Sunday, December 17

A Report on India Biopharma Industry

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Abstract

The biopharma sector makes for a huge part of the Indian biotechnology industry—$1.9 billion in 2009-2010 to be precise, accounting for 60% of the $3 billion revenues of the biotech industry as a whole. Vaccines are of largest share among biopharma products with 60% contribution. Government of India is giving support to this industry by providing funds to promote growth through its initiatives like Biotech Industry Partnership Programme (BIPP), and Biotech Industry Research Assistance Programme (BIRAP).With world class R&D facilities and cost cutting capabilities India is attracting contract research outsourcing projects which is an add-on to the biopharma sector growth .The world has understood the value of India as R&D hotspot and they simply cannot lose the opportunity of being in India.

Introduction

India has an enormous potential in becoming a leading player in the global biotechnology industry. The Indian biotech sector stands 4th in terms of volume and 13th in terms of value. The sector is one of the fastest growing knowledge-based sectors in India and experts predict that biotechnology is going to play a key role in shaping India’s rapidly developing economy.

Strengths

  • India’s scientific knowledge pool stands at 3 million graduates, 700,000 post-graduates and 1,500 PhD’s. A comparison of several countries shows that these numbers are increasing in India annually at a faster rate than in other countries. India is estimated to add 690,000 graduates annually which is significantly higher than in China, Japan, the United States, or Europe.

  • The cost differential for drug discovery between the United States and India is around 75%. In India, a drug discovery process may be around USD 200 million in versus USD 800 million in the US

  • Clinical trials cost 30% less to carry out in India than in Australia and about 50% less than in the US.

Limitations

  • Administration of resources supporting biotech research and development

  • Lack of awareness regarding biotech practices

In India, the biotechnology sector can be divided into five categories: biopharma, bio-services, bio-agri, bio-industrial, and bioinformatics.The biopharma sector leads the pack having generated 65% of the total industry’s revenue [1]. Domestic firms dominate this sector, accounting for fourteen of the top twenty firms.

The biopharma sector is comprised of 200 companies involved mainly in the production of vaccines, therapeutic drugs, animal biologicals, statins and diagnostics. Vaccine production is the most profitable, with five of the top ten companies in the biopharma segment dealing primarily in vaccines. Vaccines account for approximately 60% of total biopharma products. India has a handful of dedicated biopharma companies which manufacture monoclonal antibodies (MAbs) which primarily include cancer drugs, insulin, growth hormones, and cell culture to produce vaccines. India is one of the largest producers of traditional vaccines in the world comprising mainly of pediatric vaccines such as Anti Rabies Vaccine, Oral Polio Vaccine, and Hepatitis B Vaccine.

Support from Indian government

The biopharma sector has been largely start-up ventures. The establishment of an independent Department of Biotechnology within the Ministry of Science and Technology as early as 1986 helped in creating a scientific workforce, a large infrastructure network, and strong support to R&D in life sciences. In September 2007, the government approved the National Biotechnology Development Strategy, which seeks to build coherence and connectivity between disciplines, bring together the variegated skills across sectors to enhance synergy and address a number of challenges.

The Union government has come out with several schemes to give a fillip to the biopharma sector. It has allocated funds to promote growth through its initiatives like Biotech Industry Partnership Programme (BIPP), Biotech Industry Research Assistance Programme (BIRAP) along with the Small Business Innovation Research Initiative (SBIRI) scheme to boost public-private-partnership effort and New Millennium Indian Technology Leadership Initiative (NMITLI) financial assistance schemes.

The tax incentives like Weighted deduction of 200 percent on R&D expenses(so as to attract more investments in R&D),Excise duty on formulations maintained at 4 percent, number of patent and Drug Master Files filed with USFDA (2101 DMF’S) in recent years, agreement with WTO TRIPS(so as to protect new inventions from being copied and manipulated) has given a boost to the fast growing biopharmaceutical industry. The new patent law, tax regime, skilled labor force, it’s evident seriousness in building a biotech industry and amendment of schedule Y of drugs and cosmetics act rule 1945 has paved the way for the western investment. 

 Vaccines

Vaccines had the largest pie in biopharma with an estimated sales of Rs 2,180 crore over last year’s figure of Rs 2,000 crore. The vaccine segment, human as well as animal vaccines     accounted for approximately 60 percent of the total BioPharma market. Total estimated sales from the human vaccine business stood at Rs 1,750 crore over the 2008-2009 figure of Rs 1,550 crore. Domestic sales of human vaccines just about crossed Rs 1,000 crore. In FY 2008-2009 this figure stood at Rs 900 crore .

Exports

Export sales is estimated to have generated Rs 750 crore, as compared to Rs 650 crore in FY 2008-09. Animal Vaccines registered a marginal decline with sales of Rs 430 crore over last year’s figure of Rs 450 crore. In animal vaccines, poultry vaccines clocked Rs 220 crore, cattle and sheep vaccines registered Rs 210 crore. The vaccine market will continue to drive the growth of the biopharma segment growing in the range of 10-13 percent in the next 5 years. The factors that will drive this include education and awareness about disease prevention, increase in disposable income and participation by government.

Diagnostic market segment

Driven by a rise in chronic diseases and investments in the healthcare infrastructure, diagnostics and therapeutics business also had a positive impact on the industry. The diagnostic market is estimated to be at Rs 2,000 crore with molecular diagnostic market share at $300 million in FY 2009-2010. This accounts for 20-22 percent share of the total BioPharma market. A highly competitive segment, the market currently is growing at 15-20 percent with a 50:50 revenue share split between MNCs and homegrown companies. Major MNC companies in the diagnostic market include Roche, Siemens (which has acquired Bayer Diagnostics) and Abbott while homegrown names in the top league include Tulip Group, Transasia Biomedicals, RFCL (Diagnova), Span Diagnostics and Trivitron. This growth is driven from the gradual acceptance of the concept of preventive and personalized medicine. The therapeutics market claimed 15 percent of market share in FY 2009-2010 with the cancer therapeutics sales clocking Rs 311 crore

                                      Biopharma total sector wise revenues (2009)

Sector

%  Revenue share

Vaccines

60

Diagnostics

20-22

Therapeutics

15

Others

5

Total Biopharma Revenues

100

Clinical Research Organizations

Clinical research is currently in the news for its immense business potential in India with the focus of clinical research outsourcing to India shifting from cost advantages to quality in conducting clinical trials and data management services, and rapid response. A number of contract research organizations (CROs) like GVK Biosciences Pvt Ltd, Lotus Labs etc., encouraged by the recent regulatory reforms, are setting up operations in India. 

The total market value of clinical research performed in India in 2001-02 was about $70-80 million.  The Confederation of Indian Industry predicts that it will grow to $200 million by 2007 and anywhere between $500 million and $1 billion by 2010

Mergers & Acquisitions

Almost a dozen deals must have been signed during January-June 2008 alone. These are cross-border deals as well as deals within the companies in India:

  • Ranbaxy acquired by Daiichi Sankyo (Japan)

  • RFCL acquires Bremer Pharma (Germany)

  • Manipal AcuNova acquires -Ecron (Germany)

  • Jubilant Biosys-Forest Laboratories (US) -Merger

  • Intas Biopharmaceuticals acquires Biologics Process Development (US).

Contract research out sourcing

A strategic partnership between the pharma and biotech industries has led to new innovations and biopharma industry is leading contract research market. The contract research outsourcing activity is expected to increase in the clinical trials stage. Emerging regions such as India, China, Latin America and Central and Eastern Emerging regions such as India, China, Latin America and Central and Eastern Europe will drive the market by providing cost advantage . The market is driven by the increasing R&D expenditure and a strong need in the biopharmaceutical industry to improve R&D efficiency by cutting costs.

These partnerships help biopharmaceutical companies in reducing the time to approval by approximately a month and reducing costs by about 15-20% [7]. Therefore pharmaceutical companies will rely on the contract research organizations across the world to enhance their product pipeline strength by bringing drugs to approval faster. Contract research outsourcing market will continue to grow at a rate of 13%, driven by the Demand from the Biopharmaceutical Industry

 Competition from China

Of the $ 71 billion global biopharma market,India is just $2 bn  where as China is towering $10 bn.India has only12 internationally recognized biotechnology companies like Biocon, Bharat Biotech, Ranbaxy and Reliance Life Sciences.The Chinese  government has built more than 100 biotechnology parks ( one of them is Shanghai Zhangjian High Tech Park )that have attracted multinational companies. Many local Chinese biopharma companies, meanwhile, are collaborating with international companies leading to speedy enterprise development and focus on R&D. China is also providing successful at attracting foreign venture capital.

Biopharma to be 200 billion dollar industry by 2020

Indian biotech sector has reached an inflection point as it is close to achieving the US$ 5 billion mark and targets US$ 10 billion in 2015.Going by the scientific expertise here in the country, there is room for intellectual capital and a requirement for smart and low cost innovations.

Indian BioPharma industry to grow over 10% for next 5 years.Biopharma is a booming sector in India and it is growing at 15% annually. By 2020, the market is projected to be worth over $200 billion.

Conclusion:

Biopharma revenues could increase to a formidable USD 25 billion by 2015. India’s vast pool of skilled manpower, huge patient base and relatively low costs drives many global biotech giants to partner, acquire or outsource to Indian companies. Likewise, some of the larger Indian companies have even begun acquiring foreign entities in the Unites States and Europe, to retail their products and expand product offerings.(See mergers and acquisitions in this report)

The success of Indian companies in reducing the prices of drugs, has made most multinationals realize that it is now impossible to ignore India

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