Market Size and the Key Opportunity Segments

The Indian biotechnology sector is one of the fastest growing knowledge-based sectors in India and is expected to play a key role in shaping India's rapidly developing economy. With numerous comparative advantages in terms of research and development (R&D) facilities, knowledge, skills, and cost effectiveness, the biotechnology industry in India has immense potential to emerge as a global key player.

The Indian biotech industry grew threefold in just five years to report revenues of US$ 3 billion in 2009-10, a rise of 17 per cent over the previous year, according to the eighth annual survey conducted by the Association of Biotechnology-Led Enterprises (ABLE) and a monthly journal, BioSpectrum, based on inputs from over 150 biotech companies.

The biopharma sector contributed nearly three-fifth to the industry's revenues at US$ 1.9 billion, a rise of 12 per cent, followed by bioservices at US$ 573 million and bioagri at US$ 420.4 million. The remaining revenue came from the bioindustrials US$ 122.5 million and bioinformatics US$ 50.2 million segments.

Biopharma and bioservices sectors contributed 63 per cent and 33 per cent, respectively, to the total biotech exports. The bioagriculture, bioindustrials and bioinformatics sectors remained focussed on domestic operations, bringing in nearly 90 per cent of their revenues from India.

While the industry, spanning bio-pharma and agri-biotech, accounted for US$ 3 billion, the equipment and ancillary segment contributed around US$ 1 billion.

Moreover, as per Kiran Mazumdar-Shaw who is also the chairman and managing director of Biocon, which has topped the list of biotech companies in India in the ABLE survey, India is looking forward to achieve US$ 5 billion in revenue this fiscal (2010-11).

India is also gaining importance as a clinical trial destination. According to a joint study by an industry body and Ernst and Young (E&Y) released in August 2009, the industry-sponsored Phase II, Phase III clinical trial sites in India have grown by 116 per cent during June 2008 and August 2009, with the country moving from rank 18 to 12 across the 60 most active countries.

India participates in 7 per cent of the global Phase III trials and 3.2 per cent in the Phase II trials with industry-sponsored trials having grown by 39 per cent CAGR during 2004-08.

Major investments

Investments, along with outsourcing activities and exports, are key drivers for growth in the biotech sector.

According to data released by the Department of Industrial Policy and Promotion (DIPP), the drugs and pharmaceuticals sector has attracted foreign direct investment (FDI) worth US$ 1.67 billion between April 2000 and March 2010.

Some of the major investments in the sector are as follows:

• Panacea Biotec Ltd has bagged a three-year contract worth over US$ 222.37 million from UNICEF to provide the agency with EasyFive vaccine, a protection against a set of pediatric diseases for 2010, 2011 and 2012.
• Alexandria Real Estate, the US$ 5.2 billion US-based company which provides solutions to life science industry, has decided to set up a biotech research and development (R&D) and incubation facility in Gujarat. It plans to spend around US$ 107 million for the project.
• The Defence Research and Development Organisation (DRDO), which caters primarily to the armed forces, plans to spend US$ 63.5 million to upgrade and custom-make its existing line of biotech products for civilian use.
• Biotechnology major Biocon has fully acquired the joint venture Biocon Biopharmaceuticals from its Cuban partner CIMAB. Under the business restructuring plan, Biocon will pick up CIMAB's 49 per cent stake and will make Biocon Biopharmaceuticals (BBPL) a wholly owned subsidiary of Biocon.