source - ibef · 2016-02-22 · source: planning commission, reserve bank of india, aranca research...
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Source: Planning Commission, Reserve Bank of India, Aranca Research
Note: R&D - Research and Development
Eighth-largest R&D
investor
• In 2013, India had the world‟s eighth largest annual R&D investment, accounting for 2.7
per cent of global R&D expenditure; this is expected to increase to USD44 million by 2014
from USD40 billion in 2012
Pharma sector driving
R&D growth
• India‟s pharmaceutical industry, which accounts for about 1.4 per cent of the global
pharmaceutical industry in value terms and 10 per cent in volume terms, is expected to
remain a major R&D growth driver
Rapidly growing
overseas investment
• Cumulative overseas direct investments by India has expanded at a CAGR of 43.5 per
cent to USD183 billion during FY14 from USD21 billion in FY08, global car makers are
also looking to move their R&D investments in India
World‟s sixth most
innovative country
• India stood sixth in terms of the most "innovative" country in General Electric's Annual
Global Innovation Barometer in January 2013
Growing demand
Source: R&D spending estimate by Battelle and R&D Magazine, Aranca Research
Notes: F - Forecast, IPR - Intellectual Property Rights, CoE - Center of Excellence, PPP - Public Private Partnership, TRIPS - Trade Related Aspects of Intellectual
Property Rights, NMITLI - New Millennium Indian Technology Leadership Initiative, NIC - National Innovation Council
Robust demand
• Rising income and evolving lifestyles have led to higher demand for aspirational products
• Indian companies‟ investments in R&D is not surprising given the importance of innovation to sustain competitive edge
• Indian players are set to benefit from expiration of patents
Attractive opportunities
• Vast opportunities in IT, pharmaceuticals, automobiles, biotechnology and agriculture
• India is the largest exporter of IT products and has the third largest pharma sector with a fast growing contract research segment
Policy support
• PPP for promoting exchange of scientific knowledge and R&D
• Strengthening educational infrastructure
• Amendments to the Patents Act (1970) to make it TRIPS-compliant
• Setting up of NIC in 2010
• Adoption of Science, Technology and Innovation Policy 2013
High ratings
• Establishment of CoEs in various areas; NMITLI initiative on PPP basis
• Increased investments by private players; setting up of R&D centers
• During FY07–13, IPR applications increased at a CAGR of 11.8 per cent from 137,900 to 269,500
2013
R&D
spending:
USD42
billion
2014F
R&D
spending:
USD44
billion
Advantage
India
Source: Zinnov, Korn/Ferry International, Asia-Pacific Research Center, Stanford University, Aranca Research
Notes: TRIPS - Trade Related Aspects of Intellectual Property Rights, WTO - World Trade Organisation
• Indian Patents
and Designs Act
(1911)
• Dependence on
bulk imports
• Establishment
of CSIR, DRDO,
ICAR, ISRO and
IITs
• Patents Act (1970)
• Recognition of
process patents only
• Restricted foreign
ownership in Indian
companies
• Focus on „reverse
engineering‟ among
pharmaceutical
companies
• TRIPS under WTO
(1995)
• Amendments to the
Patents Act (1970) to
make it TRIPS
compliant
• Reintroduction of
product patents
• Reduction in tariff
and non-tariff
measures
• Easing FDI norms
• Shifting focus in
pharma towards
clinical research and
new drug
development
Before 1970
Introductory Stage
1970 to early 1990s
Indigenisation
Stage
Early 1990s to 2005
Liberalisation and
Transition Era
2005 onwards
Growth Era
• Augmentation of network of centrally-
funded institutions and universities
• Increase in R&D and exports in
sectors such as IT, pharma,
electronics and automobiles
• Innovations in automobiles such as
Nano, the world‟s least expensive car
• Numerous innovations from rural India
• Setting up of National Innovation
Council
• Adoption of Science, Technology and
Innovation Policy 2013
• Between January 2005 and December
2014, India granted 3,575 patents to
foreign companies against only 1,039
patents to domestic firms in the
pharmaceuticals sector
Source: Department of Industrial Policy
and Promotion, Aranca Research
Intellectual
Property (IP)
Patents
Trademarks
Geographical
Indications
Industrial Designs
Layout Designs
Plant Variety
Protection
Copyright
Source: Battelle, Aranca Research
Notes: GERD - Gross Domestic Expenditure on R&D,
R&D - Research and Development
Forecasted expenditure of world‟s leading R&D
investors in 2014 (USD billion) In 2013, India was the eighth-largest country in terms of
R&D investments, retaining its 2012 position
It is expected to retain its eighth position in 2014, with R&D
investments increasing to USD44 billion from USD42 billion
in 2013
R&D investments has helped Indian companies to
overcome tight competition with affordable products
internationally
33
40
44
44
52
63
92
165
284
465
Brazil
Russia
India
United Kingdom
France
South Korea
Germany
Japan
China
United States
Source: Battelle, Department of Science and Technology,
Aranca Research
Notes: CAGR - Compound Annual Growth Rate,
PPP - Purchasing Power Parity, F - Forecast
R&D spending in India (USD Billion) India‟s share of global R&D spending rose to 2.7 per cent in
2013 from 2.6 per cent in 2012 and is forecasted to be at
2.7 per cent in 2014
India‟s R&D investment growth is likely to outpace overall
GDP growth. During 2012–14, R&D spending (in terms of
PPP) is expected to expand at a CAGR of 4.9 per cent to
USD44 billion, while GDP (in terms of PPP) would increase
at a CAGR of 4.4 per cent
The Planning Commission of India expects to double the
government‟s R&D spending from the current 0.9 per cent
of GDP to 2 per cent by 2017
In developed and emerging economies, the ratio of private
and public sector investments in R&D is generally around
2:1. However, in India, as per recent estimates, private
sector investments in R&D stand at just about half of that of
the public sector, indicating huge potential for private
players
40
42
44
0.84%
0.85%
0.85%
0.81%
0.84%
0.87%
38
40
42
44
46
2012 2013 2014F
R&D expenditure (PPP) As a % of GDP -RHS
Source: Reserve Bank of India, Battelle, Aranca Research
Cumulative overseas direct investment
(USD billion)
Cumulative overseas direct investments increased to
USD183 billion in FY14 from USD21 billion in FY08
This has led to significant amount of technology transfer
through industrial acquisitions
For instance, Tata Steel‟s takeover of Corus brought with it
more than 80 patents and 1,000 researchers
21
38
56
100
125
146
183
FY08 FY09 FY10 FY11 FY12 FY13 FY14
Source: Department of Industrial Policy and Promotion
Aranca Research
Note: FY14* - Up to December 2013
Break-up of Intellectual Property Rights (IPR)
applications (FY14*)
During FY14*, the total patent applications stood at 186,000
Trademark applications accounted for the largest share (79
per cent) of total applications at 147,174 in FY14*
Patent and design applications accounted for 17.4 per cent
(32,425 applications) and 3.4 per cent (6,410) share,
respectively
17%
4%
79%
Patent
Design
Trade markapplication
Source: Department of Industrial Policy and Promotion
Aranca Research
FY14* - Up to 31st December 2013
Intellectual Property (IP) applications („000) During FY07–13, Intellectual Property Rights (IPR)
applications increased at a CAGR of 10.1 per cent from
137,913 to 246,240. There were around 186,071* IPR
application in FY14
Trademark applications expanded at a CAGR of 11.1 per
cent over FY07–13 to 194,216. There were around
147,174* trademark application in FY14
Patent and design applications rose at a CAGR of 7.1 per
cent each, during the same period
Growing IP application activity indicates increased in-house
R&D and innovation in India
0
56
112
168
224
280
0
50
100
150
200
250
FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14*
Patent-LHS Design -LHS
Trade mark application -LHS Total IPR applications -RHS
191
297
517
699
780 871
1,031
Pre 2000 2002 2004 2006 2008 2011 1H2013
Source: Zinnov Consulting, The Indian R&D Landscape, 2012 and Attrition,
Hiring and Salary Increase Study, 2013, Crossing the value chasm
Notes: CAGR - Compound Annual Growth Rate,
R&D - Research and Development
MNC R&D centers in India The number of MNC R&D centers in India has grown at a
CAGR of 14.4 per cent to 1,031 over 2000-13, with an
overall employment base of 244,000
Around 30 per cent of the top 1,000 global R&D spending
organisations have centers in India
MNC captive centers in India along with Indian providers of
engineering R&D outsourcing account for nearly 23 per cent
of the overall global engineering R&D outsourcing market
Most of the centers are located in metro cities – Bengaluru,
Delhi, Mumbai, Chennai and Hyderabad. However, MNCs
have begun spreading out to tier-2 cities after 2005
India‟s robust talent pool of over 200,000 engineers has
grown at an average rate of 9 per cent over the last five
years; this has been supporting increased R&D activity
45 per cent of the world's top 500 R&D spenders invest in
India
India has benefitted from alliances with foreign companies
with our scientists and researchers getting exposed to the
latest, state-of-the-art foreign technologies
CAGR: 14.4%
Source: Zinnov Consulting, Attrition, Hiring and Salary
Increase Study, 2013
Notes: CAGR - Compound Annual Growth Rate,
R&D - Research and Development
YoY- Year on Year
MNC R&D centers distribution in India (2013) Bengaluru (erstwhile Bengaluru) has 39 per cent of MNC
R&D centers, followed by Mumbai and Pune at 19 per cent
Until 2005, Tier-1 cities were the favorite destination for
MNCs due to the availability of rich talent, favorable
policies, and better quality of life
However, post-2005, MNCs have started expanding to Tier-
2 cities, as they offered benefits such as higher catchment
area, lower attrition, and cost arbitrage
Total R&D talent pool in 2013 stood at 244,000 having a 11
per cent YoY growth
R&D related investments and processes attain easier
approval from regulatory authorities globally. This has also
increased focus on new generics
Bengaluru 39%
Mumbai/ Pune 19%
Hyderabad 12%
NCR 13%
Chennai 11%
Others 6%
Source: Financial Express, Value Notes, Aranca Research,
Notes: R&D - Research and Development,
IT - Information Technology; CAGR - Compound Annual Growth Rate
R&D outsourcing in India (USD Billion) Companies across sectors (such as IT, consumer
electronics, personal devices, medical electronics, telecom
and automobiles) are now offshoring complete product
responsibility
India has become one of the most preferred location for
engineering offshoring
By 2020, USD42 billion worth of work related to R&D of
product engineering is expected to be outsourced to India,
growing by a CAGR of 22.7 per cent from 2003 1.3
18.3
42.0
2003 2014 2020
CAGR: 22.7%
Source: Zinnov- Crossing the value chasm
Notes: R&D - Research and Development
Number of R&D centers for global 500 companies, 2014 Only four of the top 50 global companies do not have R&D
presence in India, Apple being one of the four
The top 500 R&D spenders contribute over USD577 billion
with the top 100 R&D spenders alone contributing 66 per
cent to the global R&D spend
R&D spending by top pharmaceutical companies in India is
up 20.6 per cent in FY14
46
83
52 45 28 20
4
17
48 55 72 80
Top 50 Top 100 100- 200 200-300 300-400 400-500
Present Not present
Encouraging the private
sector
• The benefit of section 10 (23 G) of the IT Act has been extended to financial institutions
that provide long-term capital to hospitals with 100 beds or more
• Government is encouraging the PPP model to improve availability of healthcare services
and provide healthcare financing
Encouraging
investments in rural
areas
• The benefit of section 80-IB has been extended to new hospitals with 100 beds or more
that are set up in rural areas; such hospitals are entitled to 100 per cent deduction on
profits for five years
• Government has allocated USD550.81 million for agriculture research in Union Budget of
2013-14
• Two more agricultural institutes will be established in states of Jharkhand and Assam
Source: Union Budget 2013-14, Health Ministry, Aranca Research
Tax incentives • Customs duty on life-saving equipment has been reduced to 5 per cent from 25 per cent
and exempted from countervailing duty
• Import duty on medical equipment has been reduced to 7.5 per cent
Incentives in the
medical travel industry
• Incentives and tax holidays are being offered to hospitals and dispensaries providing
health travel facilities
Source: Organisational websites, IP India, Aranca Research
Notes: R&D - Research and Development; IP – Intellectual Property, *This list is indicative
Organisation Business description
Council of Scientific and Industrial Research (CSIR)
• CSIR is India‟s largest R&D organisation, with 39 laboratories and 50 field stations. In FY12, CSIR had over 1,872
active patents in India, 813 in the US, 328 in the EU, 147 in Japan and 829 in other countries
• It is engaged in scientific industrial R&D for economic, environmental and societal benefits for the country
• Its research areas span across aerospace, biotechnology, chemicals, energy, foods, information dissemination,
leather and metals, minerals and manufacturing etc.
• It has filed highest number of patents in FY2013
Defence Research and Development Organisation (DRDO)
• DRDO is engaged in design and development of weapon systems and equipment in accordance with the
requirements of the military services
• In 2012, DRDO had a network of 50 labs and establishments to carry out research. It has over 5,000 scientists and
about 25,000 other scientific, technical and supporting personnel
• Its research areas include aeronautics, armaments, combat vehicles, electronics, instrumentation engineering
systems, missiles, materials, naval systems, advanced computing, simulation and life sciences, ballistics test
facility got inaugurated in Ramgarh
Indian Council of Agricultural Research (ICAR)
• ICAR is one of the largest national agricultural organisations in the world. It consisted of 99 institutes and 53
agricultural universities across India in 2012
• It is the apex body for coordinating, guiding and managing research and education in agriculture, including
horticulture, fisheries and animal sciences in India
Organisation Business description
India Space Research Organisation (ISRO)
• ISRO is engaged in development of space technology and its application to various national tasks, launched
Mangalyan successfully in its very first attempt#
• The organisation has 19 centers across India to pursue R&D activities
• Its research areas include communication satellites for television broadcast, telecommunications and
meteorological applications, and remote sensing satellites for management of natural resources
Indian Council of Medical Research (ICMR)
• ICMR is the apex body in India for the formulation, coordination and promotion of biomedical research and one of
the oldest medical research bodies in the world
• The council has a fleet of 21 institutes, six regional medical research centers and five units engaged in medical
research
• The council‟s research priorities encompass the areas of communicable diseases, fertility control, maternal and
child health, nutritional disorders, and non-communicable diseases such as cancer, cardio-vascular diseases,
blindness and diabetes
Centre for Development of Advanced Computing (C-DAC)
• C-DAC is a premier R&D organisation of the Department of Information Technology (DIT)
• It is engaged in research in the areas of supercomputers, applied electronics, technology, applications and health
informatics
• CDAC has filed 16 patent applications in FY12
Source: Organisational websites, Aranca Research
Notes: R&D - Research and Development, # on 24 September 2014, *This list is indicative
Organisation Business description
Indian Institutes of Technology (IITs)
• It is a group of autonomous engineering and technology oriented institutes of higher education
• In FY13, IITs filed the highest number of patent applications amongst all the institutes and universities in India with
205 applications
National Dairy Research Institute (NDRI)
• NDRI is engaged in research, teaching and extension activities in areas of dairy production, processing,
management and human resource development
• Its research activities focus on improving dairy productivity, innovating milk processing technologies and
disseminating information to the various stakeholders in dairy business to make dairying a self-sustaining business
• In 2012, R&D activities comprised 71 in-house and 46 externally funded research projects, including 20 NAIP
projects in consortium mode with financial outlay of USD7.1 million
Indian Institute of Science (IISc)
• IISc is one of the earliest instances of PPP for a research institute in India
• It is engaged in research in various departments of science such as biological, chemical, electrical, mathematical,
physical and mechanical sciences. A new center for Brain Research is expected to contribute to future growth
• In FY13, the institute filed the third highest number of patent applications amongst all the institutes and universities
in India with 31 applications
Source: Organisational websites, IP India, Aranca Research
Notes: R&D - Research and Development, IP - Intellectual Property, *This list is indicative
Organisation Business description
The Energy and Resources Institute (TERI)
• TERI is engaged in developing solutions to global problems in fields of energy, environment and sustainable
development, has also established research centers in Bengaluru, Goa, Guwahati, Himalayas, Mumbai
• The important research areas include biotechnology, earth science and climate change, technology development,
social transformation, and modelling and economic analysis
Institute of Life Sciences (ILS)
• ILS undertakes basic and translational research in frontier areas of life sciences
• The institute‟s research interests are in the areas of infectious disease biology, gene function and regulation, and
translation research and technology development
Indian Institute for Advanced Studies (IIAS)
• IIAS is a residential centre for advanced research in humanities, social sciences and natural sciences
• Its major research areas include social, political and economic philosophy; comparative studies in philosophy and
religion; education, culture and arts; natural and life sciences; and national integration and nation building
Source: Organisational websites, Aranca Research
Notes: R&D - Research and Development, *This list is indicative
Organisation Business description
Hindustan Unilever Limited
• HUL is credited with innovations in product areas such as structured bar soap, fairness cream, zero alcohol soap,
poly-coated scouring bar for dishwashing, fortified salt, instant tea, critical components for a water purifying device,
and value-added (nature care) tea
• Worldwide, HUL has over 20,000 registered patents and patent applications
• The company filed 57 patent applications and was one of the top Indian patentees in FY11
Tata Steel Limited
• Tata Steel undertakes research in areas such as raw materials and coke, iron and ferro alloys, steel making,
coated products, materials characterisation and joining, materials modelling and product design, and refractory
technology
• The company filed 42 patents in FY12, taking its IP portfolio (filed and granted patents and copyrights) from 32 in
FY2000 to 493
Cipla Limited
• Cipla‟s R&D division focuses on new product development and new drug delivery systems across a range of
therapies
• In FY14, the company‟s total R&D spending stood at USD86 million
• In 2011, Cipla filed 260 patent applications across the globe of which 13 were filed in India
• It is among the top companies domestically in R&D spending
Source: Organisational websites, Aranca Research
Notes: R&D - Research and Development, Growth* - In terms of INR, *This list is indicative
Reaper Windrower
Machine
• For easy and timely
harvesting of
soybean crop
• Prevents shattering
of soybean pods due
to non-availability of
labourers for
harvesting the crop
in time
Hand Operated Water
Lifting Pump
• For convenient
water-lifting at a
good discharge rate
and low cost
• The pump was built
in response to a
dearth of available
pumps that could be
afforded by small
farmers
Bamboo Lathe
Machine
• For stripping off the
outer covering of
bamboo to develop
a smooth surface for
making interior
decoration and utility
items
• Reduces the time
and labour required
to do the job
manually
Pedal Operated
Washing Machine
• For washing clothes
while exercising on
a pedal machine
• An affordable and
convenient way of
washing clothes in
rural India which
experiences
frequent power
shortages
Source: Rediff Business, Aranca Research
Source: Times of India, Economic Times, The Hindu, Defence Now
Notes: ICBM - Inter-Continental Ballistic Missile, DRDO - Defence Research & Development Organisation, HSL - Hindustan Shipyard Limited
INS Vikrant
• India Indigenous
Aircraft Carrier (IAC)
• Total displacement
of over 40,000
tonnes
• Being built by
Cochin Shipyard
Limited
• To be inducted by
2014-16
Agni-V missile
• Successfully test
fired in April 2012
• India joined an elite
group of nations
having ICBM
technology
• Indigenously
developed by DRDO
• To be inducted by
2014-15
Arihant Class
Submarines
• With its launch in
2009, India joined
an elite group of
nations having
nuclear-powered
submarines
• Developed by HSL
Tejas
• Second supersonic
aircraft to be
developed
indigenously by
Hindustan
Aeronautics Limited
(HAL)
• To be inducted by
2015 at a cost of
USD103.1 million
Source: Aranca Research
Note: R&D – Research and Development
Competitive Rivalry
• In a bid to discover the next block buster drug, competition between
the pharma companies are intense
• In addition, expiry of patents will also lead to further competition from
generic drug manufacturers
Threat of New Entrants Substitute Products
Bargaining Power of Suppliers Bargaining Power of Customers
• Huge R&D expenditure
requirement reduces threat of
new entrant
• Government regulation is strict
for this industry
• Bargaining power of suppliers
in this industry is high because
quality of products and timely
delivery matter and there is less
number of quality suppliers in
this industry
• Bargaining power of customers
is low due to undifferentiated
products
• Cheaper generic formulations
pose a threat to healthcare
companies
Competitive
Rivalry
(High)
Threat of New
Entrants
(Low)
Threat of
Substitute
Products
(Low)
Bargaining
Power of
Customers
(Low)
Bargaining
Power of
Suppliers
(High)
Source: Aranca Research
Note: R&D – Research and Development
Competitive Rivalry
• High entry barriers due to the capital-intensive nature of the industry
has reduced competitive rivalry
• Entry of new players in the market has led to increased competition.
However, given the low success rate, rivalry is low
Threat of New Entrants Substitute Products
Bargaining Power of Suppliers Bargaining Power of Customers
• Capital intensive nature of
industry reduces the threat of
new entrants
• Strict government regulation
• Suppliers‟ power is low
because the raw materials are
largely undifferentiated
• Individual buyers do not have
influence on pricing
• However, government price
control enhances buyer‟s
power
• Patent protection stops the
threat of alternative drugs and
chemicals for a period of time
Competitive
Rivalry
(Moderate)
Threat of New
Entrants
(Low)
Substitute
Products
(Low)
Bargaining
Power of
Customers
(Low-Moderate)
Bargaining
Power of
Suppliers
(Low)
Source: Company website, Aranca Research
Note: R&D – Research and Development
• Private players in the industry are making their supply chain efficient and leveraging
economies of scope to reduce cost. One such example is Narayan Hrudayalaya (NH)
where health care is provided at affordable cost. NH reduces cost by
• High procurement of medical supplies
• High-volume by high capacity utilisation and staff productivity
• Good human capital management (i.e. training)
• Leveraging the benefit of Information Technology to reduce cost and improve healthcare
delivery
• Developing new and innovative healthcare services will help players in differentiating
themselves from others
• Healthcare providers are also trying to provide better services to differentiate themselves
• Certain players in industry focus only on providing one kind of health care service to its
customers and gain expertise through research in the area. This also helps them to be the
leader in that service. One such example is Tata Memorial hospital which is focused on
treatment of cancer and provides leading cancer treatment in India
Cost leadership
Differentiation
Focus
Source: Company website, Aranca Research
Notes: R&D – Research and Development,
* - Number is taken from an Panacea Annual Report 2012-13
• Higher emphasis on technological innovations that will improve efficiency and help in
achieving cost leadership. For example, Panacea Biotec has been providing innovative
vaccines at affordable prices across globe
• Investing heavily on R&D to create new and innovative products. For example, Biocon‟s
strong commitment to research has enabled it to bring „first-in-class‟ biologic drugs that will
change the treatment of psoriasis and other autoimmune diseases
• Companies are creating barriers by applying for patents to curb replication of the drug by
other manufacturer. For example, Panacea has been granted 400* patents in India and
worldwide
Cost leadership
Differentiation
Creating barriers
Source: Battelle, Electronics for You, Organisational websites, Aranca Research
Notes: PPP - Public Private Partnership, R&D - Research and Development,
NMITLI - New Millennium Indian Technology Leadership Initiative,
CoE - Centre of Excellence, NIC - National Innovation Council
Policy support
PPP in R&D
Strengthening educational
infrastructure
Amendments to the Patents Act &
Setting up of NIC
Inviting Resulting in
Growing demand
Evolving consumer lifestyles
Liberalisation and increasing competition
Proximity to future
growth markets
Increasing investments
Establishment of CoEs, NMITLI initiative
Providing support to global projects from
India
Increasing corporate R&D investments
Source: Aranca Research
R&D spending by top six pharma giants in FY14
(USD million) India‟s pharmaceutical market is highly fragmented, with
300 large and 18,000 mid-sized and small companies
The country‟s pharma industry accounts for about 1.4 per
cent of the global pharma industry in value terms and 10 per
cent in volume terms
Indian healthcare sector, one of the fastest growing
industry, is expected to advance at a CAGR of 17 per cent
during 2011–20 to reach USD280 billion
This would help drive R&D growth in India; the average
R&D expenditure by Indian pharma companies is close to 6
per cent of total revenues
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PPP in R&D
• Exchange of scientific knowledge between research centers, national laboratories,
institutes of higher learning and the industry
• The Indian Government plans to involve the private sector in R&D mainly for sectors like
vaccines, drugs and pharmaceuticals, super computing, solar energy and electronic
hardware. The govt. has announced to create a USD16 million fund for setting up R&D
units with the help of industries
• The government has shell out a USD1.1 billion public-private partnership fund to support
research and development in India
Funded institutions and
foreign universities
• Increasing the number of Indian Institutes of Technology (IITs) to 16, establishing 3 new
Indian institute of Science Education and Research (IISER) and 30 central universities
• Foreign universities permitted to enter the higher education system in India by establishing
their own campuses or joint ventures with existing universities
• Government allocated a sum of USD762.42 million for medical education, training and
research under the Union Budget 2013-14
Tax incentives
• Government offers 200 per cent deduction for capital and revenue expenditure incurred by
manufacturing companies with in-house R&D
• Income tax exemption of 125 per cent to 175 per cent on donations made to universities,
colleges and other scientific associations
Source: Battelle, Electronics for You, Union Budget 2013-14,
Organisational websites, Aranca Research
Note: PPP - Public Private Partnership
Patents Act • Amendments to the Patents Act, 1970 to make it TRIPS compliant
• Increased incentives to domestic firms to conduct R&D
• Increased likelihood of technology transfer from developed nations
National Innovation
Council (NIC)
• In 2010, NIC was set up to implement strategies for inclusive innovation in India and
prepare a roadmap for innovation over 2010-20, idea is to build a domestic model to cater
to Indian needs
• Tasks of NIC include creating a framework to encourage innovation by central and state
governments, universities, R&D institutions and SMEs
Source: Battelle, Aranca Research
Note: SMEs - Small and Medium Enterprises
Source: Aranca Research
Introduction of STI
Policy 2013
• In January 2013, the government of India introduced the Science, Technology and
Innovation (STI) policy 2013 at the centenary sessions of the Indian Science Congress
held at Kolkata
Vision of STI Policy • The STI policy is aimed at helping India become one of the top five global scientific
powers by 2020, by taking advantage of large demographic pool of engineers and science
graduates
Rising involvement of
the private sector
• STI aims to boost innovation through Research and Development (R&D) led by the Public-
Private Partnership (PPP) mode thereby increase the investments on Research and
Development (R&D) to 2 per cent of GDP by 2017 from current 1 per cent
Increase in human
resources
• The policy seeks to increase the number of full-time R&D personnel by 66 per cent over
2013–17 and expand the number of publications from the current 3.5 per cent of global
share to around 7 per cent by 2020
Source: India Electronic News, Moneycontrol, CNBC, Economic Times, Appliancemagazine.com,
Business Standard, The Hindu, Company websites, Aranca Research
Note: R&D - Research and Development
2013
• Jan 13: DuPont is planning to
double their R&D activities in
India
• April 13: Yamaha announced
the establishment of a R&D
centre in India
• Jun 13: Huawei will be setting
up a new Research and
Development (R&D) centre in
Bengaluru with an investment
of USD150 million
• Jul 13: OneOcean
Corporation has set up
ClipCard Technology (R&D)
centre in India
• Oct 13: Carraro India has set
up a new R&D centre in India
2012
• Mar 12: Aditya Birla Group
launches R&D centre at Navi
Mumbai, developed at a cost
of about USD52 million
• Apr 12: Maruti Suzuki
announces an investment of
USD500 million to set up an
R&D facility at Rohtak
• Jun 25: Chinese equipment
maker Huawei will invest
USD2 billion to set up global
R&D center
• Nov 23: General Electric will
invest USD60 million to
expand its R&D facility; it is
expected to develop 30 new
products by 2015
• Jan 22: Intel India to invest
over USD120 million to
expand its Bengaluru R&D
center
• Mar 07: BASF opens global
R&D center in Mumbai
• Sep10: Valvoline
Communications Ltd (VCL) a
JV between Ashland Inc and
Cummins India Ltd will open
its R&D centers in Ambernath
near Mumbai in Maharashtra
2014
Source: India Electronic News, Moneycontrol, CNBC, Economic Times, Appliancemagazine.com,
Business Standard, The Hindu, Company websites, Aranca Research
Note: R&D - Research and Development
Centers of Excellence
(CoEs)
• The government has set
up CoEs based on the
PPP model for technology
development and transfer,
scientific research, human
resource development and
economic outreach
• CoEs have been set up in
the areas of telecom,
wireless technology, bio-
informatics, lasers and
optoelectronic devices and
nano-electronics
NMITLI
• The programme identifies
areas for development
based on national
consultation and invites
best partners from
institutions, academia and
private sector to play a role
in the process
• NMITLI has initiated 60
largely networked projects
in diverse areas involving
85 industry partners and
280 R&D groups from
different institutions with
investment outlay of
USD114 million
Centrally funded institutes
• The government proposes
to establish 8 new IITs, 3
IISERs, 10 NITs and 20
IIITs
• These institutes together
account for over 80 per
cent of the total PhDs in
engineering in India
• The institutes are also
amongst the top Indian
applicants for patents from
the „institutes and
universities‟ category
Central and foreign
universities
• Government is expected to
have set up 30 new central
universities by 2012
• New universities in 16
uncovered states
• The remaining 14 new
Central Universities will be
set up as world class
centers of excellence at
different locations
• Foreign universities
permitted can enter higher
education system in India
by having their own
campuses or joint ventures
with existing universities
Source: ARAI, Business Standard, India Law Office, Deloitte, Aranca Research
Notes: IT - Information Technology, ARAI - Automotive Research Association of India,
NVH - Noise, Vibration and Harshness
Pharma and healthcare
• Indian healthcare sector, one of the fastest growing industry, is expected to advance at a
CAGR of 17 per cent during 2011–20 to reach USD280 billion
• Contract research is a fast growing segment in the Indian healthcare industry
• Indian pharmaceuticals market is anticipated to expand at a CAGR of 17.2 per cent over
2011-2016 to touch USD27.3 billion
• Indian companies got 81 ANDA approvals from US FDA from period of January-August
2014
Information Technology
(IT)
• India is increasingly seen as a product development destination
• Companies are now offshoring complete product responsibility including complex services
like product management
Automobiles
• Research is being carried out by individual companies as well as industry associations
such as ARAI in various areas such as structural dynamics, safety, NVH and electronics
• India is the sixth largest auto market globally and is poised to become the third largest by
2020
Source: ARAI, Business Standard, Planning Commission,
India Law Office, Aranca Research
Notes: IT - Information Technology, ARAI - Automotive Research Association of India,
NVH - Noise, Vibration and Harshness, DBT – Department of Biotechnology # Announced in budget 2015-16 with a sum of USD16.3 million
Biotechnology
• By FY17, India‟s biotech industry is estimated to increase to USD11.6 billion from USD4.3
billion in FY13
• Protein and antibody production, and fabrication of diagnostic protein chips are promising
areas for investment
• Stem cell research, cell engineering and cell-based therapeutics are other areas, wherein
India will cash in its expertise
Agriculture
• India has the potential to become a major producer of transgenic rice and several
Genetically Modified (GM) or engineered vegetables
• Hybrid seeds, including GM seeds, represent new business opportunities in India based
on yield improvement
• In 12th Five-Year Plan, DBT has proposed to support 10 agricultural universities through
R&D grants to promote R&D on agriculture
• Two agricultural institutes will be established in states of Jharkhand and Assam#
Source: Zinnov - Crossing the value chasm
Notes G500 – Global 500 companies
There is a potential to create 200,000 R&D jobs by Global
500 companies in the next five years
During 2013-18, R&D headcount is expected to increase at
a CAGR of 15.8 per cent
176
366
313
229
489
595
2013 2018
R&D headcount Remaining addressable population
R&D headcount by G500 („000)
Source: Lupin website, Lupin Reports
Notes: API - Active Pharmaceutical Ingredient, CNS - Central Nervous
System, NSAIDS - Non-Steroidal Anti-Inflammatory Drugs,
TB - Tuberculosis, NCE - New Chemical Entity
Patents filed by Lupin Lupin is a renowned pharma player having a wide range of
quality, affordable generic and branded formulations and
APIs
Lupin has emerged as the fifth largest and among the top
five fastest-growing companies in the US
It is one of the world‟s largest manufacturers of TB drugs
and has significant market share in the cardiovascular,
diabetology, asthma, paediatrics, CNS, Anti-infectives and
NSAIDs therapy segments
By FY14, Lupin‟s total patent filing reached 1,762 up from
600 in FY08
The company is amongst the fastest growing in top 10
generic pharmaceutical players in Japan and South Africa
38 26
75
42 60
108
26
84
42 12 41 39
5 14 17
43 47
232
FY09 FY10 FY11 FY12 FY13 FY14
Formulation Patents API/Process patents NCE patents
Source: Lupin website
Notes: CAGR - Compound Annual Growth Rate,
* - Growth in INR terms
Lupin net sales (USD million) Its revenues increased from USD822.5 million in FY09 to
USD1.8 billion in FY14, at a CAGR* of 24 per cent
India formulations business grew by 5 per cent* recording
revenues of USD414 million for FY2013-14 as compared to
USD435 million for FY2012-13
822
1,007
1,271
1,474
1,742 1,839
853
FY09 FY10 FY11 FY12 FY13 FY14 H1FY15
CAGR*: 24%
Source: Office of the Controller General of Patents,
Designs and Trademarks 2012-13 Annual Report,
Company Annual Reports, Aranca Research
Indian IT patent applications (FY13) Infosys is 3rd highest number of patents applications in India
Research activity for different areas is allocated amongst
dedicated labs such as Software Engineering lab,
Convergence lab, Security and Privacy lab, Distributed
Computing lab and E-Com lab
36
40
81
135
162
HCLTechnology
TejasNetwork Ltd.
Infosys
SamsungIndia
TataConsultancy
Source: Company Annual Reports, Aranca Research
Notes: CAGR - Compound Annual Growth Rate,
* Calculated in INR terms
Income and net profit (USD billion) During FY10-14, the company‟s revenues increased at a
CAGR* of 21.84 per cent to USD8.3 billion from USD4.8
billion
During the same period, net profit expanded at a CAGR* of
14.41 per cent to USD1.8 billion from USD1.32 billion
Infosys spent USD144.8 million in R&D expenses during
FY14
Consequently, total R&D spending during FY13 accounted
for 2.0 per cent of total revenue 0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1.6
1.8
2.0
0
1
2
3
4
5
6
7
8
FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 H1FY15
Sales Net Profit - RHS
Source: Company Annual Reports, Aranca Research:
Note: CAGR - Compound Annual Growth Rate,
* calculated in INR terms
Income and net profit (USD billion) During FY11-14, the company‟s revenues increased at a
CAGR of 29.9* per cent to USD13.57 billion from USD8.18
billion
During the same period, net profit expanded at a CAGR of
29.6 per cent to USD3.2 billion from USD1.94 billion
TCS spent USD32.7 million in R&D expenses during FY14,
up 10.5 per cent from the USD29.6 million spent in FY13
0.0
0.4
0.8
1.2
1.6
2.0
2.4
2.8
3.2
3.6
0
2
4
6
8
10
12
14
16
FY11 FY12 FY13 FY14 H1FY15
Sales Net Profit - RHS
19 22
34
21
FY10 FY11 FY12 FY13
Source: Economic Times, Company Annual Reports,
Company website, Aranca Research
Notes: CAGR: Compound Annual Growth Rate,
* CAGR calculated in Indian Rupee terms
Strong research and development (USD million) Incorporated in 1933, HUL is India‟s leading company by
sales in the Fast-Moving Consumer Goods (FMCG) sector
in India. British-Dutch company Unilever owns a majority
stake of 52 per cent in HUL
In 2012, Forbes recognized HUL as the world's sixth most
innovative company; it was the highest ranked FMCG
company in the list
Silver Award for DuPont Global Packaging Award in 2012
for reduction in plastic packaging
Eighteen of HUL‟s brands featured in the „100 Most Trusted
Brands‟ 2012 survey carried out by Brand Equity
HUL was felicitated for receiving the highest number of
patents in 2009 at the Annual Intellectual Property Awards
2010
The company has over 20,000 registered patents and
patent applications worldwide
HUL is also driving innovation in various categories such as
oral care, personal products and soaps & detergents etc.
CAGR*: 8.1%
Automotive Research Association of India (ARAI) Survey No 102, Vetal Hill, Off Paud Road, Kothrud,
Pune - 411 038
Tel: 91-020 30231111
Fax: 91-020 25434190
E-mail: [email protected]
Website: www.araiindia.com
Indian Society for Clinical Research (ISCR) c/o Pfizer center, 5, Patel Estate, S.V.Road, Jogeshwari(West),
Mumbai-400 102
Tel: 91-022 26774140, 66932028
E-mail: [email protected]
Website: www.iscr.org
The South India Textile Research Association (SITRA) 13/37, Avanashi Road, Coimbatore - 641 014
Tel: 91-422 2574367, 6544188
Fax: 91-422 2571896
Email: [email protected]
Website: www.sitra.org.in
API: Active Pharmaceutical Ingredient
ARAI: Automotive Research Association of India
CAGR: Compound Annual Growth Rate
CoE: Center of Excellence
DRDO: Defence Research and Development Organisation
FDI: Foreign Direct Investment
FY: Indian Financial year (April to March)
So FY10 implies April 2009 to March 2010
GDP: Gross Domestic Product
GERD: Gross Domestic Expenditure on Research and Development
HAL: Hindustan Aeronautics Limited
HSL: Hindustan Shipyard Limited
IAC: Indigenous Aircraft Carrier
ICBM: Intercontinental Ballistic Missile
IT: Information Technology
NMITLI: New Millennium Indian Technology Leadership Initiative
NVH: Noise Vibration and Harshness
PPP: Public Private Partnership
PPP: Purchasing Power Parity
R&D: Research and Development
TRIPS: Trade Related Aspects of Intellectual Property Rights
USD: US Dollar
WTO: World Trade Organisation
Wherever applicable, numbers have been rounded off to the nearest whole number
Year INR equivalent of one USD
2004-05 44.81
2005-06 44.14
2006-07 45.14
2007-08 40.27
2008-09 46.14
2009-10 47.42
2010-11 45.62
2011-12 46.88
2012-13 54.31
2013-14 60.28
Exchange rates (Fiscal Year)
Year INR equivalent of one USD
2005 43.98
2006 45.18
2007 41.34
2008 43.62
2009 48.42
2010 45.72
2011 46.85
2012 53.46
2013 58.44
Q12014 61.58
Q22014 59.74
Q32014 60.53
Exchange rates (Calendar Year)
Average for the year
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