India-EU Creating Complementing Valueebtc.eu/pdf/India-EU_creating_complementing_value.pdf · India-EU: Creating Complementing Value Initiating a Green Biotechnology Revolution. Table

India-EU: Creating Complementing ValueInitiating a Green Biotechnology Revolution

Table of Contents

1 Landscape and Rationale

2 Success Stories

3 Global Biotech Market Scenario

4 India Opportunity: Green Biotechnology

5 Industry and Govt. Structure

6 G t I ti6 Govt. Incentives

7 Recent Initiatives and Future Trends

Scope and Assumptions


Scope:This is a concept document detailing the market potential and opportunity of the Indian BiotechnologyIndustry. It provides insights of macro perspectives in India with specific focus on Green Biotechnology.y p g p p p gyThe presentation provides an in-depth view of the total market size, market shares, trends & drivers,future potential, regulatory insights, and entry barriers for the Bio-Agriculture / Green Biotech Industry inIndia.

Purpose:Purpose:The presentation exhibits the market challenges and opportunities within the Green-BiotechnologyIndustry in India so as to create clarity of business focus for EU Biotech Companies.

Primaries:In-depth interactions were conducted with 3 Senior Principal Scientists at Indian Agricultural ResearchInstitute, New Delhi; detailing on the macro and micro aspects within the Green Biotechnology space inIndia. The insights were used to validate the findings from secondary sources.

Assumptions:Assumptions: Bio-fuels market is assumed to follow the same industry growth curve as bio-diesel Market Size of Bio-fertilizers in 2009, was estimated by benchmarking the CAGR of 2004-2007 period

2

Biotech Industry Landscape in India


BiotechnologyBiotechnology

BiopharmaceuticalsBiopharmaceuticals BioServicesBioServices Bio Agriculture /Green Biotech

Bio Agriculture /Green Biotech BioIndustrialBioIndustrial Bio InformaticsBio Informatics

VaccinesVaccinesHybrid

seeds & Transgenic

crops

Hybrid seeds &

Transgenic crops

Clinical TrialClinical Trial Enzyme Manufacturing

& Marketing

Enzyme Manufacturing

& Marketing

Software & Tools

Software & Tools

DiagnosticsDiagnostics Biopesticides &

Biofertilizers

Biopesticides &

Biofertilizers

Contract ResearchContract Research

TherapeuticsTherapeutics BiofuelsBiofuels

3

Acronyms


JV Joint VentureIPO Initial Public OfferingCAGR Compounded Average Growth Rate

fPhD Doctor of PhilosophyDBT Department of BiotechnologyCST Central Sales TaxST Sales TaxA.P Andhra PradeshBt B ill Th i i iBt Bacillus ThuringiensisMt Metric TonsHa HectareGoI Govt. of IndiaTDB Technology Development BoardK 000’sK 000 sM MillionB BillionICMR Indian Council for Medical ResearchICAR Indian Council for Agricultural ResearchCSIR Council for Scientific and Industrial ResearchCSIR Council for Scientific and Industrial ResearchAPIIC Andhra Pradesh Industrial Infrastructure Corporation LtdSIBRI Small Business Innovation Research InitiativeGM Genetically Modified$ US Dollar

4

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2 Success Stories






Success Stories indicate huge opportunities to explore complementing value by collaborating with Indian biotech companies

2 Success Stories

Acquired 17% of Canada's Biosyntech Performing Phase I clinical trials for their new oncology molecule at Biosyntech;

Expected to announce Phase II clinical trials soon

Nicholas Piramal India Ltd. Mumbai

In collaboration with University of Ottawa, researchers working to reduce the process of Clinical indications for corneal transplantation to a single surgery

Soon to be launched in India in collaboration with Operation Eyesight Universal, Canada

LV Prasad Eye Institute, Hyderabad

Marketing and licensing agreement with Dragon Pharmaceuticals Inc Canada for distribution of Erythropoietin (EPO) in India

Partnered with United Pharma - Mohali for formulating various herb-based natural h ti l th t h ti i it t ti i fl t ti id t ti

Emcure Pharmaceuticals

Fytokem of Saskatoon, C d pharmaceuticals that have anti-irritant, anti-inflammatory, anti-oxidant properties

Partnered with Beckons India, Mohali for Essential Fatty Acids (EFAs) from fatty acid rich crops

Canada

Bioriginal Food & Science Corp., Saskatoon

100% subsidiary in the form of a formulation plant and clinical research facility Agreement with Biocon, for development of enzymes, other biotech products

100% subsidiary in Ottawa engaged in biotech related R&D

Apotex Pharma, Canada

Gangagen LifesciencesBangalore

References: ATS6

Bangalore

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2 Success Stories






Global Biotech Companies ‘looking East’ to exploring synergies to address emerging macro-economic challenges


Amgen 48 21%

Other, 43, 19%

Market share of top 10 global Biotech co’s, in $B

227

Global Biotech Market, in $B

Amgen, 48, 21%

/M k

Schering‐plough, 7, 3%

Wyeth, 7, 3%

US$ 227B

145

Roche/ Genentech 48, 21%

J&J 18 8%Novo Lilly, 11, 5%

Sanofi, 9, 4%

Abbott, 9, 4%

Merck KGaA, 9, 4%

2004‐05 2008‐09

In 2008-09, the Global Biotechnology market was estd at ~$227B and expected to be ~$306B by 2013; growing at a CAGR of 11.8%

Global Biotech Industry profits estd at ~$4B; ~3 fold increase from 2008Reduction in R&D costs by 21% over 2008

J&J, 18, 8%Nordisk, 18, 8%

Reduction in R&D costs by 21% over 2008 Liquidity crisis, a major challenge for sector; 13% of global biotech firms shrunk in 2009; 57% of global

biotech firm still facing cash flow problems Consolidation via M&A reducing industry growth rateGenentech’s acquisition by Roche reduced industry revenues by 8% in the last 2 yearsq y y y y

References: Fierce Biotech, E&Y8

Asia dominates the Biotech market with India ranked 4th in Asia, 11th

globally

Global Biotech Market Scenario3

.

Europe 30%

Biotech Market share continent wise

Bioagri, Bio i d t i l

Market share of Segments in Global Biotech industry, in $B

Asia, 34.73%

Bio-Services 15%

industrial, Bio informatics

16%

$ 227B

North America 24.30%Rest of world

9.80%

India, 1.17% Bio Medical 69%

,15% $ 227B

Asia leads the global Biotech market with ~35% revenue share, followed by Europe with 30% share; while India contributes ~1.2%

In 2010, global market for stem cell therapy expected to be ~$20B, India accounts for ~$540M; growing t CAGR f 15%at a CAGR of 15%

In 2007-08, industry reached break even as Asia-Pac revenues grew by ~21% and net loss declined by 98%Associated reasons include increase in IPOs with flows of over $750M

9 References: OECD, Altassets

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2 Success Stories






~40% Market Share in India owned by top 10 players; Significant growth rate over 30% expected in the fragmented biotech market


SercumNovozymes

Shantha Biotech, 54, 5%

Jubilant, 53, 5%

Market share of top 10 Indian Biotech co’s

2590

Indian Biotech Market, in $M

Sercum IBiotechte of India, 245,

24%

Novo Nordisk

Siro Clinpharm,62, 6%

Novozymes South Asia,

55, 5%

US$ 1B

Biocon, 201, 19%

Panacea Rasi Seeds

Nuziveedu Seeds, 80, 8%

Novo Nordisk, 73, 7%

US$

500

2002 2008

In 2008, Indian Biotechnology market was estd at ~$2.6B and is expected to be ~$25B by 2015; growing at a CAGR of 31.5%Acc to Kiran Mazumdar Shaw, CEO of Biocon , domestic biotechnology sector to reach $10B by 2015

With 325 Bi t h ’ i I di h f t 10 Bi t h i td t 40%

Biotech, 131, 13%

Rasi Seeds,83, 8%

2002 2008

With ~325 Biotech co’s in India, share of top 10 Biotech companies estd. at ~40% Exports account for 60% of total revenue, grew by 25%; accounting for revenues of $1.6B in 2008In 2008 the domestic revenue grew by 10%, accounting for revenues of $1B

Industry-sponsored Phase II, Phase III clinical trial study sites in India grew by 116% over the last 15 months with investments in the sector exceeding $1 2Bmonths with investments in the sector exceeding $1.2B

References: EXIM, Biotech_171109_ibef11

India offers low cost advantage backed by a stable Government,favorable demographics, knowledge and economical manpower

India Opportunity: Green Biotechnology4

Cost benefitsLucrative Government PoliciesSkilled ManpowerDemographic Boon

R&D cost in BioagriFunds for DBT increased 3 5 times toIndia’s scientificLargest agriculture R&D cost in Bioagri segment is cheaper by 30% to 50% as compared to developed countries Labor availability at a

Funds for DBT increased 3.5 times to ~$1.4B in 11th 5-year planIncome Tax benefit with deduction of

150% on R&D expenditure and international patenting costs, till 2012Exemption on import duties on

India s scientific knowledge pool stands at 3M graduates with ~22K medicine graduates, 700K post-graduates,5K PhD’s

Largest agriculture sector in world with ~60% agricultural land, varied climatic zones that can help in R&D of different

lower wage rate i.e. ~25% of western countries

Clinical trials cost 50% lower in phase I, 60% lower in phase II

p pspecified items for R&D and clinical trial equipmentExemption on Excise duty and Sales

tax for bio-dieselSBIRI provides grants up to $100K to

Total supply of professionals for Bio-tech industry estd to be ~74K in 2009 growing at a CAGR of 44%In 2009 demand for

agri-biotech products2nd largest

population in the world growing at a rate of 1.4%( avg. global rate being lower in phase II

compared to global marketsTrials take significantly

less time because of availability of patients

SBIRI provides grants up to $100K to a start up in 1st phase and soft loan at 1-2 % interest ratesSEZ benefits include: Duty free import procurement of

goods

In 2009, demand for skilled professionals in:Biotech industry estd.

to be ~72K growing at a CAGR of 29%Agri bio segment estd

global rate being 1.1%)In 2007, total arable

land estimated to be ~159 M hectareArable land availability of patients

with specific diseasesClinical trials projected to

touch $23B by 2011; India’s share to be 15%

goods100% tax exemption on export

income for SEZExemption from CST and STSingle window clearance for Central

and State level approvals

Agri-bio segment estd. to be ~5.5K growing at a CAGR of ~39%

reducing @ 0.3% ( global arable land increasing at 0.4%)

and State level approvals

References: Agriculture coop, Amazon, CIA12

With an investment of over $1.2B, India on the radar of Global biotech companies ; Tie-Ups with Indian companies critical for growth


US-based biotech companies, Imac andI d E i h l d

Investments

Avesthagen, a Bangalore-based life sciences firm,h d JV ith Li i F h

Collaborations

Indus Expression have plannedinvestment of $104M to set up their unitsin India at the SEZ proposed by APIICPanacea Biotec Ltd has bagged a 3 year

contract worth over $119M from UNICEFto provide agency with EasyFive

has announced a JV with Limagrain, a Frenchinternational cooperative group; Limagrain will holdthe majority 51% stake in the JVBayer CropScience AG, a subsidiary of Germany-

based global crop sciences major Bayer AG and GVKBiosciences Private Limited (GVK Bio) of Hyderabadto provide agency with EasyFive

vaccine, a protection against pediatricdiseasesFrance's largest drugmaker, Sanofi-

Avenits, bought Shantha Biotechnics for~$774M

Biosciences Private Limited (GVK Bio) of Hyderabad,have entered into a research cooperation agreementin the area of early discovery chemistryGVK Biosciences has partnered with the US-based

clinical organisation, ResearchPoint Global. Together,the two companies which are full service contract

Indian Biotechnology

sectorVibha Seeds Group, specializing in

private crop genetics and plant breedingresearches, has invested ~$43M to setup a multi-crop seed processing facility inA.P

presearch organizations (CROs), will offer access tomedical writing, clinical data management andbiostatistics, as well as quicker patient recruitmentBiocon Limited, the country's second largest

biotechnology firm, has signed a MoU with Malaysia'sBi t h l C ti (Bi t hC ) t lAlexandria Real Estate, a ~$5B US-

based company that provides solutions tothe life sciences industry, investing~$107M to set up a biotech R&D andincubation facility in Gujarat

Biotechnology Corporation (BiotechCorp) to explorecollaboration and potential investment in Malaysia'sbiotechnology industryDriver of

knowledge-based sector

References: IBEF13

Green Biotechnology led by Bt Cotton is the fastest emerging sector in the Indian Biotechnology industry


Bio‐industrial,% Bioinformatics,

Market share of Segments in Indian Biotech industry, in $B

330

Indian BioAgri market, in $M

Bio‐services,

Bio‐agri, 0.3, 12%

0.11, 4% Bioinformatics, 0.05, 2%

330

Bio‐pharma,1.7, 65%

Bio services,0.5, 17% US$ 2.6B

23

2002 2008

Indian Bioagri market estd. at ~$330M in 2008, exhibiting maximum growth among all Biotech segments with a CAGR of ~55%

~60% of Bioagri revenue owned by top 3 players

2008

g y p p y~96% of total revenues from Indian domestic market

~ 8% of bioagri market owned by Bio-pesticides and Bio-fertilizersBt cotton driving bioagri growth with ~81% of total cotton area in IndiaHas enabled an increase in farmers’ income by $2B in 2007 alone

References: ET, Bt cotton, Biotech_171109_ibef14

High Potential Indian Bio-fuel industry at Incubation stage; Government initiatives & increased consumption driving future growth


745

Expected growth rate of Indian Bio-fuel and Bio-Energy Market, in $M R&D Pilot Incubation Growth Stabilization Consolidat

ionMaturity

Bio-Fuel Industry growth curve

396

EUustry grow

th curve

20092014

India

EU

Biofue

l ind

Production Capacity

I di Bi f l d Bi E k t td t b 400M i 2009 d 745M i 2014 ti l Indian Bio-fuel and Bio-Energy market estd. to be ~400M in 2009 and ~745M in 2014 respectively; growing at a CAGR of ~13.5%

India and China expected to increase energy consumption for transportation by ~55% by 20305 fold increase in total vehicles in India from ~21M in 1991 to ~110M in 2008 driving fuel consumptionPetrol estd to grow from ~10Mt in 2006 to ~16Mt in 2016Petrol estd. to grow from 10Mt in 2006 to 16Mt in 2016Diesel estd. to grow from ~52Mt in 2006 to ~84Mt in 2016

Surge in green-fuel demand bolstered by government initiatives National biofuel policy of India to realize 20% blending of petrol and diesel with green-fuels by 2017 Ethanol and Biodiesel blending requirements estd to be ~3 3Mt and ~17Mt by 2016 respectivelyEthanol and Biodiesel blending requirements estd. to be 3.3Mt and 17Mt by 2016 respectively

References: BS, SBI, UNCTAD, PC, USDA, USAID15

Demand-Supply gap of food crops widening; Bio-fertilizers and Bio-pesticides to yield future profitability


20.1

Indian Bio fertilizer and Bio pesticides market, in $M Food demand‐supply scenario of Indian Market (Mn Metric Tn)

612.2663.21Demand

17.8 407.8

544.6

436.8495.7 501.1

Demand

Supply

2004‐05 2008‐09

260.8

2000 2011 2021 2026

Population in India growing at a CAGR of ~1.4%, arable land reducing at 0.3%~22% Demand shortfall of food items by 2026 representing immense opportunity

India ranked 10th globally and 4th in Asia for plant diversityTremendous scope for natural biological control organisms as well as natural plant based pesticides

Organic cultivation(crops) in India is estd. at ~100K hectare; Current supply stands at ~3160 Mt while estd. demand is ~1MtBio-fertilizer increases yield by 8-24% to make agriculture a viable proposition

Indian bio-fertilizer and bio-pesticides industry estd at ~$20M in 2008-2009 ; growing at a CAGR of ~3%; and expected to grow at a CAGR of 10%-15% till 2012p g

16 References: Icrier, nistads, ibef, ibef

Untapped market and Government incentives create tremendous opportunities for Bio-Crop Revolution


Bt

Bt crop as a percent of total crop productionPer hectare revenue of bio crop , in $462

Cotton, 3%

400

Total Crop, 97%

Indian Bio-Crop Industry estd at ~$462 per hectare in 2008-2009; growing at a CAGR of ~8% India is the 4th largest adopter of Biotech crop in the world, outpacing Canada

2006‐07 2008‐09

Bt crop accounts for ~3% of total crop harvesting area~97% of untapped market representing huge opportunityBt crops improves yield by 31%

Target for Bt crop seed replacement rate set from 20% to 35% in the ongoing 11th five year plan

17 References :Apcoab, Fai Delhi, foei

Bt-Cotton leading the use of Genetically Modified Seeds; a profitable alternative to increase yield


India China South Africa Argentina

Lint yield Kg/ ha % 699

80%52319%

23765%

53133%

Pest control 30 230 26 18$/ ha % -30-

-230-67%

-26-58%

-1847%

Seed costs $/ ha % - 32 14 87$/ ha % 166% 95% 89% 530%

Total costs $/ ha % -

23%-208-16%

23%

9935%

Profit $/ ha % 311

93%470

340%65

299%23

31%

References: FAO; AP; AGRIBIO18

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2 Success Stories






Key Stakeholders in the Biotech industry; Alignment of all stakeholders essential for success

Industry and Govt Structure5

Government Funding

Most funding for advanced researchg TDB gives equity and soft loans for technology

development solely for commercial use

Bio Suppliers

Includes co’s from America, EU, and India.

Buyers

Government, private hospitals, patient

Bio Technology Players

Govt. Research Labs and Academia

Supply products such as test-tubes, other consumables to high-end equipment

hospitals, patient Industries-

Pharmaceutical co’s, research institutes

Pure play Biotech Co’s Biotech inclined industries Allied Industry

Venture Capitalists

Risk averse to invest in biotechnology projects in their gestation period

20

Government is a convenient interface to address the operational challenges of entering a new market within Biotechnology


Genetic Engineering Approval Committee (GEAC)Give approval in cases of large-scale field trials deregulation

and commercialization in addition to DBT approval process RCGM

BiotechnologyBiotechnology RCGMReview on-going researches involving hazardous microbesVisit experimental site; ensure that trials done on guidelinesAdvising custom authority on import of microbes, G.M product

Recombinant DNA Advisory Committee (RDAC)Review developments in Biotechnology nationally, globallyRecommend appropriate safety regulations for India in rDNA

research works Institutional Bio-Safety Committee (IBSC)Nodal point of interaction within a commercial organization

MoEFMoEF DBTDBT

p gInvolved implementation of rDNA guidelines

Department of Biotechnology (headed by Ministry of Science)Policy promotion regarding R&D International Co-operation and manufacturing activitiesEstablishment of infrastructure facilities to support R&D

RCGMRCGMGEACGEAC

Establishment of infrastructure facilities to support R&D,productionDevelop integrated programs for HR development

Ministry of Environment and Forest (MoEF)Ensure the compliance of requisite safeguard at R&D level

RDACRDACSBCCSBCC

21 References: dubeypartner

Indian Biotech space offers multiple and smooth modes of access for market entry


Requirements Liaison Office Project/Branch office Subsidiary /Joint Venture

Preliminary Prior approval from RBI Prior approval of RBI for Some sectors not falling in the ambit of automatic route needy

Requirement Prior approval from RBI branches (other than SEZ) ambit of automatic route need approval from FIPB

Permitted activities

Liaison / Representation/communication. No comm

business activities

Activities listed by RBIManufacturing (except in SEZ unit) not permitted

Any activity specified in MOA of companybusiness activities SEZ unit) not permitted

Limitation of liability Unlimited liability Unlimited liability Liability limited to the extent

of Equity participation

Compliance req irement Registration and Registration and periodical Compliance needed with

s bstantial higher stat torrequirement under

Companies Act

gperiodical filing of

accounts

g pfiling of accounts substantial higher statutory

compliance and filing requirement

Compliance Required to file an annual Require to file an annualRequired to file periodic and

annual filings relating torequirementunder FEMA

Required to file an annual compliance certificate

Require to file an annual compliance certificate

annual filings relating to receipt of capital and issue of

shares to foreign investor

IT Act No Tax (cannot carry commercial activity)

File return and pay tax on income earned in India

Tax on global income on net basis DDT @16 995%commercial activity) income earned in India basis DDT @16.995%

22Reference: Publication division

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2 Success Stories






Four-fold budget allocation for biotech companies; a boon for funding growth opportunities

Govt Incentives6

Investment by DBT increased from $310M to ~$1.4B in 11th 5 year plan

I T b fit

Govt. Investment in Biotech Sector in 5 Year Plans , in $M

Income Tax benefits:150% deduction on R&D expenditure and international patenting costs until 2012Tax benefits to Venture Capitalists

investing in biotech industry

1392

g y Exemption on import duties on specified

items for R&D and clinical trial equipment Exemption on Excise duty and Sales tax Service tax exemption on clinical trials of

new drugs including vaccines and herbal310

new drugs including vaccines and herbal remedies

SBIRI provide a grant up to a maximum of $100K to a start up in first phase Access to soft loans at 1-2% interest rates

133

10th 5-year plan9th 5-year

plan

11th 5-year planplan

24 Reference: osec

Lucrative State Government Incentives; synergistic value proposition for a thriving business environment

Govt Incentives6

Andhra Pradesh Over $ 2.69Bto be invested ; Land allotment to 19 companies in the Biotech Park

State Level Benefits

Over $ 2.69Bto be invested ; Land allotment to 19 companies in the Biotech Park Single Window clearanceTamil Nadu Nurturing the setting up of the biotech enterprise zones along the lines of Silicon Valley to exploit the bio resources 4 state-of-the art biotech parks, a bioinformatics and genome center to be establishedMaharashtra Government putting Equity stake in biotech parks, R&D centers, and pilot plant facilities for promoting contract researchKarnataka Creation of biotechnology fund to incentivize inflows from the biotech companies Proposing to launch India’s first state sponsored biotechnology venture capitalHimachal Pradesh Provide research based support to the Pvt Companies; providing access to a bio resource data base Provide research based support to the Pvt. Companies; providing access to a bio-resource data base 100% tax holidays for all biotech products up to year 2012

Duty free import for procurement of goods

SEZ Benefits

100% tax exemption on export income for SEZ Exemption from CST and ST Exemption from MAT Single window clearance for Central and State level approvals 5 year window period to meet export obligation norms

25 Reference: enews

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2 Success Stories






Innovation, Knowledge Transfer and Infrastructural growth – India well positioned to lead into a successful future within Biotechnology


Government of India and UNESCO, to establish a Regional Centre for research, training and education in biotechnology in Faridabad Haryana by 2010

Recent Govt. initiatives

biotechnology in Faridabad, Haryana by 2010Addresses the need for interdisciplinary human resource training

DBT to set up a unique Health Biotech Science Cluster (HBSC) at FaridabadCreating infrastructure to scale-up human resources to support a shift to high-end research in long termE l i t f d h f i t it f bi i il d tExploring avenues to fund research, focusing on opportunity for bio-similar products

The Centre is looking at initiating a Bill to empower scientists and help them commercialize their innovationsAlliances with universities for achieving sustained growth

Govt. to stimulate public / private investments by setting up a National Biotechnology Regulatory Authority

The India advantage

Looking ahead

Globally recognized as a manufacturer of economical, high quality bulk drugs and formulationsHuge base of talented, skilled and cost-competitive manpowerWell-developed scientific infrastructure

27 References: IBEF

Thank You

Documents

India-EU Creating Complementing Valueebtc.eu/pdf/India-EU_creating_complementing_value.pdf · India-EU: Creating Complementing Value Initiating a Green Biotechnology Revolution. Table