Is the Indian biotech industry chugging slowly out of the
recessionary mode? This is a question that has been asked within the
industry for some time now. Some partial answers are available with the
results of the 8th BioSpectrum-ABLE Biotech Industry Survey. The
highlights are available in this issue of BioSpectrum.
The industry has achieved a modest growth rate of 17 percent to cross
the Rs 14,000 crore mark for the first time in 2009-10. Will the
industry go back to the days of heady growth of 30 percent or more in
the near future? Most industry leaders agree that the industry is
maturing and an annual growth of around 20 percent will be something
everyone will be extremely happy with.
There are reasons for this mature approach. One, the industry's base
has been increasing and so high growth numbers are not very easy to
achieve. Two, the growth is based mainly on the good showing by the
BioServices and BioAgri sectors with the dominant BioPharma segment not
in a position to keep pace with the rest of the industry.
As a globally connected industry, with 53 percent of the revenues
coming from exports, in dollar terms the overall industry size has been
fluctuating with the value of the US currency. Thanks to the
depreciation of the Rupee in the last 12 months, the export-dominant
industry has raked in good numbers to cross the $3 billion mark for the
first time. However, the expectation of reaching $5 billion in revenues
in 2010 has not happened. Biotech is not the first industry in the
country to go through such a phase. What is heartening is-the
biotechnology ecosystem has become strong in the last five-six years.
Two key players who are part of the ecosystem are the technology
providers to the industry and the biotech education sectors. The
revenues of these two segments are currently not counted as part of the
survey for industry size. These two segments will have revenues close
to $1 billion and they too are on way to make strong recovery thanks to
the increasing investments in the biotech industry, by government-led
infrastructure building and industry investments.
There has been some churn in the BioSpectrum-ABLE Top 20 list with
Biocon regaining its No.1 slot after four years thanks to some good
revenues from its European operations and also the market acceptance of
its recently introduced innovative products. The survey has captured
the revenues of more than 60 companies this time, compared to only 50
in the previous years. With just a few publicly listed companies,
revenue details are hard to get and in the case of many private
organizations, BioSpectrum team has estimated the revenues based on
information gathered from multiple sources.
BioServices sector is clearly a strong player now and there is now a
move towards further expansion to become regional players. So, many of
these companies are in the process of expanding their footprint to
South East Asian countries and this has become a differentiator for
many. The trend will continue for some more time, along with a drive
for consolidation too within the industry.
The moratorium on Bt brinjal and the uncertainty over regulatory
approval for genetically-modified (GM) foods has not had much impact on
the BioAgri industry's performance last year. The industry is waiting
for the correct signals from the regulator and the recent regulatory
approval to conduct field trials of 17 crops has sent out mixed signals
about the future prospects for this sector. Also, the added public
scrutiny over GM products due to the relentless campaign against Bt
brinjal has added to the misery of the industry. There is now a clamor
for further reduction in prices of Bt cotton with the demand to scrap
the technology fee charged by the innovator. This is certainly a sector
that is in for some interesting times ahead.
Overall, there is cautious optimism within the biotech industry and the
recent government efforts to boost the infrastructure and support for
various industry initiatives have been highly appreciated. I am
inclined to believe that the worst is over for the industry and things
can only go well from here.