The BioPharma Sector in India

8/9/2019 The BioPharma Sector in India

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Ro y a l Da n i s h Emb a s s y , New Del h i ,Tr a d e Co mmi s s i o n o f Den ma r k , Ba n g a l o r e,Tr ade Counci l o f denmar k

The BioPharma Sector

in India



Table of Contents

1 Introduction ............................................................................................3 2 Market Indicators....................................................................................3

2.1 Pharmaceutical Industry.............................................................................. 3 2.2 Biotechnology Industry...............................................................................4

3 Indian Clusters........................................................................................5 4 Market Trends.........................................................................................6 5 Market opportunities...............................................................................7

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1 Introduction

The economic outlook for India is positive. A growth rate of above 6,9% was

achieved by the Indian economy during the year 2004-05 and it reached 8,4% in2005-06 (ending March 2006). Growth in the Indian economy has steadily increased since 1979. In fact, the Indian economy has posted an excellent averageGDP growth of 8.5% since 2003. Many factors are behind this robustperformance of the Indian economy. High growth rates in industry & servicesector and a benign world economic environment provided a backdropconducive to growth of the Indian economy. Another positive feature is thatprices have been relatively stable.

The biotech and pharma industry is considered to be the next booming sectorafter the IT industry in India. The Indian traditional distinction between biotechand pharma is that a pharma company manufactures drugs whereas a biotechcompany is engaged in R&D of new drugs. However, in reality there existsseveral mixes between the two entities where some pharma companies also doR&D and vice-versa. The following statistics therefore is the combined overview of both the biotech and the pharma industry.

Indian companies enjoy a number of advantages in the biotech and pharmaindustry such as low operational costs, low cost technologies, skilled humanresource base, large network of research laboratories and abundance of raw materials in the form of plant, animal and human genetic diversity.

2 Market Indicators

2.1 Pharmaceutical Industry

The Indian pharmaceutical industry has published encouraging numbers,reflecting the growing interest in its local market among global pharma firms.

With a national sale of approximately 6 billion USD (2006), Indian companies

have further developed a significant service industry for the global market. Thecountry’s 'back office’ culture - propagated by the IT services industry - hasflowed into pharma. During the last two years, most Indian companies haveramped up their capacities and invested in raising manufacturing standards,preparing the ground for forays into markets such as Europe and the UnitedStates, assured in the knowledge that the country has one of the largest numbers

of FDA-approved1 facilities outside the United States.

1

FDA is an abbreviation of “American Food and Drug Administration”, which is the Americangovernment institution for approval of drugs and production procedures for drugs. It is known to be the




Though, many of the world’s pharmaceutical giant companies are present inIndia, domestic companies dominate the industry. The FDI (Foreign DirectInvestment) in the pharma industry is estimated at US$ 172 million during 2005-06, recording a CAGR of 62.6% during the period beginning 2002-06.

Between 2000 to 2005, domestic pharma industry grew at a CAGR of about9.5% and touched the market size at US$ 5.13 billion by March 2005. However,towards March 2006, the growth rate jumped to 11% to hit the market size of US$ 5.7 billion, further forecasting that it will hover around 13.6% between2006-10, where the domestic pharma market size will be at US$ 9.48 billion by

20102.

2.2 Biotechnology Industry

The Biotechnology industry in India has the potential of making it big on theglobal scene. At the moment, there are more plans than concrete business activity in this industry that consists mostly of start-ups and companies that havediversified into this area. But factors like a formidable pool of medicalknowledge, a large patient population—that will not only make clinical research

viable but also be a significant market for biotech medicines—besides low manufacturing and R&D costs could lead to a major spurt in business activity.Equally important, a large amount of business could be outsourced by international biotech companies.

Repeating the previous year's growth rates, India's biotechnology industry hasnotched up another good year in 2005-06 with sales growth of 37.42 percent toreach Rs 6,521 crore ($1.45 billion) in revenues. The industry narrowly missed the$1.5 billion mark by just $50 million (Rs 225 crore).

The total biotech exports in 2005-06 were at Rs 3,357.17 crore (approx. $755millions), while the domestic business reported Rs 3,163.83 crore (approx. $ 711millions) in sales. The exports accounted for 51.48 percent share of the totalindustry.

The BioPharma sector comprising mainly of vaccines, therapeutic drugs,animal biologicals, statins and diagnostics registered record sales of Rs 4,708crore ($1,06 billion) in 2005-06 crossing the $1 billion mark and a recordedgrowth of 31.88 percent over what in the previous fiscal. This sector, likeelsewhere in the world, is the single largest contributor to the biotech industry'ssize. It accounted for over 72 percent to the total Indian biotech industry's

most difficult place in the world to get drugs and drug production procedures approved. When FDA hasapproved a drug or a drug production site, most other governments in the world will therefore normally

approve it as well2 The Associated Chambers of Commerce and Industry of India - www.assocham.org






investment friendly compared to Indian standard. Therefore the region hasattracted quite large numbers of foreign companies compared to the rest of India.

Bangalore is a global brand. It has a strong technology culture, is home to a

strong IT-cluster, and has several world-class scientific institutions like theNational Centre for Biological Sciences (NCBS) and the Indian Institute of Science (IISc).In general the south is home to some of the country’s best scientific intuitions.

These include the Indian Institute of Chemical Science (IICT) in Hydrabad andCenter for Cellular and Molecular Biology (CCMB)in Chennai just to mention afew.

The biocluster in the National Capital Region, which is comprised by the cities of Delhi, Nodia and Gurgaon, houses a number of large national and international

biotech companies including giants like Valiant, Ranbaxy, and Eli Lilly. TheNational Capital Region is also the home of a number key ministries andgovernment departments. In addition to that it is also housing as a large numberof national and international research centers. At the top of the heap is the UNfounded International Center for Genetic Engineering and Biology. Important isalso the Institute of Genetics and Integrative Biology, and The National Centerfor Immunology.

4 Market Trends

Indian biotechnology industry is currently nascent and accounts for a mere onepercent of the global biotechnology market. However, it is poised for anexponential growth. Over the next five years it is expected to reach a globalmarket share of 10 percent. Not only the export but also the domestic demand isexpected to experience an enormous growth. The annual turnover forbiotechnology products and services, which at present is about 618 million USD,is expected to reach 4.5 billion USD in 2010.

The Indian government is making a dedicated effort into making these

expectations come true. It has been raising its spending on science institutionsand provided a 150 percent tax deduction for R & D spending on biotechnology.In a recent proposal it has also been suggested to remove all import duties onequipment, instruments and consumables used in the industry’s R &D. Recently,several state governments such as Maharashtra, Andhra Pradesh, Karnataka,Punjab, and Gujarat have formulated Biotechnology Policies with focus onsetting up Biotech Parks, Incubators, Centers of Biotech Excellence andproviding fiscal incentives to the investors.




5 Market opportunities

Although it remains a developing market, there is no denying that Indiarepresents vast untapped potential for global pharmaceutical and biotechcompanies to reach out to.

The opportunities for Danish companies in the Indian biotech and pharmaindustry include the following:

• Contract research and manufacturing • Out – licensing (typically a molecule) to an Indian biotech• Sourcing bulk drugs

• Joint drug development (R&D)• Testing – pre clinical and clinical




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The BioPharma Sector in India