotech players expand their capacities to global standards

Pharmaceutical companies focus on biotechnology

The major biotech players in India have been putting concerted efforts into expanding their facilities and capabilities in order to create global scale and meet international standards. This creates favourable situation for partnerships with international companies. Biocon has announced its intention to set up a new plant worth US$ 116 million in Visakhapatnam, Andhra Pradesh. The new facility is intended to be larger than the company’s other two plants at Bangalore and will be manufacturing insulin and biosimilars or generic biotech drugs for exports. The investment has been planned over the next five years. In addition, a high-end R&D facility has also been planned near Hyderabad, with another US$ 122 million of investment. The R&D facility covers 10 acres of land as opposed to 50 acres for the manufacturing facility. Approximately 500 new employees are expected to be recruited in the first phase of expansion. On a similar note, Reliance Life Sciences (RLS) announced at the end of 2006 its intention to invest US$ 219 million into the establishment of four new facilities for producing home-grown clinical and generic products. The units are intended to be spread between North India (Haryana, Punjab, or Himachal Pradesh), Maharashtra, and Gujarat. The products developed at these facilities are intended to be 40 per cent cheaper than the imported life-saving medicines that are currently use in. Reliance Life Sciences also announced its plans to set up a world class Clinical Data Management Center (CDM) in Bangalore, Karnataka. This will enable RLS to become a fully integrated entity in the global clinical research arena. The project is estimated to cost around US$ 120-150 million and a team of 100 scientific and software professionals are expected to be involved in the project at the initial stage.

The success stories of leading biotech players like Biocon and Serum Institute of India have caught the attention of several pharma industry players. Major pharmaceutical companies are now exploring opportunities for diversifying into biotechnology as a natural choice. This integration of biotechnology into mainstream research can be seen in the activities of large pharma companies such as Ranbaxy, Cadila Healthcare, Lupin, Wockhardt, Dr. Reddy’s Laboratories (DRL)and Intas. DRL set up its biotechnology division in 1998 to establish the recombinant proteins technology platform in India. The company marketed its first biotechnology product, Grastim (used in chemotherapy-induced neutropenia and in bone marrow transplantations) in 2001. Today DRL has several other recombinant products for the treatment of cancer, diabetes, and cardiovascular diseases in its R&D pipeline. More recently in 2006, Ahmedabad-based Cadila Healthcare announced its entry into the biotech market by building a strong pipeline of biopharmaceuticals in oncology and blood disorders. The company expects to market its biotech products by 2007-08. Cadila Healthcare has developed its business plan in a away that 30 per cent of the revenues come from biotechnology. Cipla, one of India’s largest pharma companies, has also ventured into biotechnology. The company, focused on chemistry-based medicine manufacturing and marketing segment for almost 70 years, it has how decided to enter the biotech market for the first time. Other traditional pharma companies in India are following a similar path.

17

18

MARKET & OPPORTUNITIES

The center will handle both in-house projects and clientbased global outsourcing projects.

Collaborations, alliances and acquisitions becoming the norm

Direct investments from international biotech firms

In recent years there has been an unprecedented surge in partnering activity in the life science sector in general and biotechnology in particular. Mergers, acquisitions, joint ventures, and other collaborations are becoming the preferred route to global competitiveness. The Indian Government and biotech companies have recognised that partnerships not only allow a means of entrance into new global markets, but also provide a way for the domestic industry to expand its competencies and capacities across the R&D value chain. RLS announced in 2007 its plans to acquire a company either in Europe or USA in order to ramp up its clinical research services business. This move will allow RLS to widen its customer reach in developed markets and conduct multi-location phase III tests for its clients. RLS has also planned to acquire a 74 per cent stake in a UK-based biotech company called GeneMedix for about US$ 31 million RLS plans to invest a total of US$ 68 million in GeneMedix over the next five years as a means to launch its biosimilars in both Europe and USA. Biocon announced in early 2007 its plans to enter into a research partnership with international pharma player Bristol-Myers Squibb through Biocon’s subsidiary Syngene. Syngene will be provide R&D services the pharma company for discovery and early drug development. The partnership will occur through a dedicated research facility at the Biocon Park in Bangalore housing over 400 scientists. Biocon has also signed a Memorandum of Understanding (MoU) with Deakin University in Australia, a multi-disciplinary research center focusing on biotechnology and biosciences research. The MoU includes the establishment of the Deakin Research Institute in Bangalore and joint development of a Mammalian Cell Bioprocessing facility in Australia. In addition, the University will conduct research on metabolic diseases on behalf of Biocon. Panacea Biotec Ltd., one of the largest vaccine producers in India, acquired a 10 per cent stake in UK-based Cambridge Biostability Limited (CBL) for a little over US$ 380,000 at the end of 2006. CBL has also signed a long term licensing agreement with Panacea Biotec where Panacea will in-license CBL’s technology to develop, produce and market combination vaccines for diphtheria, whooping cough,

Foreign companies are increasingly showing interest and confidence in the Indian biotech market by making direct investments into the industry. At the beginning of 2007, Avesthagen managed to raise around US$ 36 million from Europe’s Groupe Danone, Groupe Limagrain and two other strategic investors. Group Danone, a food major, invested nearly US$ 7 million through its subsidiary Daninvest for R&D in bio-nutritional products. Daninvest managed to acquire a four per cent stake in Avesthagen in the process. Fidelity International acquired a ten per cent stake by putting in nearly US$ 15 million and Groupe Limagraine, a European seed major, invested over US$ 7 million. The new funds will be used for infrastructure expansion, manufacturing and R&D units, acquisition of domestic and overseas technology companies, and small seed units. The company also plans to ramp up its manpower from the current 250 to around 600 people in covring months In mid-2007, the Indian Government approved 17 FDI proposals amounting to a total of almost US$ 30 million. Of this total, Shantha Bioetchnics Ltd., a Hyderabad-based biopharmaceutical firm, will receive close to US$ 10 million from its majority French partner Merieux Alliance. Perhaps, the largest vote of confidence in India’s biotechnology market comes from Amgen-the world’s largest biotech company. Amgen has opened a wholly owned subsidiary, Amgen Technology, in Mumbai in early 2007. The Indian branch of the US biotech player will initially be focusing on clinical development and trials for Amgen’s drugs, It will work with Contract Research Organisations (CROs) in India and East Asia. Amgen, valued at an impressive US$ 14.3 billion, spends over US$ 2 billion on R&D per year. Amgen is currently working on building alliances with domestic companies to support its R&D operations (preclinical development, data management support and statistical programming). Other foreign biotech companies like Moscow based Shreya Life Sciences and Syngenta have invested in India in the past either by funding or setting up research facilities in India.

B IOTECH

hepatitis B, haemophilus influenza B and tetanus. CBL has been working on making vaccines that do not require storage under refrigeration or reconstitution before use. The joint venture will allow Pancea Biotec a greater insight into the development and application of thermostabilisation technology- an area that CBL specialises in. Furthermore, Ocimum Biosolutions, a leading integrated life-sciences solution provider, joined Microsoft’s Bio IT Alliance in mid-2007. BioIT was created in 2006 it is a cross-industry group which focuses on integrating Science and Technology in order to speed up the pace of drug discovery and recognise the opportunities in personalised medicine. The alliance includes various pharmaceutical, biotech, software, and hardware companies. Ocimum Biosolutions will be playing a key role in addressing the growing need for intelligent informatics solutions in the Global Life Sciences Scenario. Other recent partnerships in India include Nicholas Pirmal’s acquisition of Avecia, a UK-based biotech company, in an effort to improve its innovation and contract research base. Advinus announced a US$ 150 million drug discovery deal with Merck in November, 2006 and Merieux Alliance (a French biotech major) bought a 60 per cent stake in Shantha Biotechnics, thereby boosting Shantha’s vaccine capacities to the global level. The Indian Government has also been actively pursuing collaborations with other countries as can be seen by the Indo-Norwegian initiative. DBT in India and the Research Council of Norway (RCN) intend to set up joint research initiatives in biotechnology. The initial focus will be on vaccines research for fish and animals, after which the products will be marketed and new areas of research will be taken up. DBT and RCN will jointly fund all projects as per the guidelines of a roadmap that is to be created by stakeholders from both countries. One of the main objectives of the venture is to promote the development of aquaculture and animal health in India and Norway. DBT also signed another MoU with the National Research Council (NRC) in Canada in 2006. The main objective of the tie up is to promote research collaboration in biotechnology by encouraging close interactions between DBT and NRC. The initial focus will be on harnessing plants for improving human and animal health, and establishing an understanding of the genomics of plants that are of common interest to both countries. Besides, other areas such as vaccine design, production and delivery systems

and bio-devices will also be studied as part of the project. To jump start the venture, India and Canada agreed to launch a workshop on ‘Plants For Health’ that was organised by NRC Plant Biotechnology Institute, Saskatoon in March 2007. Various other international collaborations are being pursued by the Government. Some of these have already been in progress and others are new ventures. On-Going Bilateral Programs -

Indo-Denmark Indo-Finland Indo-France Indo-Mongolia Indo-Singapore Indo-UK

New Bilateral Programs -

Indo-Cyprus Indo-EU Indo-Norway Indo-Ukraine Indo-Venezuela Indo-Canada

A number of conferences and seminars have also been arranged by the industry and the Government in an effort to encourage partnerships in the biotech industry. In November 2006, the Global BioPharma Conference Group, comprising of companies from various countries, organised a conference to bring to focus synergies in global biotechnology and to promote partnerships between Indian and US companies. This conference was held in collaboration with various US research universities, the major challenges being faced by the industry were discussed in detail.

Increased Governmental support for biotechnology The market growth and foreseen potential of the Indian biotech industry together has provided a stroing stimulus for Government Initiative in not only supporting, but also enhancing the opportunities available for players in this sector. Biotechnology, has carved its own niche in the economic growth agenda of national and state policymakers. The Central and State Governments are increasingly putting efforts into simplifying the regulatory system for biotechnology. In addition, the Governments have Initiated a number of proactive reforms for the industry. At the Central Government level, Union Finance Minister P Chidambaram claimed, that over the next couple

19

20

MARKET & OPPORTUNITIES

of years the biotech industry will receive similar benefits and advantages as currently provided to the IT industry. These prerequisites will accelerate scientific research in the country and eventually result in more innovation and lower heath care costs. In addition, there is a National Biotechnology Development Strategy in the works by the Indian Government. With the goal of building India’s capabilities to globally competitive standards, the strategy is intended to offer a package of incentives and policy measures that will encourage further industry expansion. There is also an independent National Biotechnology Regulatory Authority (NBRA) being set up by the Department of Biotechnology (DBT) in order to simplify the current multi-clearance system for products. DBT has also announced its intention to invest about US$ 52.5 million in 2007-08 on R&D (including new programmes in medical biotechnology other than those already in place). The fast pace at which the biotechnology industry in India has been growing has convinced states like Gujarat, Andhra Pradesh, Maharashtra, Karnataka, and Tamil Nadu that biotechnology has the potential to contribute greatly to the socio-economic growth. As a result, many Indian states have introduced supportive policies to promote industry expansion at the state level. In addition, many of the state Governments have entered public-privatepartnerships with developers to build biotechnology parks like the Shapoorji Pallonji Biotech Park (Andhra Pradesh), Lucknow Biotech Park (Uttar Pradesh), Savli Biotech Park (Gujarat), etc. The Maharashtra State Government in collaboration with the Confederation of Indian Industry (CII), organised a seminar in 2006 titled ‘Bio Business Opportunities in Maharashtra, India This aimed at creating awareness among leading industry players (both domestic and international) about the potential biotechnology opportunities in the state. The Maharashtra State Government has also been actively promoting the development of various biotech parks, R&D centers and pilot plant facilities for contract research by placing equity stakes in these projects.

Strengthening Confidentiality and IP protection In 2005, as a consequence of the TRIPS agreement, India entered the product patent regime. This move drastically repositioned the Indian biotechnology industry and its standing from a global perspective. Roche India Pvt. Ltd.

was the first life sciences company in India to be granted a product patent. The patent was approved in February 2006 for Roche’s biotech drug Pegasys. Immense efforts are being placed on making the patent filing system, examination, search and grant procedures simpler. As a result, many other product patents have been successfully approved by Indian authorities since Roche’s breakthrough. Efforts are also being made to increase the presence of judicial courts which deal with IP issues in order to accommodate the growing strength of IP standards. Currently, patent applications can be submitted in one of the four locations in India: Delhi, Chennai, Mumbai, and Kolkata. The strengthening IP scenario in India has contributed greatly in attracting international biotech players to invest in the Indian biotechnology sector.

Increased biotech funding for the Indian market The Indian biotech industry today has a large scope for investment in order to push R&D to the next level and enable the industry to grow. It has now become apparent that investors, who had earlier been wary of the risks associated with investing in a nascent industry like biotech in India are now showing an increased confidence in the growth of the Indian biotech market. The same confidence is now shared by the state Governments in the country. Various global and domestic financial institutions are also showing interest in investing in the biotech market. Among these investors are entities such as Andhra Pradesh Industrial Development Corporation (APIDC), Axis Holdings, Chrys Capital, 3i, ICICI Venture, Kotak Mahindra, Nadathru Holdings, UTI Venture Funds, and Yes Bank. Besides, the industry is also taking initiatives to promote awareness about the various investment opportunities in Indian biotech indistry. The Association of Biotechnology Led Enterprise (ABLE) planned a major workshop titled “Bioinvest”, in collaboration with leading investment companies in November, 2006 in an effort to spur the growth of biotech investments. Industry experts predict that the biotech sector will receive investments of US$ 730 million to US$ 850 million over the next two years this includes funding from VC companies, private equity funds, investment bankers and Indian Central and State Governments. Reliance Industries Ltd. is partaking in the US$ 27 billion venture financing space in India through Reliance Life Sciences (RLS). RLS recently invested between

B IOTECH

US$ 40 to 50 million in a US$ 650 million biotech venture fund, titled MPM BioVentures IV, floated by US investment management firm MPM Capital. RLS will invest in start-up Indian biotech companies that are into R&D. RLS expects to gain business from at least two-thirds of the clients who will be associated with the US$ 650 million fund by MPM. RLS expects that its involvement in this fund will enable it to gain access to intellectual capital and the capabilities for the management of life sciences venture funds. The Gujarat Biotech Venture Fund (GBVF) a 12 year close-ended fund managed by Gujarat Venture Finance Limited (GVFL), has a target corpus of about US$ 122 million. The GBVF has committed itself to invest in start-ups as well as in early-stage companies involved in areas of biopharma, bio-agri, contract research, and industrial biotechnology. GVFL announced its intention of providing almost US$ 487,000 for early stage biotech funding to Ahmedabadbased Celestial Biologicals in September, 2006. Among international investors, the International Finance Corporation (IFC-the private sector arm of the World Bank Group) committed equity of up to US$ 4 million to the APIDC Biotechnology Fund. The fund was established by APIDC Venture Capital Ltd., the organisation that launched India’s first biotech focused VC fund. The final closing of the fund was in April 2005, resulting in total fund amounting to US$ 37 million. Important investors who contributed to the fund include IFC, Washington, APIDC (a State Government institution), Life Insurance Corporation, Andhra Bank, and the Technology Development Board (TDB), a Government technology funding institution. In August 2006, Avestha Gengraine managed to raise around US$ 24 million from European banks to expand its facilities and product pipeline. Other global entities that are interested in investing into Indian biotech include Bank of America and Citibank. ICICI, India’s largest private sector bank, announced

in late 2006 that it has allotted over US$ 243 million for the funding of small pharma and biotech companies and projects in the country. Of the corpus, ICICI had already approved loan applications worth US$ 155 to 170 million. The bank has inducted people from the biotech industry in order to ensure better understanding of the way the industry works, and thereby, service the industry in the most optimal manner. ICICI has signed a MoU with the Government of Maharashtra to provide banking services in the biotech sector within the state. The Government of Maharashtra has also signed three other MoUs with leading banks in an effort to provide funding for biotech projects in Maharashtra. These MoUs have been signed with the Punjab National Bank, State Bank of India (SBI), and the new private sector entity, Yes Bank. The agreement asks that the banks to provide timely and necessary credits and cater to other financial needs of biotech entrepreneurs. SBI will be handling about US$ 170 million of the total US$ 1.09 billion, an amount that has been set aside for small and medium enterprises and mid-corporates in Maharashtra and Goa. Yes Bank has an exposure of about US$ 36 million for various biotech companies and the bank has also decided on a US$ 125 million life sciences fund out of which some part will be allocated to biotech companies. The Government of Maharashtra is also planning a biotech fund named Maharashtra Biotech Fund this fund will be created out of budgetary allocations.

Emerging areas in biotechnology are stem cell research and nanotechnology Stem cell research continues to pick up momentum in India and significant investments have been made in this field. DBT has jointly formulated draft guidelines for stem cell research activities permissible (such as adult and umbilical

Indian Biotech Players involved in Stem Cell Research Reliance Life Sciences (RLS)

- S etting up an animal house for conducting regulatory toxicology and preclinical efficiency studies for cell -based therapies

Asia Cryo-Cell

- Stem cell banking firm - Plans to set up an extensive clinical trial programne at its stem cell transplant center in Chennai using technologies licensed from companies in Japan and USA

Life Cell

- Based in Chennai - Operates 26 stem cell transplant centers all over India - Plans to open five more centres in 2007 and have up to 50 centers operating in India by the end of 2008 - Has collaborations with CRYO-CELL International (CCI) USA - the world’s largest cord blood bank.

21

22

MARKET & OPPORTUNITIES

cord blood stem cell research), restricted (embryonic stem cell research), and prohibited (reproductive cloning and the introduction of animal embryos in humans). Due to the marginally less controversial debate about embryonic stem cells and cloning in India as compared to Western countries, there has been much room for progress in the field and Indian players are moving in to tap into this potential. The Center for Cellular and Molecular Biology (CCMB) has collaborations with Deccan Medical College (DMC) for liver stem cell research and the Japan-based Nichi-in Center for Regenerative Medicine for human trials using stem cells in end-stage liver failure patients. The Central Government has also taken active interest in stem cell research this can be seen by DBT’s move to set up a Center for Stem Cell- a research facility which will would undertake studies on stem cell applications for diseases. DBT has provided Christian Medical College, Vellore about US$ 6 million and appointed the college to set up the center. DBT has also been approved by the Indian Council to conduct India’s first ever multi-centric clinical trials with stem cells at five hospitals in the country. The All India Institute for Medical Sciences (AIIMS) has also been doing therapeutic stem cell research work using bone marrow mononuclear cells in clinical trials involving about 40 patients. The convergence of nanotechnology and biotechnology has created an opportunity for the innovative development of medical advances spanning the continuum of drug discovery and development. Research in Nanotechnology is being carried out in about 20 top academic and scientific institutions in India. Indian biotech is already making use of nanotech applications as can be seen in the case of Dabur Pharma. The company recently developed a nanotech-based chemotherapy agent called Nanoxel. The nanoscale drug delivery system is the country’s first indigenously developed chemotherapy agent, and is also the first developed outside of USA.

B IOTECH

Policy & Regulations

Regulatory framework The biotech regulatory structure in India comprises several administrative bodies in order to accommodate the cross-sectoral reach of the industry. In order to ensure human and environmental safety, the Government has established a multi-regulatory structure for the approval of GM crops and biotech products for human health. The key body under the Ministry of Science and Technology is the Department of Biotechnology (DBT). DBT is responsible for approvals for investments and technology-related activities in biotechnology. Drug Controller General of India (DCGI) is responsible for the approval of pharmaceutical products including those that are recombinant in nature.

biotech has accomplished to date and the framework for the future within which strategies and specific actions to achieve further growth can be taken. The DBT expects that the NBDS will increase India’s biotech revenues to US$ 5 billion and increase the workforce by adding one million jobs by 2010. The NBDS assimilates the opinions of various stakeholders of the industry-scientists, educationalists, regulators, representatives of society and others. The ten-year strategy addresses various issues such as human resource development, academic-industry interface, infrastructure development, laboratory and manufacturing, promotion of industry and trade, biotechnology parks and incubators, regulatory mechanisms, public education and awareness building. The most prominent features of the NBDS have been outlined below:

Government of India

Department of Biotechnology

Recombinant DNA Appraisal Committee (RDAC)

Ministry of Environment

Regulatory Committee On Genetic Manipulation (RCGM)

Genetic Engineering Approval Committee (GEAC)

Institutional Safety Committee (ISC) Source: ABLE

National Biotechnology Policy Having recognised rapid growth that Indian biotech industry is undergoing and the vast potential the industry has in India, the Indian Government has adopted various measures in an attempt to ensure further growth. Among these is the National Biotechnology Development Strategy (NBDS) by the DBT. The NBDS is a compilation of what Indian

• T he Government will focus on increasing the number of PhD programs in the biosciences and biotechnology in India since academic leaders are critical for innovation. A National Task Force will be created to establish model undergraduate and postgraduate curricula, attract talent to the life sciences and enable working conditions for scientists to undertake industry oriented research • Proven technologies such as diagnostics and vaccines will be scaled up and infrastructure for biotechnology R&D (especially for molecular modeling, protein engineering, drug designing and immunological studies) will be further expanded. DBT plans to establish a Single Window Clearance mechanism in an effort to make approval of biotech plants simpler and also encourage private players to contribute to the infrastructure development for Indian biotech • In order to increase the value from R&D investment and IPR generation, the Government will provide active support through incubator funds and provision of various incentives. In addition to these the Government will also

23

MARKET & OPPORTUNITIES

24

•

•

•

•

focus on innovation capacity and the ability to maintain a continuous pipeline of products. The Government will establish policies for promotion of innovation and commercialisation of knowledge so that the industry can grow G  overnment support in the form of fiscal incentives and tax benefits will be provided to the biotech sector since it is a research-intensive industry and has companies that invest about 20 to 30 per cent of their operating costs on R&D or technology outsourcing. In addition, in order to sustain innovation, the Government will financially support early phase product development and small/medium enterprises, as they will eventually play a major role in sustaining innovation D  BT is creating the Small Business Innovation Research Initiative (SBIRI) as a means to support small and medium sized enterprises through grants and loans. The initiative will enable the support of pre-proof concepts, early stage innovation research, and provide mentorship. Various biotech parks are being set up across India in an effort to facilitate the transfer of technology by serving as a platform for entrepreneurship through partnerships among investors from academia, R&D institutions, and the industry The National Biotechnology Regulatory Authority will be established to meet the need for a scientific, rigorous, transparent, efficient, and consistent regulatory mechanism for bio-safety evaluation

National Biotechnology Regulatory Authority The National Biotechnology Regulatory Authority (NBRA), being established by DBT, is expected to be fully operational in about two years. Although it will be administered by the DBT, the NBRA will remain an independent science-based body that is completely separate from the bureaucracy and will be headed by a renowned scientist. The Indian Government is working closely with US regulatory bodies such as the FDA, US Environmental Protection Agency (EPA), and United States Department of Agriculture (USDA) to create a robust science-based regulatory structure that would allow for faster application of biotech methods in agriculture, veterinary and medical sectors within a framework that meets global standards. In order to keep regulators and scientists up to date with the changes the biotech industry faces on a regular basis, an advanced school of learning will be a part of the regulatory body

Other Recent Policy Initiatives/Developments The DBT, in collaboration with the Department of Science and Technology is currently planning to set up a mission mode program in biomaterial and medical devices to promote R&D and industrial activity. The Departments are also setting up various institutions for research to help the biotech sector pick up momentum in India. DBT also invited project proposals from Indian scientists (as individuals or interdisciplinary groups) in mid-2006 for initiating R&D projects in the area of vaccine development, formulation and evaluation. DBT proposed to provide competitive financial support to applicants having proven track records. The Government has been actively spreading awareness of the growing potential of biotechnology in India. It has also made many provisions, both fiscal and non-fiscal, in order to encourage the growth of the industry. By collaborating within the public system and with the private sector as well, the Indian Government has been working towards a strong, integrated, and sustainable base for the rapidly growing biotech industry.

State-led initiatives After having studied other countries, the Indian Government has recognised that cluster formation leads to dynamic growth of the life sciences industry globally. Therefore the State Governments in India have been aggressively promoting biotechnology through the formation of biotech clusters, i.e., biotech parks. By offering fiscal incentives in addition to basic infrastructure, many states in India have adopted a public-private-partnership model to develop biotech parks in India. These parks not only attract tenant companies and institutions because of the fiscal benefits, but also because of the ease of both industry and industryacademia collaborations which promotes faster growth and progress. In addition to facilitating biotech parks, State Governments in India have also been establishing biotech policies at the state level. For example, the Government of Goa announced that it will be establishing a State Level Implementation Committee (SLIC) to ensure the smooth implementation of its Biotechnology Policy 2006. The policy has been formed in an attempt to increase biotech research and industry in the state of Goa. Under the policy, the Government promotes R&D through financial and infrastructural support and also encourages public-private partnerships.

B IOTECH

Select Biotech Parks in India

Park

Operating Model

Area Occupied (Approx)

Facilities

S.P. Biotech Park, Hyderabad

- P  ublic-Private (Private player-Shapoorji Pallonji Group)

- P  hase I - 145 acres (100% Occupied - Phase II - 162 acres (75% Booked) - Phase III - Proposed

- L and plots of varying sizes. - Basic infrastructure like quality roads, continuous water supply and uninterrupted power.

ICICI Knowledge Park, Hyderabad

- P  ublic-Private (Private Player - ICICI Bank)

- 200 acres - (Innovation corridor I (Phase 1 & phase 2, 100% Booked and Occupied, Phase III - Under Construction, (Innovation Corridor III 100% Booked)

-

Ready to use modular laboratory Developed plots Virtual information System Shared facilities like NMR, etc. Dedicated electric substation, Sound telecom connectivity, Water & sewage treatment plants, etc.

TICEL Bio Park, Chennai

- Govt. of Tamil Nadu

- 5 acres (Expected complete occupancy by 2006)

-

Wet Laboratories T ransgenic Greenhouse Training Center Bioinformatics infrastructure

International Biotech Park, Pune

- P  ublic-Private (Private player- The Chatterjee Group (TCG) - Developments India Pvt. Ltd.)

- 1 10 acres (Under Construction)

- Independent plots - 10 Laboratory modules

KINFRA Biotech Park, Kochi

- P  ublic-Private (Private Player- TCG)

- 50 acres (Proposed)

- N.A

Source : Ernst & Young Analysis

In a similar move, the Government of Gujarat announced a five-year biotechnology policy to accelerate biotech growth in the state. The Biotechnology Policy (BT) Policy 2007- 2012 has been created as an attempt to increase biotech business by five times. Under the policy, the State Government will provide incentives and concessions as well as support in the form of infrastructure, training, accreditation etc. The Government has also decided to fund new biotech research projects to some extent in order to jump start the industry’s progress. Karnataka has decided to address the shortage of trained manpower by establishing a Finishing School in Biotechnology in July, 2007. Various industry experts are working in collaboration to design the course content and duration. The Finishing School is intended to prepare graduates for the skill sets that are required in the industry. It is expected that the training offered by the Finishing School will cover many skill aspects that biotech companies spend much time and money to cover in thier in-house trainings. The Syndicate Bank has agreed to start an education loan for the program.

Budget 2007-08 The Union Budget proposals for 2007-08 are expected to

provide the much needed support to sustain the biotech industry’s growth. The Association of Biotechnology Led Enterprises (ABLE) had presented a set of recommendations to the Finance Minister as part of the pre-budget exercise. Of these, one of the key demands of these recommendantions that was met by the Government was the removal of clinical services and drug development research from the realm of service tax levy, thereby making clinical services more competitive in the global market. Additionally, the incentive on R&D expenditure spend has been given a five-year extension on 150 per cent weighted average tax deduction. Also, excise duty has been removed for life saving vaccines and recieved focus HIV detection and control has by the Government. Biotechnology has received a boost through excise duty and sales tax exemption. Bio-pharma also benefited from the 2007-08 Budget as manufacturing and specific equipment (including medical equipment) was awarded duty reduction. The Budget also provides tax benefits to VCs investing in biotechnology, thereby creating a positive business environment for the Indian market.

25

26

MARKET & OPPORTUNITIES

Key Players

Top 5 biotech companies in India are home grown The top 30 home grown Indian biotech companies contributed US$ 1.05 billion in revenues, accounting for a little over 50 per cent of the total revenue, indicating rapid pace of development of the domestic industry. Serum, Biocon, and Panacea, all of which are home grown Top 20 Companies 2006-07

Company

Revenue (US$million) 2006-2007

change from 2005-06

Serum Institute of India Ltd.

231.4

35.27%

Biocon

200.2

19.62%

Panacea Biotec

145.9

37.04%

Rasi Seeds

81.1

7.70%

Nuziveedu Seeds

55.1

262.16%

Novo Nordisk

54.0

26.86%

Venkateshwara Hatcheries

46.4

N/A

Indian Immunologicals

38.4

54.50%

Mahyco Monsanto Biotech

36.6

- 61.58%

GlaxoSmithKline

29.2

27.66%

Aventis Pharma

29.1

4.50%

Shantha Biotechnics

28.0

39.90%

Eli Lilly and company

27.3

31.76%

Mahyco

26.9

- 6.00%

Bharat serums

26.4

39.00%

Novozymes South Asia

24.3

20.48%

Intervet India

19.6

22.99%

Bharat Biotech International

17.0

45.53%

Ankur Seeds

16.9

N/A

Advanced Enzymes Technologies

16.9

23.75%

Source: ABLE Annual Survey 2007

companies have crossed US$ 122 million in revenues Serum is well on its way to crossing the US$ 243 million mark. Among the top companies there is a balanced mix of companies involved in bio-agriculture, bio-services and bio-pharma activities. Bio-industrials and bioinformatics are segments that are still in the process of picking up momentum in India. Venkateshwara Hatcheries and Indian Immunologicals are among the leading players for poultry and animal health care respectively. In the bio-industrial segment, companies such as Advanced Enzyme Technologies and Rosari Biotech made it to the top 30 biotech players. Serum Institute of India grew by about 35 per cent in 2006-07, making it the top biotech company in India. Leading bio-agri companies Rasi Seeds and Nuziveedu Seeds moved ahead to make it to the top 5 biotech companies in India. The top 5 companies in India contributed 35 per cent of the total industry revenues with the top 3 involved in the bio-pharma segment and the fourth and fifth in bio-agri. Furthermore, 16 out of the top 20 companies had revenues over US$ 24 million in 2006-07.

Leading Indian biotech companies Serum Institute of India Ltd. Serum Institute of India Ltd Fact File -

S egment: Bio-pharma Start-up year: 1966 Biotech Revenue 2006-2007: US$ 231 million Leader in Vaccines market

- Launched HIB vaccine - Involved with global organisations in conducting clinical trials for Meningitis vaccine - Bought stakes in UK-based Lipoxen - Entered into agreement US-based Akom Sourcs: Biospectrumw, June 2007

B IOTECH

Serum, with record sales of around US$ 231 million in 2006-07 and a growth of 35 per cent, continued to be the leading vaccine company and largest biotech company in India. At 80 per cent, Serum’s overseas sales hold the key to its growth. The company supplies vacancies to over 130 countries and is an Indian leader for MMR and Hep B vaccines. Serum’s subsidiary company, Serum International rapid revenues of about US$ 10 million in 2006-07with a growth of 16 per cent, making the entire Serum group’s revenues touch almost US$ 242 million. Serum Institute of India Ltd. Business Revenues 2006-07 2006

231

2005

171

2004 0

123 30

60

90

120 US$

150

180

210

240

Source: Biospectrum , June 2007

The year 2006-07 was a significant one for Serum with the launching of its indigenously developed HIB vaccine (also available in the market as SiiHIB Pro vaccine). The company is currently the only indigenous manufacturer of HIB vaccine in India. Serum is able to produce over 100 million doses of the vaccine and plans to supply this vaccine to the Global Alliance for Vaccines and Immunisation (GAVI), Pan American Health Organisation (PAHO) and UNICEF at prices lower than those quoted by MNCs. Furthermore, Serum bought a 14 per cent stake in Lipoxen PLC, a bio-pharma company specialising in the development of oncology drugs, differentiated biologicals, and vaccines. This has allowed Lipoxen to raise US$ 5 million in funds from Serum and in return, Serum will have access to some of Lipoxen’s technology. Serum has also collaborated with Akorn, an US-based company giving Akorn the rights for exclusive distribution of rabies monoclonal antibodies. In return, Akorn is to help fund Serum’s product development through milestone payments including the successful completion of Phase I, Phase II, and Phase III clinical trials, and receipt of CBER approval for a Biological License Applications (BLA) license (expected to occur in 2012). Serum has also offered Akorn the first option to obtain exclusive marketing rights in the entire Americas for Anti-D human monoclonal antibody. Akorn also has the first option right to expand marketing into Europe.

Serum Institute is also actively involved in the development of vaccines for the world’s poorest countries where vaccines are in critical shortage. Serum’s involvement in the Meningitis Vaccine Project (MVP), a partnership between Seattle-based non-profit PATH and the WHO, has spurred the company to complete Phase I trials of a new conjugate vaccine against serogroup A meningococcal disease. The vaccine will now be tested in Africa in order to make it a part of the public health vaccine collection. The vaccine can also be used in India during the sporadic occurrences of the disease. The Serum Institute has also set up the first biotech SEZ, known as Serum Bio Pharma Park, in Pune at the beginning of 2006. The multi-phase project will require a total investment of approximately US$ 292 million, with the first phase requiring a minimum US$ 122 million that will be covered by the company. The whole project is expected to be completed by 2010. About one billion doses of various vaccines are expected to be made per year from this SEZ alone.

Biocon Ltd. Biocon Fact File -

S egment: Bio-pharma/Bio-industrial/Bio-services Start-up year: 1978 Biotech Revenue 2006-07: US$ 200 million Strong in stains, immunosuppressants, and recombinant insulin

- W  ide range of products across key therapeutic segments: diabetology, cardiology, and oncology - Syngene entered into research partnership with Bristol-Myers Squibb - Developing Nasulin with Bentley - Signed a MoU with Abu Dbai’s NMC Group - Launched BIOMAb-EGFR for head/neck tumors - Established a partnership with Ferozsons Laboratories in Pakistan - Launched a comprehensive portfolio of renal therapy products Source : Biospectrum, June 2007

Biocon reported revenues of about US$ 200 million in 2006-07 from the sale of bio-pharma and industrial enzyme products. This amount accounted for 83 per cent of the total operating revenues for Biocon,. It showed an almost 20 per cent growth from the previous year’s revenues of around US$ 167 million. Research services and licensing accounted for the remaining 17 per cent of the operating revenues, jumping from US$ 24 million in 2005-06 to almost US$ 40 million in 2007-08 (growth rate of 63 per cent). As a group, Biocon ended the financial year with revenues of about US$ 241 million.

27

28

MARKET & OPPORTUNITIES

The Biocon Group consists of Biocon Ltd. (focused on bio-pharma), Syngene International, Clinigene, and Biocon Biopharmaceuticals. Syngene does custom research work (bio-services) while Clinigene is involved in clinical research work. Syngene is the leading company for bio-services in India. Biocon Biopharmaceuticals focuses on new molecule developments. Biocon Ltd. Business Revenues 2006-07 200

2006 2005

167

2004 0

157 25

50

75

100 US$

125

150

175

BioMAb-EGFR, a therapeutic monoclonal antibodybased drug for treating tumors of epithelial origin was launched in India by Biocon and is the first of its kind to be clinically developed in the country. The product has shown positive results in trials initiated in various countries and is being studied overseas for its potential use in treatments for lung, colorectal, glioma, and pancreatic cancers. Biocon also launched a complete portfolio of renal therapy products priced 35 per cent cheaper than current products. The company has major plans of expanding its R&D activities and has decided to double its R&D expenditure in 2007-08 for this purpose. Biocon also plans to out-license 12 of its molecules over the next one to two years.

200

Source: Biospectrum , June 2007

Biocon’s bio-pharma capabilities are strongest in the areas of statins, immunosuppressants, and recombinant insulin. The company has an extensive product range in the areas of diabetology, cardiology, and oncology, amongst others. Having begun with a focus on fermentationderived microbial enzymes in 1984, Biocon has extended its activities into new domain areas such as bioprocess development, gene expression technologies, proteomics, bioconversions, and secondary metabolites. Biocon’s strong R&D and engineering skills can be seen with the invention of PlaFractor- a tool that is able to present novel production processes for therapeutic molecules. Nasulin, an intra-nasal insulin spray being developed by Biocon, has been approved by the Drug Controller General of India (DCGI) for Phase II trials on type-2 diabetic patients. Bentley Pharmaceuticals has conducted the pharmacokinetic clinical studies with the drug in India and is planning to complete the majority of the US clinical Phase II trials soon. IN105 is yet another non-injectable insulin product that Biocon is working on simultaneously with Nasulin. Both Nasulin and IN105 are expected to hit the market in about three to four years. Biocon plans to manufacture and market an array of bio-pharma products in a joint venture with Abu Dhabi’s NMC Group. An MoU has been signed for the venture and the products will be made available to the Gulf Cooperation Council (GCC) - the region’s first initiative to develop and market bio-pharmaceuticals. The set of drugs will cover Biocon’s specialty therapeutic segments such as cardiology, diabetology and oncology- and will contribute to GCC’s US$ 5 billion pharmaceutical market.

Panacea Biotec Panacea Biotec Fact File -

S egment: Bio-pharma Start-up year: 1984 Biotech Revenue 2006-07 : US$ 146 million Product pipeline includes Hep B vaccine, and other vaccines for renal disease, neuropathy, cough and cold, and pain management among others

- R  eceived first supply order from WHO in 2007 - Many new drugs added to product list in the formulations segment - Entered into collaboration with Netherlands Vaccines Institute for IPV vaccine in 2006 - Acquired a 10 per cent stake in Cambridge Biostability - Planned joint venture with Vovartis Vaccines - Planning launch of Polprotec in India and overseas Source : Biospectrum, June 2007

2006-07 was a significant year for Panacea Biotech with yearend revenues of almost US$ 148 million and a growth rate of a little over 37 per cent from 2005-06. Vaccines accounted for over US$ 115 million and formulations accounted for around US$ 32 million. Panacea Biotec, one of the first companies to have introduced the Hep B vaccine received its first supply order from WHO for Hep B vaccine in 2007. The estimated market demands for Hep B vaccine in 2007 and 2008 are 163 million Panacea Biotech Business Revenues 2006-07 2006

146

2005

107

2004 0

53 20

40

Source: Biospectrum, June 2007

60

80 US$

100

120

140

160

B IOTECH

and 198 million respectively. Panacea will also be supplying Hep B Combos vaccines to UNICEF, and anti-TB and ARV vaccines to WHO/UNICEF. Panacea has also added various new drugs to its profile in 2006 for areas including renal disease management, pain management, neuropathy, diabetes, and cough. The company entered into a partnership with the Netherlands Vaccine Institute for IPV vaccine and PT Bio Farma, Indonesia for measles vaccine in 2006. In addition to these, Panacea also bought a 10 per cent stake in Cambridge Biostability by investing around US$ 6.5 million. Panacea already has four state-of-the-art research facilities in progress, and further infrastructural expansion is being undertaken currently. The company is planning to increase its visibility in the private market through a joint venture with Novartis Vaccines and the launch of one of its products, Polprotec, in India and other countries. It is expected that in approximately four years, the company will be ready to launch a set of thermo stable vaccines, along with JE and dengue vaccines. Panacea plans to out-license some of its patented products in Europe and the US in the coming years.

Nove Nordisk India Business Revenues 2006-07 2006

54

2005

43

2004

34 10

0

-

S egment : Bio-pharma Start-up year : 1990 Biotech Revenue 2006-07 : US$ 54 million World leader in diabetes care

- D  iabetes care products, human growth hormone and haemostasis management - Launched Levemir, a basal insulin analogue, in May 2006 - Has an exclusive agreement with Torrent Pharma for manufacturing of insulin - Has distributorship alliance with Abbot India - Has an agreement with TCS for offshore clinical operations service

Source : Biospectrum, June 2007

Novo Nordisk India, the Indian subsidiary of Novo Nordisk, is a world leader in diabetes care. The company generated revenues valued at US$ 54 million in 2006-07 rendering an almost 27 per cent growth from the previous year. Novo Nordisk launched Levemir, an insulin analogue that is delivered through a pen-like device and works on prolonging action, in India around mid-2006. The pen-like device is called FlexPen and Levemire is imported from Denmark. The company’s service and product portfolio

30

40

50

60

70

US$ Source: Biospectrum , June 2007

contains diabetes products, human growth hormone and haemostasis management. Torrent Pharma manufactures insulin formulations for Novo Nordisk as part of an exclusive agreement. The agreement has been in action for over 15 years with a manufacturing facility that has often been quoted as the best maintained site of Novo Nordisk globally. Novo Nordisk also has an agreement with TCS for offshore clinical operations service. Where TCS provides a range of data management services for trials that are run by Novo Nordisk globally.

GlaxoSmithKline (India)

Novo Nordisk India Novo Nordisk India Fact File

20

GlaxoSmithKline (India) Fact File -

S egment : Bio-pharma Start-up year : 2001 Biotech Revenue 2006-07 : US$ 29 million Leader for vaccines among MNCs in India

-

 as promoted awareness on the use of vaccines in India H Has set up vaccines facility in Nasik About to launch a cardiovascular drug In discussions with Japanese and American companies for laughing of other products - Has idenfitied 6 oncology centers for conducting clinical trials Source : Biospectrum, June 2007

GlaxoSmithKline (GSK) grew by approximately 27 per cent with its US$ 29 million biotech sales in 2006-07 as opposed to the US$ 23 million revenues generated in 2005-06. The company is the leader for vaccines among MNCs in GlaxoSmithkline India Business Revenues 2006-07 2006

29

2005

23

2004 0

19 4

8

Source: Biospectrum , June 2007

12

16 US$

20

24

28

32

29

30

MARKET & OPPORTUNITIES

India and continues to propel its growth by encouraging awareness regarding vaccine use in India through dynamic initiatives. GSK in India, an affiliate of GSK Biologicals, is currently involved in the marketing of 13 vaccine products. The company is a leader in the Indian market for vericella, haemophilus conjugate, hepatitis A, diphtheria, and typhoid vaccines. GSK has set up a state-of-the-art vaccines filling facility in Nasik that conforms to cGMP norms. GSK is about to launch a cardiovascular drug called Carvedilol from Roche. Among the products launched two were pediatric vaccines, Boosterix and Infanrix and one was an anti-asthmatic drug co-developed by Zydus Cadila. The company is currently considering other such licensing deals with companies in Japan and USA. Like in the case of Novo Nordisk, GSK has established partnership with TCS for clinical data management where all of GSK’s data worldwide would be managed by TCS. Having recognised India as a prime center for clinical research in various areas such as oncology, psychiatry and infectious diseases, GSK has aggressively pursued the trials avenue in order to achieve company growth. The company has selected six oncology centers to conduct early phase clinical trials in India. These centers are being developed by the Institute of Cancer Medicine, University of Oxford. GSK India was involved in more than 15 global clinical trials investigating six therapy areas and 200 patients in 2006.

Quintiles Spectral India Quintiles India, a subsidiary of Quintiles Transnational is the second largest provider of bio-services in India. The company generated revenues of US$ 34 million in 2006-07 with a growth rate of almost 65 per cent. Quintiles was the first foreign CRO to establish its operations in India in 1997. The Company chose the Joint-Venture route to enter India however soon bought out its partner’s stake to become a 100 per cent subsidiary of Quintiles Transnational. Quintiles Spectral (India) Pvt Ltd has a strong presence in the Indian clinical research industry. Quintiles India now offers full portfolio of services for Phase I-IV clinical studies in various therapeutic areas. Many of the top global companies have worked with Quintiles in India. The company has so far undertaken numerous international studies in India involving a large number of patients and covering a wide range of therapeutic areas including oncology, psychiatry, neurology, anti-infectives,

gastroenterology, ophthalmology, endocrinology and cardiology. It has completed many oncology studies as part of multi-country programs for regulatory submissions. Quintiles India has also conducted a number of parasitology trials, bacterial keratitis studies and a large anti-diarrheal study for its European clients. Significantly, it has completed a diabetes study for a European sponsor. It has also conducted pivotal studies on bipolar disorder and the drug has been approved based on the data generated in India. Pivotal Phase III study in bacterial conjunctivitis was completed and the drug was approved by USFDA based on the Indian data. Quintiles India has also undertaken a study in chronic spinal cord injury under a US FDA fast track approval. Using India’s IT expertise, Quintiles assembled a team in Bangalore that is trained and skilled in offering data management services in Clintrial, Oracle Clinical and various Electronic Data Capture platforms. The unit provides customised solutions including Case Report Forms (CRFs) design, database design, query management, double data entry, coding and quality control as per the global standards and at highly competitive prices. The company follows globally accepted Standard Operating Procedures (SOPs) and ICH guidelines. Quintiles India is backed by a large team of clinical researchers, ITES professionals and also regulatory staff who have built their credibility with investigators and regulatory authorities. Quintiles entered into an agreement with the Manipal Quintiles Fact File -

S egment : Bio-Services Start-up year : 1997 Biotech Revenue 2006-07 : US$ 34 million Ranked second in Indian bio-services

- O  ne of the leading CROs in India - Has done studies in various therapeutic areas - Has clinical research collaborations with Manipal Group Alliance Source: Biospectrum, July 2007

Group, whereby the Manipal Group will be the preferred research partner for Quintiles in India, Nepal and South East Asia for clinical trials. The Manipal Group has the largest teaching hospital network in India and has built a reputation for high-quality patient care through its super specialty hospital in Bangalore and its network of teaching hospitals across its campuses.

B IOTECH

Rasi Seeds Rasi Seeds is the leading seed company in India. The company generated revenues of US$ 77.5 million in 2006-07, and US$ 72 million during 2005-06. Rasi Seeds sells quality seeds of various crops to farmers all over India. In 2006, the company accounted for 29 per cent of the total Bt cotton seeds sold in India. The company has been using Bollgard technology developed by Monsanto. Rasi Seeds R&D center has been recognised by the Department of Scientific and Industrial Research (DSIR) and the company’s product coverage measures an impressive ten million acres in the past decade. Rasi Seeds Fact file -

S egment : Bio-agri Start-up year : 1973 Biotech Revenue 2006-07 : US$ 81million Leading seed company

- C  ompany provides seeds of various crops - Has undertaken field trials and large scale trials of Bt cotton - Top notch marketing network all over India and two procuction centres - Entered contract farming with an ELS cotton hybrid

Rasi Seeds has entered into contract farming with An Extra Long Staple (ELS) cotton hybrid with the idea of “Breeding to Branding”- the first of its kind in the world. The company has also been taking initiatives to outsource technologies-especially those for drought, improving fertilizer use efficiency for viruses in different crops-from technology providers around the world.

Nuziveedu Seeds Nuziveedu Seeds grew to US$ 53 million in 2006-07 from US$ 14.5 million in the year 2005-06. The company released two Bt hybrid cotton varieties after approval from the Genetic Engineering Approval Committee (GEAC). These new varieties are being sold in various states in India. The economic benefits from these cotton varieties are almost US$ 700 per hectare under irrigated conditions. The company has produced 500,000 packets of the Bt hybrid seeds for cultivation of which about 130,000 were sold in the state of Andhra Pradesh alone. Each packet was priced at about US$ 42, of which around US$ 29 is Monsanto’s share as it owns the technology used.

Source : Biospectrum, June 2007

Nuziveedu Seeds Fact File

Apart from cotton, Rasi Seeds has also been focusing its R&D efforts into other crops. Among these, the comapny has made promising progress in hybrid maize, sunflower, lady finger, bottle gourd, ribbed gourd, bitter gourd, tomato and chilli. Current R&D projects have been focusing on using recombinant DNA technology, in vitro plant tissue culture, molecular biology, and molecular breeding in crops in order to address natural weaknesses in the crops. Rasi Seeds Business Revenues 2006-07 2006

81

2005

75

2004 0

21 10

20

30

40 50 US$

60

70

80

90

Source: Biospectrum , June 2007

Rasi Seeds has established a highly sophisticated biotech laboratory with facilities for research on DNA finger-printing, DNA-based genetic purity test, and tissue culture and transformation of different crops. Other facilities include a modern high through-put biotech facility for breeding of transgenic crop production.

-

S egment : Bio-agri Start-up year : 1973 Biotech Revenue 2006-07 : US$ 55 million Manufacturer of hybrid cotton seeds

-

Commercially released two Bt hybrid varieties  orking on indigenous transgene to combat bollworms W Has 15 cotton hybrids in pipeline Signed a MoU with Tamil Nadu Industrial Development Corporation (TIDCO) to establish a biotech/IT SEZ near Chennai

Source : Biospectrum, June 2007

The technology used by Nuziveedu was outsourced from Monsanto-Mahyco and it provides bollworm resistance in the cotton hybrids. Although Nuziveedu is currently using technology from Monsanto, the company has been working on developing its own technology along similar lines. The company’s current pipeline includes 15 cotton hybrids of which two are in the last stages of trials. In Nuziveedu Seeds Business Revenues 2006-07 2006

55

2005 0

16 10

20

30

40 US$

Source: Biospectrum , June 2007

50

60

70

31

MARKET & OPPORTUNITIES

32

addition to cotton, Nuziveedu has also been working on Bt varieties in rice and brinjal. Nuziveedu Seeds has a total customer base of about 6.5 million farmers. As a result the company has a large marketing network spread over 12 states in India.

Novozymes South Asia Novozymes, a group company of Novo Nordisk, generated revenues worth US$ 23 million in 2006-07 as compared to US$ 19 million in the previous year. Novozymes caters to mostly clients in Europe, North America and Asia. The company uses tools such as gene technology, microbiological techniques and fermentation technology. Industrial enzymes and microorganisms account for 95 per cent and five per cent of Novozymes’ business respectively. Novozymes’ products include technical enzymes, food enzymes, and feed enzymes. In the area of microorganisms, the company is involved in sales of microorganisms for aquaculture, wastewater management, cleaning and biological plant care. Novozymes has planned to expand its presence in India by building a new laboratory and office facilities in Bangalore by mid-2008. This would enable the company to establish a R&D unit in India for the first time. The initial focus of research will be on optimising enzyme properties. Novozymes South Asia Fact File -

S egment : Bio-Industrial Start-up year : 2000 Biotech Revenue 2006-07 : US$ 24 million Leaker for industrial enzymes

-

S ells more than 600 products in 130 countries Building new laboratory/office space in India Establishing R&D operations in India soon Novozyme’s enzymes play a significant role in food, textile, cleaning, and wastewater treatment

Source : Biospectrum, June 2007

B IOTECH

Advantage India

Infrastructure and skilled labor, cornerstones of any venture, ware available in India at significantly lower costs. In addition to these, favorable patent regulations, have served to catapult the Indian biotechnology sector onto the global radar. This comes at an opportune time, with global companies scouting for strategies to maintain costs, while simultaneously retaining quality. With the public and private sector’s growing focus on ramping up the industry to global standards and beyond more and more overseas biotech markets are viewing India as an excellent choice of partner to enhance their operational range and productivity.

Low Cost Operations in India R&D costs in India are significantly lower than those in the developed world. Outsourcing part of a drug discovery chain to an Indian company can save up to US$ 200 million on development costs. The low cost of operations is attributed to availability of skilled manpower and infrastructure at comparatively lower rates. Salaries for R&D personnel are significantly lower in India compared to Europe or USA. The cost of clinical trials is 50 per cent lower in Phase-I, and 60 per cent lower in Phase-II in India when compared to the global clinical trials market. Also, the time taken to conduct a clinical trial is considerably lesser in India due to the availability of a large patient pool and faster enrollment rates.

Large human resource pool With the distinction of being ranked as the number one reservoir of scientific manpower, ahead of countries like Philippines, China, Australia, and Japan, as well as home to a legacy in higher education in the sciences, easily justifies why companies are coming to India to fuel their growth. There are 40 national research laboratories in the

country, employing 15,000 scientists; there are more than 346 universities and 16,500 colleges with about 9.5 million students enrolled. India produces about 350,000 graduates in biosciences and about 172,000 post-graduates. Furthermore there are more than 5,000 PhDs and 1,000 post-docs in the bioscience-related fields in India. Established names in life science education and research include the Indian Institute of Science (IISc), Tata Institute of Fundamental Research (TIFR), National Center for Biological Sciences (NCBS), and the Centre for Cellular & Molecular Biology (CCMB) to name a few. The large proportion of English speaking manpower is also a big advantage for India. The biotech parks across the country that offer various cost-benefit incentives and allow for easy industry-industry and industry-academia synergies also play a big role in making India an attractive biotech destination. Some Bioscience-related Indian Institutions

Institution Name

Area of focus

National Center for Biological Sciences

Biochemistry, Bioinformatics & Genetics

Jawaharlal Nehru Institute for advanced Scientific Research

Molecular and Chemical Biology & Genetics

National Institute of Immunology

Immunology

Institute of Genomics & Integrative Biology

Genomics, Genome Informatics and Proteomics

International Centre for Genetic Engineering and Biotechnology

Molecular Biology & Biotechnology

Centre for Cellular & Molecular Biology

Bioinformatic & Genetics

Centre for DNA Fingerprinting & Diagnostics

Computational Biology and Bioinformatics

Central Drug Research Institute

Drug Discovery & Regulatory studies

33

34

MARKET & OPPORTUNITIES

Favorable IP climate Adherence to the TRIPS agreement with regard to the Patent Protection Act implemented in 2005 has been key to the renewed interest in Indian biotech. This move has increased the confidence of innovator companies in India, spurred the steady inflow of investment and collaborations. Areas related to data exclusivity, patentability rules and compulsory licensing are in the process of being strengthened.

B IOTECH

35

Exchange Rate of US$ 1 = INR 41 has been used throughout this report.

Disclaimer This publication has been prepared for the India Brand Equity Foundation (“IBEF”). All rights reserved. All copyright in this publication and related works is owned by IBEF. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this publication), modified or in any manner communicated to any third party except with the written approval of IBEF. This publication is for information purposes only. While due care has been taken during the compilation of this publication to ensure that the information is accurate to the best of IBEF’s knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice. IBEF neither recommends nor endorses any specified products or services that may have been mentioned in this publication and nor does it assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this publication. IBEF shall, in no way, be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this publication.

India Brand Equity Foundation (IBEF) is a public-private partnership between the Ministry of Commerce & Industry, Government of India and the Confederation of Indian Industry. It aims to effectively present the India business perspective and leverage business partnerships in a globalising market-place. India Brand Equity Foundation c/o Confederation of Indian Industry 249-F Sector 18, Udyog Vihar Phase IV Gurgaon 122015, Haryana, INDIA Tel: +91 124 401 4087, 4060 - 67 Fax: +91 124 401 3873, 401 4057 Email: [email protected] Web: www.ibef.org Website in the Russian language: www.ibef.org/russia