Global biotechnology market
Globally, the biotechnology industry, part of the life sciences sector has emerged as an attractive segment and is expected to grow by 37 percent at a Compound Annual Growth Rate (CAGR) of 8.2 percent over the four-year period 2015-19.
This growth, although single digit, is significantly higher than the more traditional segments in the life sciences sector, such as pharmaceuticals (expected to grow at a CAGR of approximately 4 percent during 2015-19).
The global sales contribution of biologic drugs in the total drug market is expected to increase from 23 percent in 2014 to 27 percent in 2020.
The Americas and Europe currently account for the largest share in the global biotechnology market; however, due to favourable government policies; a relatively low cost of conducting clinical trials and manufacturing products; and an improving healthcare ecosystem, higher growth is expected in the Asia Pacific (APAC) region.
Growth drivers of the global biotechnology market
Biotech-based products, including monoclonal antibodies and recombinant products are increasingly being used to effectively treat diseases such as cancer, rheumatoid arthritis, Hepatitis C and diabetes; the increasing prevalence of these diseases is likely to serve as a high-impact driver for this industry:
almost 14 million new cancer cases were diagnosed worldwide in 2012; by 2025, this number will be increase to 19 million new cases per annum
almost 400 million people had diabetes in 2015; the figure is expected to increase to 640 million by 2040
39 percent of the total drugs approved by the US FDA in 2015 were biologic drugs compared with 36 percent in 2014 and 22 percent in 2013; FDA approvals for biopharmaceutical products are expected to increase going forward.
Indian biotechnology market
India is the twelfth-largest biotechnology market in the world with a 2 percent share of the global market; it ranks third in APAC after Japan and China.
The Indian biotechnology sector was estimated at USD5.2 bn in 2015 with exports usually contributing to almost 50 percent of the total sales.
Increase in biotechnology applications providing effective and targeted treatment to patients; and about 400 biotechnology-based drugs and vaccines in clinical trial stage, targeting more than 200 diseases.
India's biotech industry comprises biopharmaceuticals, bio-services, bio-agriculture, bioindustry and bioinformatics. Biopharmaceuticals is the largest segment of the Indian biotechnology market as it accounts for approximately 60 percent of the total biotechnology sector 1 and is likely to remain so in the future as well. Biopharmaceuticals is dominated by vaccines, where India is the global leader by volume.
India's biopharmaceutical segment is one-third of the global vaccine market by volume.2 Further, India is the largest producer of Hepatitis B vaccines in the world.3
The Indian government has been keen to support the biotechnology industry's growth to counteract the threat of neglected tropical diseases. The ‘Make in India' initiative along with other forms of input and assistance, is providing the necessary thrust to the indigenous production of biotech products.
Biopharmaceuticals comprise three main segments - vaccines, diagnostics and therapeutics.
There are as many as 100 players in the biopharmaceutical market in India, dominated naturally by vaccine makers.
The sale of vaccines is expected to get a boost due to high demand from developing countries, and global efforts towards eradication of some diseases.
Therapeutics continue being the focus in Indian R&D, with human insulin being the most common area of research. Several opportunities in biosimilars are opening up for Indian companies with regulatory approval pathways in Europe and the U.S. becoming clearer.
Making a steady shift from traditional vaccines, Indian biopharmaceutical players are now stepping up their focus on biosimilars; several Indian pharmaceutical companies are also focussing on the biosimilar market.
With the FDA signalling changes in its stance on biosimilar medicines, Indian companies are now focussing on the U.S. market to tap this opportunity.
Additionally, Indian biopharmaceutical companies are making strong efforts to launch price-competitive bio-therapeutics and recombinant vaccines - both in India and in semi-regulated markets - likely to boost both revenue and margins.
The Bio-services segment mainly constitutes clinical research organisations that are involved in conducting clinical trials for domestic as well as international pharmaceutical companies.
India, which was once a lucrative clinical trial destination, has now less than 1.5 percent share in global clinical trials (by numbers) due to stringent regulatory laws.
The Drugs Controller General of India has eased guidelines to conduct clinical trials in the country; these relaxations include removal in the restrictions on the number of clinical trials an investigator can undertake at a time, allowing clinical trials in less than 50-bedded hospitals etc.
With R&D cost increasing in developed markets, global pharmaceutical companies are outsourcing research services to enhance their drug pipeline. The average cost of conducting phase I studies in India is 50 percent lower that the U.S. and European nations.
Strategic alliances in the CRO industry has increased in the recent years. For example, a leading contract research and manufacturing organisation and a leading BioPharma company have been working together since 2007 to develop integrated capabilities in medicinal and process chemistry, biology, biotech, biomarkers, drug metabolism, pharmacokinetics and analytics.
Consolidation within the industry is another trend that one has observed in the recent years. For example, a leading Ahmedabad headquartered global lifesciences company acquired a Mumbai based CRO in 2014 to expand its services in clinical data management, pharmaceutical analytics and medical marketing.
The Bio-agri segment mainly includes seed companies as well as technology development companies for seed producers
India has the fourth-largest area covered by genetically modified crops - largely BT cotton.
GM seeds follow a long drawn process of trials and approval. Due to the stringent regulations, only cotton is planted using GM seeds in India.
GM seeds could help improve yield of agriculture products, which can help address the rising food needs of the country
Increase in government interventions:
In March 2016, the government intervened to control cotton seed price in the country.
The government also launched GM Technology Agreement Guidelines, 2016, under which technology providers are required to compulsorily give licence to all applicants.2 However, these guidelines are yet to be implemented in the country.
The Bio-industrial segment primarily comprises enzyme-manufacturing and marketing companies.
India has a very low share in the global industrial enzyme market; however, we are in a sweet spot to leverage this opportunity with our low-cost manufacturing strength and R&D capabilities.
Lack of stringent government mandates have hurt the sector's potential. Interventions are required to promote usage of bio-enzymes.
The Pharmaceutical sector is a prominent user of enzymes and therefore growth in pharmaceutical sector is expected to boost sale of enzymes as well
With stringent environmental laws and higher emphasis on energy conservation, demand for enzymes is expected to witness higher growth from various industries
Biotechnology companies in this space have started focusing on manufacturing cellulosic enzymes that aid the production of bio-fuels
The Bioinformatics segment is involved in the design and maintenance of extensive electronic databases for various biological systems.
Regulatory frameworks are required in the country to monitor and control genomic data.
Availability of good infrastructure and skilled workers is likely to help the bioinformatics industry grow in India. The country possesses around 10 percent of the global professional and skilled bioinformaticians.3
There is thus a significant opportunity for India to utilise this talent pool in various areas, such as DNA sequencing, data mining, proteomics, functional genomics and molecule design simulation.
Increase in government funding and the opening of several bioinformatics institutes is expected to lead the future growth of the segment.
Increase in government support
Steps taken under the ‘Make in India' initiative, such as new IP policy, setting up of biotech parks, entrepreneurship and skills development, can help position India as a leading hub for biotechnology products.
The Department of Biotechnology (DBT) has recently released the National Biotechnology Development Strategy 2015-20; implementation of which could help create and improve infrastructure for R&D and commercialisation; bring in investment capital, IP regime, technology transfer; help set up regulation standards, skills development etc
With increased acceptance and demand for baiosimilars globally, India can potentially emerge as a key player in this segment. Many Indian companies have developed capabilities to manufacture biosimilars and have successfully launched them in the Indian market
The government has released draft guidelines in April 2016 to streamline the regulatory process for biosimilars and similar vaccines in India.
Domestic companies are also venturing into other emerging areas, such as cell therapies and regenerative medicine - which are still nascent in revenue terms but likely to grow rapidly in the near future.
Dominance of the biopharmaceuticals segment
The biopharmaceutical segment has been generating more than one-half of the Indian biotech industry's total revenues. The country is ranked as the world leader in the production of vaccines.
Pharmaceutical companies are also focussing on the biotech sector for future growth.
Global companies are collaborating with Indian biotech companies owing to India's cost advantage and availability of skilled manpower.
India has also signed pacts with foreign universities to promote research and innovation. For example, India has signed a pact with Cambridge University to develop a biotechnology-specific programme for early-career fellowships.