CHAPTER-3

HEALTH BIOTECHNOLOGY FIRMS IN INDIA: EVOLUTION, STRUCTURE AND GROWTH

3.1 Introduction

The focus of the thesis being on the health biotechnology, the present chapter

portrays a comprehensive dimension of the Indian health biotechnology industry. The

chapter analyses the evolution, structural characteristics, activities and developments

shaping innovation and growth of Indian firms in health biotechnology.

The present chapter is divided in to four sections. The first section highlights the

status of the Indian health biotechnology sector and its salient achievements. The second

section presents analysis or profile of the Indian health biotechnology Industry. The third

section discusses the growth, investment and expansion plans of the biotech industry in

general and the health biotechnology segments such as biopharmaceuticals and

bioinformatics in particular. The concluding section presents the broad discussion and the

issues involved therein.

3.2 Status of Indian Health Biotechnology Sector

Biotechnology has emerged globally as a high growth sector with tremendous

potential for applications in areas of human and animal health, agriculture, environment and

processing industry. In the pharmaceutical sector, advances in the modem biotechnology

have initiated a radical change in the production of new or rare molecules and drugs with

lower costs, novel means for quicker and more accurate diagnostic tests, and new and safer

vaccines (US OTA 1991, UNCTAD 2002, Arora et al2003). Globally, the health sciences

convergence between biotechnology and pharmaceutical companies is most advanced.

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Biotechnology is leading the new health economy with around 30 of the 200 top selling

medicines worldwide being developed by either biotechno logy com panies alone or in

partnership with the pharmaceutical companies. Out of 30, 40 % are top-selling biologics

blockbusters. (Ernst and Young 2004).

India is making consistent efforts to emerge as a key player in biotechnology and in

recent years there has been active interest and involvement of industry in this area. Indian

biotechnology industry has a strong presence in the Asia-Pac ific region with ranking next to

Australia and China, and is among the Top 12 countries in terms of number of

biotechnology companies in the world (Ernst and Young 2004).

The Indian biotechnology industry like its global counterparts is dominated by the

health sector, the sectoral composition of the biotechnology industry (see Figure 3-1) shows

that the health sector (bio pharma) accounted for 69%, bio services 13%, agricultural

biotechnology II%, industrial applications 5 % and bioinformatics 2% of the biotech

industry revenues during 2006-07 ( Biospectrum 2007).

Fig. 3-1

Sectoral Composition of Biotechnology Industry Revenues, 2006-07

5% 2%

13%

Source: Biospectrum Voi(S) , Issue 6, June 2007.

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• Bio Pharma

• Bio Services

o BioAgri

1 0 Bio lndusrtrial

• Bio Informatics

The importance of the health biotechnology is further derived from the fact that 70%

of the firms in the list of Top 20 biotechnology firms in India are in the health

biotechnology business segment (See .Table 3-8, p 88).

Prominent among India's notable achievements in modem health biotechnology in

the recent years include: the development of a recombinant Hepatitis-B Vaccine, Human

Insulin, Erythropoietin, Granulocyte Colony- Stimulating Factor, Interferon, Streptokinase,

an international patent for solid state fermentation called 'Pia Factor', bioinformatics

software's like 'A vadis' and 'Biosuite'. The first indigenously developed recombinant

Hepatitis-B Vaccine by the company Shantha Biotechnics, Hyderabad drastically brought

down the cost from $16 (imported price) per dose to around 50 cents in India (BCIL 2003,

Kumar et al 2004). The Indian health biotechnology firms have developed niche in the

vaccines segment. These firms operate on low cost- high volume strategy primarily

influenced by the demand from the public agencies and international health organisations

such as WHO for the poor/ developing countries which makes the entry of global pharma

players commercially unviable (See Blume 2005, Archibugi and Bizzari 2005).

The leading vaccme firms in India such as Shantha, Bharat Biotech, Indian

Immunologicals etc are associated with the development and manufacturing of vaccines

through national initiatives involving the Public-Private Partnership (PPP) and also through

the global initiatives with the agencies such as International AIDS Vaccine Initiative

(IA VI), Bill Melinda Gates foundation etc. for developing vaccines in the area of AIDS,

Cancer etc1• (See DBT Annual Report (various years), Palnitkar 2005). As a result, 45% of

the Top 20 biotechnology firms are dominated by the vaccine manufacturers such as Serum

Institute of India, Panacea Biotech, Shanta Biotech and Bharat Biotech etc.

1 For historical account ofthe national vaccine developrpent and Immunization policies shaped by international agendas/global policies ( See Madhavi, 2007).

78

3.2.1 Profile of the Indian Health Biotechnology Industry

The profile of the Indian Health Biotechnology Industry is based upon an analysis

of the databases of 'Directory of Biotechnology Industries and Institutions in India',

2007(latest edition) and 2003 brought out by the Biotech Consortium India Limited (BCIL),

Govel111ilent of India, New Delhi. The analysis of the two periods provide an added

advantage in portraying a comparative scenario including the structural changes in the

health biotechnology development.

3.2.2 Distribution of Biotechnology Firms

The Indian biotechnology industry has significantly increased its presence over the

years (See Table 3-1). More than two fold increase in number of firms was observed during

2007 as compared to the year 2003. The 'Health' remained a dominant biotech sector during

the two periods, though its share declined to 35% in 2007 as compared to 44% in 2003.

Similarly, a decline was also observed in the 'Agriculture' biotech sector over the two

periods. In contrast, the 'Services' sector gained prominence with a second highest share of

32% in 2007 as compared to a marginal share of 0.6% in 2003. It is further observed that

the two sectors present in 2003 namely 'Industrial Biotech' and 'Equipment' were

regrouped/reclassified under the 'Process Industries' and 'Services', resulting in a

significant increase in the shares of the latter during 2007. An interesting feature is the

emergence of 'Biotech Associations' and 'Biotech Parks' during 2007 adding to the

maturity of the Indian Biotechnology Industry.

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Key finns established prior to 1980s like Wockhardt Ltd., Hindustan Antibiotics

Ltd., Lupin Ltd., Gland Phanna, Venkatesawara Hacheries etc., were primarily active in

phannaceutical business and later got diversified into healthcare biotechnology. The last

decade (beyond 1991) has seen the emergence of Dedicated Biotechnology Finns (DBFs)

like Shantha Biotech, Bharat Biotech, Xycton Diagnostics, Strand Genomics (now Stand

Life Sciences), Syngene International etc., and the active participation by phanna majors

like Ranbaxy, Cadila, Reddy Research Foundation, Dabur etc in the health biotechnology.

The first successfully established spin-off company from the Indian Institute of Science

(liSe), Strand Genomics (now Strand Life sciences) also emerged in this period.

Interestingly, subsidiaries of MNCs like GlaxoSmithKline and EillyLilly also emerged on

the scene during this period (beyond 1991). The reasons for the active participation by the

MNCs during this period could possibly be the signing of WTO treaty by India coupled

with the comparative advantages the country offers like cost competitiveness, skilled

manpower etc in the health domain.

There has been a significant increase in the total number of biotechnology finns

during 2007 which could be largely attributed to i) increasing number of phanna finns

established during 80s and 90s, integrating biotechnology in their activity domain, and ii) a

large number of new biotechnology finns established during 2000 and beyond.

Nearly 72% of the total finns were located in four states or regions namely:

Maharastra, Andhra Pradesh, Kamataka and Delhi (See Table 3-2). It is interesting to

observe that the Maharastra being a traditional Phanna hub, could easily integrate

bio~echnology to occupy the top position, while Andhra Pradesh enjoyed the second

position as an upcoming biophanna hub.

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Table 3-2. State-wise distribution of Health Biotechnology firms, 2007

fsl.No. State INo of Firms 1 Maharastra 64 (26%) 2 Andhra Pradesh 46 (19%) 3 Kama taka 38 (15%) 4 Delhi 30 [12%) 5 Gujarat 20 (8%) 6 Tamil Nadu 14 (6%) 7 Haryana 13 (5%) 8 Uttar Pradesh 6 (2%) 9 Goa 5 (2%) 10 West Bengal 2 (1%) 11 Punjab 2 (1%) 12 Kerela 2 (1%) 13 Madhya Pradesh 2 (1%) 14 Orissa 1 (0.4%) 15 Uttaranchal 1 (0.4%)

Total 246 (100%) Note: F1gure m bracket mdJCates percentage.

Source: Own, derived from the BCIL Directory 2007

Incidentally, the two states also hold a large number of S&T institutions thus

enabling networking for technological innovation resulting in clustering of firms in these

two states. In contrast, Gujarat being traditionally known for its large concentration of

Pharma majors like Torrent, Cadila, and Alembic etc has been quite slow to catch-up in

adopting biotechnology.·

The State governments are giVmg a special thrust for the promotion of

biotechnology cluster development by framing liberal/favorable policies, tax and excise

concessions as well as the much needed venture capital support (CMIE 2004, Whittaker et

al 1993). This has resulted in an upsurge of new biotechnology firms especially in States

like Andhra Pradesh, Kamataka and the place "Baddi" in Himachal Pradesh is a recent

witness of this phenomena2 (Chronicle Pharmabiz 2004, www.biotecdesk.com). Perhaps,

this could be one of the reason that the State of Gujarat despite being recognized as a

2 The state of Himachal Pradesh does not figure in the list of health biotech firms probably due to the establishment of regional production units by the incumbent firms to avail the liberal incentives.

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traditional pharma hub along with Maharashtra is yet to catch-up with other states in

adopting Biotechnology. Recently, the Gujarat government has taken several proactive steps

such as evolving biotechnology policy and incentives, establishing biotech parks etc for the

promotion of the biotechnology in the State (See Gujarat State Biotechnology Mission

website).

Table 3-3. Segment-wise distribution of Health Biotechnology firms, 2007

Segment No of Firms

Marketing 126 (58%)

Manufacturing 156 (72%)

R&D 154 (71%)

Consultancy 19 (9%) Others 2 (1%) Total 217 (100%) Note: Figure m bracket Indicates percentage.

Others include Training and Design. Source: Own, derived from the BCIL Directory 2007

It is clear from the above Table 3-3, that majority of the firms are operating in

multiple segments like marketing, manufacturing as well as R&D of Biotechnology

products/processes. Nearly, 10% of the firms such as Avestha Gengrine Technologies,

Biocon Limited, Bharat Biotech International, Bhat Biotech India and Biotech Consortium

India Ltd etc. are active in providing Consultancy and Training.

In addition, the biotechnology firms are working in the multifarious activity domain

such as Recombinant-drugs, Vaccines, Diagnostics, Contract Research, Antibiotics,

Enzymes etc having R&D as a prominent feature (See Table 3-4).

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Table 3-4. Health Biotechnology firms by Activity domain, 2007

Proportion of S.No. Activity Domain Total Firms Firms doing

R&D(%) 1 Diagnostics 66 52 2 Recombinant Therapeutics 40 65 3 Vaccines 38 79 4 Contract Research Organization 18 50 5 Antibiotics 17 71 6 NDDS 14 93 7 Equipment 14 43 8 Instrument and Media 14 36 9 Herbal Extracts 13 31 10 Fermentation 7 86 11 Nutraceuticals 9 33 12 Enzymes 7 86 13 Others 38 79

.. Note: Others mclude finns active m biOremediatiOn, tissue culture, biochemicals, probiOtics, peptJdes, software tools etc

Source : Own, derived from the BCIL Directory 2007

In terms of manpower profile (See Table 3-5), 52% of the firms like RPG Life

Sciences Limited, Iridfrag Limited, Unique Biotech Limited, Xcyton Diagnostics Limited,

Semi Labs Limited and Yashraj Biotechnology Limited etc. have less than 100 employees.

Table 3-5. Health Biotechnology firms by J'otal Employment Size

Employment Size No of Firms 2 to 10 17 (14%) 11 to 50 27 (23%) 51 to 100 10 (8%) 101 to 200 19 (16%) 201 to 300 8 (7%) >300 39 (33%) Total* 120 (100%)

Note: * -Based upon the respondent finns. Source: Own, derived from the BCIL Directory 2007

Nearly 33% of the firms like Span Diagnostics Limited, Biocon Limited, Indian

Immunological Limited, Panacea Biotech Limited, Shanta Biotech, Nicholas Primal India

Limited and Eli Lilly etc. have a strength of more than 300 employees.

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However, other important firms with employee strength ranging from 101-300 are:

Reliance Life Sciences, Bharat Biotech, Vimta Labs, Beacon Diagnostics Private Limited,

Monozyme India, Jupitor Bioscience, Dr. Reddy Laboratories, Venkateswara Hatcheries,

Lupin and BIBCOL etc

In case of Technical employment (See Table 3-6), 63% of the firms like Lupin

Limited, Xcyton Diagnostics Limited, Strand Genomics, Eli Lilly, Yashraj Biotechnology

Limited and Virchow Biotech, etc have less than 50 employees.

Table 3-6. Healthcare Biotechnology firms by Technical Employment Size

Technical employee Size No of Firms

2 to 10 25 (24%) 11 to 50 41 (39%) 51 to 100 13 (12%) 101 to 200 5 (5%) 201 to 300 11 (10%) >300 10 (10%) Total* 105 (IOOo/o)

Note: Based upon the respondent firms. Source : Own, derived from the BCIL Directory 2007

Nearly 12% of the firms such as Reliance Life Sciences, Bharat Biotech, Vimta

Labs, Jupitor Bioscience Limited, Dr. Reddy Laboratories, Venkateshwara Hatcheries

Limited and BIBCOL etc have technical personnel ranging from 51 and 100

Firms such as Shanta Biotech, Torrent Gujarat Biotech Limited, Cadila Healthcare,

Nicholas Primal India Limited and Dabur India Limited etc. have technical personnel

ranging from I 00 to 300. While some of the firms having more than 300 technical personal

are Wyeth Lederle Limited, Hindustan Antibiotics Limited, Panacea Biotech Limited and

Biocon Limited etc.

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Taking into consideration the dominance of small and medium enterprises in the

health biotechnology, the government recently launched a scheme, Small Innovation

Business Research Initiative (SIBRI) in 2006 to enhance their R&D and innovation

capabilities.

Table 3-7. Health Biotechnology firms by type of Alliances by Establishment Year, 2007

Establishment Year No of Firms Indian Prior to 1950 7 1 1951-1960 7 5 1961-1970 5 3 1971-1980 16 5 1981-1990 42 10 1991-2000 64 25 Beyond2000 41 8

Total 182 57 Note: Some of the finns revealed haVJng multtple alhances. Source : Own, derived from the BCIL Directory 2007

No of Alliances Foreign Total

1 2 4 9 3 6 10 15 9 19

21 46 8 16

56 113

. Alliances are a prominent feature among the biotechnology firms irrespective of the

year of establishment (See Table 3-7). The alliances involved contract research, contract

manufacturing, marketing, technology transfer as well as joint R&D agreements. Indian

biotechnology firms exhibited alliances with national institutions like JNU, Delhi; BARC,

Mumbai; NCL, Pune; Bayer (India), IGIB, Delhi and liSe, Bangalore etc. and with

international institutions like Austin Chemical Company (USA); Animal Research Institute

(Australia), Institute of Animal Health (UK) and Vetter Pharma (Germany) etc.

3.3 Growth of Health Biotechnology Industry

In recent years, the Indian · biotech industry has attained a critical mass . in

manufacturing and research services and has doubled in size within last two years. The

industry has grown to US $2 billion (Rs.8541 Crore) in 2006-07 from US $1 billion

(Rs.4745 Crore) in 2004-05. The biotech industry has made a significant progress and has

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reached the stage of Globalization, Maturity and Products (GMP) (see BioSpectrum 2007).

The GMP stage is attributed to several factors such as the maturity attained by the industry

with a sustained growth rate of 30% for over 5 consecutive years, increase in exports, global

alliances and of late mergers and acquisitions etc driving the globalization and increase in

product development and expansion with most of the major companies launching new

products in. the recent past. The Top 20 biotechnology companies offering a variety of

products and services and with significant increase i,n revenues over the years suitably

reflect this GMP trend (See Table 3-8). It is further observed that 70% of Top 20

biotechnology firms in India are in the health biotechnology business. The combined

revenue of the Top 20 firms reached US $ 1.15 billion in 2006-07 accounting for more than

50 % of the total biotechnology revenues.

The GMP trend is further substantiated with the increasing presence of MNCs,

especially in biotechnology sector in India3• The list of Top 20 biotechnology firms also ·

comprised of 30% MNCs firms (See Table 3-8). The biotech industry exports revenues

reached a level of US $ 1.2 billion (Rs 4937 Crores) accounting for 60% of the total

revenues in 2006-07. The biotechnology industry is expected to reach US $ 5 billion by

2010 from the existing US $ 2 billion in 2006-07, with more than 1 million jobs (Bio

Spectrum 2007, Draft National Biotechnology Development Strategy 2005).

The next sub-sections discuss in detail the Biopharmaceuticals and Bioinformatics

segments of the health biotechnology industry followed by a sub-section on Investments

and Expansion plans in health biotechnology industry.

3 According to TIFAC Report (2006); FDI in R&D, there are around !50 MNCs doing R&D in India

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T bl 3 8 T 20 n· t h I F' I I d' 2006 07 a e - • op 10 ec no ogy 1rms n n I a, -Biotech Biotech %

Revenues Revenues change Business Domain

2006-07 2005-06 over Rank Company (Rs. Cr) (Rs. Cr) 2005-06

Serum Institute of 950.95 703.00 35.3

Vaccines and Immuno-1 India biologicals

2 Biocon 823.00 688.00 19.6 Biopharmaceuticals

3 Panacea Biotec 600.00 437.82 37.0 Biopharmaceuticals

4 Rasi Seeds 333.33 309.49 7.7 Agri. Biotech

5 Nuziveedu seeds 226.42 62.52 262.2 Hybrid Cotton Seeds

6 Novo Noi'disk 222.00 175.00 26.9 Pharmaceuticals/Biopharma Venkateswara

190.50 Vaccines and Diagnostics - -

7 Hatcheries kits Indian

157.90 102.20 54.5 Animal and human

8 Immunologicals biologicals Mahyco Monsanto

150.30 391.25 61.6 9 Biotech Agri. Biotech products

10 Glaxo Smith Kline 120.00 94.00 27.7 Vaccines

11 A ventis Pharma 119.65 114.50 4.5 Vaccines/Biotech products Shantha

115.00 82.20 39.9 Biopharma /Health Care

12 Biotechnics products Eli Lilly and

112.00 85.00 31.8 13 Company Pharmaceuticals/Biopharma

14 Mahyco 110.69 117.76 -6.0 Crop testing

108.49 78.05 39.0 .Biological products/ new

15 Bharat Serums generation r- thera:~_eutics

Novozymes South 100.00 83.00 20.5

16 Asia Industrial enzymes

17 Intervet India 80.58 65.52 23.0 Veterinary biologicals Bharat Biotech

70.00 48.10 45.5 Vaccines and

18 International biopharmaceuticals

19 Ankur Seeds 69.50 - - Seeds 20 Advanced Enzyme 69.30 56.00 23.8 Enzymes for multipurpose

Technologies industries

Total 4729.61 3693.41 28.1 Source: B1oSpectrum Vol (5), Issue 6, June 2007.

3.3.1 Biopharmaceuticals

The biopharmaceuticals segment continues to occupy over two-thirds of the total

biotechnology industry in the country. It recorded a market revenue of US $ 1.45 billion

(Rs 5973 Crore) accounting for 70% of the total biotechnology business during 2006-07

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(BioSpectrum 2007). The total biopharma business has witnessed a growth rate of 30%

during the last five years. In fact, the Indian biopharmaceuticals alone have the potential to

reach US$ 2 billion market size by 2010 (Draft National Biotechnology Development

Strategy 2005). The biopharmaceuticals products fall under four broad categories/sectors

namely: vaccines, therapeutics, diagnostics and others, like statins. The vaccine business

(both human and animal health care taken together) is the largest contributor, accounting for

51% of the biopharma market share, therapeutics 16%, diagnostics 12%; the rest 21% is

accounted by others, primarily statins business during 2006-07 (See Table 3-9). The

biopharmaceuticals accounts for nearly three-fourth (75%) of the total exports dominated by

vaccines and statins (BioSpectrum 2007).

Table 3-9. Biopharma Sector-wise Revenues

Sector Biotech Related Revenues (Rs Crores) %Share in

2006-07 2005-06 %Change 2006-07

Vaccines 3053.00 2341.00 30.4 51

Diagonsitics 950.00 905.00 5.0 16

Therapeutics 725.00 640.00 13.3. 12

Others 1245.00 822.00 51.5 21

Total 5973.00 4708.00 26.9 100

Source: Btospectrurn July 2UU

The domestic vaccine market is currently of the order of US$ 100 million and is

growing at the rate of 20% per year (www.biotechsupportindia.com). The key players in

vaccine segment are: Serum Institute, Shantha Biotechnics, Bharat Biotech, Biological

Evans, Cadila, GlaxoSmithKline, Haffkine Bio Pharmaceuticals, Panacea Biotech,

Wockhardt, Indian Immunologicals, Venkateswara Hatcheries etc. These companies are

selling Diptheria, Pertussis, Tetanus (DPT); Diptheria, Tetanus (DT); Tetanus, Rubella,

Hepatitis-B Vaccine; Rabies (tissue culture based); Typhoid vaccines and new generation

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vaccines etc. In the pipeline are the vaccines for protection against Hepatitis-E. Malaria,

Human Immunodeficiency Virus (IDV), Tuberculosis, Leishmaniasis etc, also there are

opportunities for developing recombinant viral vector vaccines and Deoxyribonucleic Acid

(DNA) vaccines.

The therapeutic products are largely consumed in the domestic market and the major

players in this segment include: Shantha Biotechnics, Eli Lilly, Bharat Biotech

International, Cadila Healthcare, Cadila Pharmaceuticals, Intas Pharmaceuticals, Nicholas

Primal, Novo Nordisk, Wockhardt, Biocon, Dabur Research Foundation etc. These

companies are working in the areas of diabetes, tuberculosis, HIV, malaria, cancer, cholera

and heart diseases etc.

The market for the diagnostics is around US$ 100 million and nearly 50% of the

demand is met by the imports (www.biotechsupportindia.com). In the diagnostics segment

there are a handful of companies namely: X-cyton Diagnostics, Accurex Biomedical,

Reametrix, Beacon Diagnostics, Bhat Biotech, Bio-systems Diagnostics, Monozyme India,

Span Diagnostics etc. These companies are selling kits for Pregnancy, Ovulation, estimation

of Thyroid-Stimulating Hormone (TSH), HIV infection, Hepatitis-B Virus (HBV) infection,

Hepatitis-C Virus (HCV) infection, rheumatoid diseases and disorders, cancer (cervix,

colon, prostate, lungs, ·mouth etc.), kidney and lever function tests.

In addition, monoclonal and polyclonal antibodies for disease immunodiagnosis,

tissue typing, clinical assays and research constitute a huge portion of the market. Key

industry players in this space include Lupin Labs, Cadila, Dr. Reddy's Laboratories,

Ranbaxy etc. The animal health biotech market is yet another expanding field. It is

expected to touch US$ 200 million by the 2011 (www.biotechsupportindia.com). MNCs

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and large companies with animal health divisions based in India include Bayer, A ventis

Pharma, Pfizer, GlaxoSmithKline, Wyeth, Wockhardt, Ranbaxy and Alembic.

Some of the companies have developed biotech products or entered into tie-ups with

global leaders to market the biotech products in the country. India today boasts of being the

world's largest producer of recombinant Hepatitis-B vaccine due to the combined strength

of Shantha Biotechnics, Bhart Biotech, Panacea Biotech, Wockhardt and Serum Institute.

India is also emerging as a global player in recombinant Human Insulin where companies

like Biocon and Wockhardt are the lead runners. Following the Biologics like Streptokinase,

Granulocyte colony-stimulating factor (GCSF), Interferon, Erythropoietin (EPO) and others

are all set to gain market share in the near future. A list of the biopharmaceuticals products

manufactured in India by Indian firms may be seen in Table 3-10 below

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Table 3-10 Biopharmaceutical Products in India

Sector Type Product N arne Application Producer

Vaccines Recombinant hepatitis B surface antigen Shanvac B Hepatitis B Shantha Biotechnics Recombinant hepatitis B surface antigen Revac- B Hepatitis B Bharat Biotech Recombinant hepatitis B surface antigen Gene Vac- B Hepatitis B Serum Institute of India Purified capsular polysaccharide Vi of Salmonella typhi TypbarVi Typhoid Bharat Biotech

Therapeutics Recombinant human insulin Wosulin Diabetes Wockhardt (Mumbai) Recombinant human erythropoitein a Epox Anemia Wockhardt Recombinant human interferon a-2b Shanferon Cancer Shanta Biotechnics Recombinant streptokinase Shankinase Cardiovascular Shanta Biotechnics

Indikinase Cardiovascular Bharat Biotech Liposomal amphotericin B injection Fungisome Visceral Life care Innovations

Leishmaniasis (New Delhi) Recombinant human granulocyte colony-stimulating factor Gramstim Neutropenia Dr. Reddy's Laboratories

Diagnostics Immunoblot assays using recombinant HIV -1 antigens HIVTRI-DOT HIV-1 and HIV-2 J. Mitra (New Delhi) gp41 and C-terminus ofgp-120 and HIV-2 antigen gp-36

Immunoblot assays using recombinant HIV -1 antigens HIV-HCV Combo HIV and Hepatitis C Bhat Biotech India gp41 and gp-120, HIV-2 antigen gp-36, and HCV antigens

NS-3, Nc-4 and NC-5 (Bangalore)

Enzyme-linked immunosorbent assay for recombinant HEP-Chex C Hepatitis C Xcyton Diagnostics HCV core antigens 1 b & 3g, together with peptides for (Bangalore) HCV antigens NS_3, NS-4 1, NS-4 2 and NS-5

Enzyme-linked immunosorbent assay for recombinant Cysti-Chex Neurocysticercosis Xcyton Diagnostics version of Taenia solium excretory/secretory antigens

Source: Chaturvedt, S. (2007)

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3.3.2 Bioinformatics

The Indian bioinformatics sector is gradually trying to gamer a good share of the

global revenues and has grown to Rs. 145 Crore in 2006-07 as against the previous year

figure of Rs. 120 Crore with more than 80% of it being accounted by exports. It is a

promising sector for Indian entrepreneurs with the developments going beyond the

genomics and proteomics zone. The bioinformatics industry is mushrooming around the IT

service centers and as a result a lot of companies have come up in the Southern part of India

viz., Bangalore, Hyderabad and Chennai vis-a-vis very few companies in the North. Some

of the major players in the south are: Jalaja Technologies, Infosys, K.shema Technologies,

IBM India, Strand Life Sciences (erstwhile Strand Genomics), TCS and GVK Biosciences,

etc. In the North, companies active in this area are Mascon, Labvantage solutions, SAS

India and V life Sciences Technologies etc.

The· sector has recently witnessed enormous activities in terms of launching new

tools, opening an overseas subsidiary, acquisitions and getting funds from financial

institutions, The successful products launched in this area are 'Biosuite' by Tata

Consultancy Services (TCS) and 'Avadis' by Strand Life Sciences. The product Avadis was

successfully licensed to the company Abgenix, and a co-distribution agreement has also

been signed with a Japanese company and more recently the company has launched new

modeling and deployment platform- Sarchitect. Another company, VLife Sciences, Pune

has been selected by the Industrial Toxicology Research Centre (ITRC), Lucknow to

develop software for their computational research while TCS bagged a multi-million dollar

contract from the US based life sciences firm, Sequenom. Yet another company, Ocimum

Biosolutions, raised the funds from the International Finance Corporation (IFC) to the tune

of US $ 6.5 million. Further, the company acquired the biomolecules business of Isogen

Life Sciences, Netherlands and has also set up a German subsidiary in Ebersberg to expand

foothold in the European Market.

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3.3.3 Investments and Expansions:

Spurred by the state and national government support, a series of investment and

expansion activities have beeri initiated by the industry like: The Company, Biocon plans to

invest around US$113 .5 million over the next three years to expand its statins facility and to

increase the number of scientists in its contract research organization, Syngene. Ranbaxy,

India's largest pharma company is planning to enter the biotech segment with investments

of around US$ 50-60 million. Lupin is expanding into biotechnology via acquisitions while

Intas Pharma is also making a foray in this segment. MNCs Roche Scientific India plans to

invest US$ 7.5 million in India for conducting clinical research operations. India is already

a center for conducting regional trials for Roche Interferon cancer drug "Pegasys". Of late,

various biotechnology companies such as Wockhardt, Nicholas Primal and Strand

Genomics etc have been successful in mobilizing foreign investments for the expansion and

R&D activities (CMIE 2004, Biocon 2004, Sharma 2002).

As a result of the 2005 Global Patent Agreement, Indian companies are driven to

innovative research and are establishing their own niche areas like: Reliance Life Sciences

plans to launch genetically engineered skin; A vesthagen Ltd, won a US patent for multiple

use genetic modification technology; GlaxoSmithKiine (GSK) Biologicals plans to launch

number of vaccines like new generation DTP, rota virus and cervical cancer for its global

portfolio; and Xcyton, a small biotech diagnostic kit-maker made its presence felt in the

global and domestic diagnostics market (Ernst and Young 2004, Economic Times 2004). As

several biotech medicines are due to come off patent in the next few years, pharma majors

are looking at India for contracting research and manufacturing of biologic generics. India is

emerging as a knowledge hub and cost-competitive destination for biotechnology research,

product development, toxicity studies and clinical trials and is positioned to take advanta~e

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of the moves by governments in the US and Europe to create a regulatory framework for

approving generic versions (Ernst and Young 2004).

Recently, global alliances and mergers and acquisitions for new product

development, latest technology platforms and entering new markets etc. are driving the

investments and expansion of the Indian biotech companies. For example, Panacea Biotech

signed an agreement with PT Biopharma, Indonesia to manufacture and market the measles

vaccine. This will help boost Panacea's revenues and profit besides widening the product

range. Similarly, Reliance Life Sciences Pvt Ltd, will invest in Gene Medix, a UK based

bio-pharmaceutical company to launch the biosimilars in the EU and US market. Another

company Merieux Alliance from France has strengthened its presence in Asia by acquiring

a majority stake in Shantha Biotech having focus on vaccines, therapeutic proteins and

monoclonal anti-bodies.

Currently, there are 17 recombinant products approved for marketing in India as per

Indian Genetically Modified Organism Research Information System (IGMORIS)

compared to 12 in 2005-06. In fact, all the Top Indian companies have launched recently

new. products such as The Serum Institute of India Limited, launched its indigenously

developed HIB vaccine. Biocon launched BIOMAb-EGFR, a therapeutic monoclonal anti­

body drug for treating solid tumors of head and neck cancers. Dabur Pharma launched

'Nanoxel', a new version of existing anti cancer drug, Paclitaxel, a nano-particle based

formulation for reducing side effects associated with chemotherapy treatment and Bharat

Biotech International launched anti-rabies vaccine, 'Rabirix' for both prophylactic and

therapeutic treatments etc. According to the forecasts for 2010, the size of the bio industry

would be around US$ 5 billion, with about 100 biotech products (domestic and imported) in

the market and with about 50,000 technologies working in the biotech labs.

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3.4 Discussion and Issues

The Indian biotechnology industry like its global counterparts is dominated by the

health sector. The present chapter discussed the important characteristics of Indian health

biotechnology .firms by analysing their evolution, structure and growth.

The analysis revealed that the evolution/growth of health biotechnology firms has its

roots in pharmaceuticals industry, which reflects the phenomenon-taking place globally.

Majority of the biotechnology companies were established after 1980s and this period

incidentally coincides with the initiatives started by the Government during the Sixth Five

Year Plan {1980-85) to set-up a dedicated Department of Biotechnology (DBT) with the

aim to nurture and promote biotechnology development in the country.

The growth of health biotechnology companies gained momentum in post 1990s,

with a phenomenal growth being observed in the post WTO period i.e. 1995 onwards. This

period has seen the emergence of dedicated biotechnology firms (DBF) or start-ups, large

pharmaceutical firms adopting biotechnology, spin--offs from the established pharma majors

like Dabur, Ranbaxy, Reddy, Cadila etc as well as the biotechnology majors like Biocon

and Shantha Biotechnics. Interestingly MNCs subsidiary like Eli Lilly, GlaxoSmithK.line

etc also gained entry during this period. Realizing the potential of health biotechnology,

there has been resurgence in the growth of biotechnology firms mainly due to existing

pharma firms integrating biotechnology in their activity coupled with the establishment of

new biotechnology firms during 2000s.

The growth of health biotechnology firms has largely taken place in clusters. The

results showed a large concentration of companies in the four states namely: Maharashtra,

Andhra Pradesh, Kamataka and Delhi though Himachal Pradesh is a recent witness of this

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phenomenon (Chronicle Pharmabiz 2004, www.biotecdesk.com). Recently, the Gujarat

government has taken several proactive steps such as evolving biotechnology policy and

incentives, establishing biotech parks etc for the promotion of the biotechnology in the state.

The firms that are active in the health sector mainly comprised of medium sized and

newly dedicated biotechnology firms. The activity profile of these firms though quite

diverse is mainly concentrated into the domains of recombinant therapeutics, vaccines,

diagnostics and antibodies. Biotechnology is a kflowledge or research-intensive industry;

the results portend that biotechnology firms irrespective of their size are engaged in multi­

disciplinary R&D activities. Thus, there is a realization by the firms to carry out innovative

research for achieving growth by bringing out new products in the post WTO era which

fully supports the assertion of Whittaker and Bower (1993) (see also Bhattacharya 2004).

Globally, the growth of biotechnology has been characterized by large alliances or

networks of learning. Indian Biotechnology firms have exhibited alliances both with the

national and international organizations and of late even mergers and acquisitions are also

happening4• The dominance of foreign collaborations among the firms reflects the tendency

to catch up with the new or cutting-edge technology or align with the global research

network for higher growth. The Chapter-4 'Morphology of Linkages' (seep 99), brings out

an interesting aspect of the international linkages among the case study firms.

The R&D efforts of Indian biotechnology firms are substantially lower than that of

the global counterparts and one of the prime reasons for this is lack of research

infrastructure as compared to that of other developing countries like Brazil, Taiwan, China

and Israel. However, the biotech industry in the last few years has made considerable

progress in terms of emergence of new growth companies, larger product pipelines,

4 Ramani (2002), study on Indian biopharmaceuticals also supports this assertion

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increased patent filings, large number of global alliances and also mergers and acquisitions5•

Though slowly, there has been a transition to product model by the Indian biotechnology

companies, but India is still a generic market and to achieve the global presence Indian

firms need to have not only the product focus but also should come up with blockbuster

drugs6•

The Indian Biotech Industry is presently characterized by dynamic features such as

high technology, happening industry, firms with global perspective, rising investments and

expansion and committed government support which aptly constitute the right case for the

study of the innovation dynamics of the industry in the NSI framework.

Furthermore, the analysis revealed that R&D and alliances is a common feature of

the firms having biotechnology activity profile mainly concentrated in the domains of

recombinant therapeutics, vaccines, diagnostics and antibodies. Literature shows that the

linkages among the various actors, the key characteristic of the National System of

Innovation (NSI) is more prominent in a knowledge-intensive sector such as Biotechnology,

as the desired capabilities of innovation reside in multiple actors and not in one single actor.

In view of this assertion, the next chapter analyzes the linkages or interactions of the case

study health firms in the national biotechnology innovation system while addressing one of

the central questions of the thesis. It primarilY, explores the morphology of firm linkages

namely the nature, type and the direction in the health biotechnology innovation system.

5 see Thorsteinsdottir, H et al (2006), Quach, U et al (2006), BioSpectrum (2007), Frew et al (2007), Ernst and Young (2007). 6 see en 2004a.

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