BIOTECHNOLOGY
November 2010
Manan
BIOTECHNOLOGY
November 2010
Contents
Advantage India
Market overview
Industry infrastructure Investments Policy and regulatory framework Opportunities Industry associations
2
ADVANTAGE INDIA Biotechnology November 2010
Advantage India
India is one of the preferred destinations in custom research outsourcing (CRO) and custom manufacturing outsourcing(CMO).
The clinical trials market has witnessed 31 per cent growth during 2004-2008. CMO has recorded around 43 per cent growth, at thrice the global market rate. Outsourcing capabilities Strong quality and technical capabilities
In 2009, India had more than 120 US Food and Drug Administration (FDA)approved plants and around 84 UK Medicines and Healthcare products Regulatory Agency (MHRA)-approved plants, with capabilities to manufacture products of exceptional quality. The industry is constantly engaged in upgrading technology to enhance the quality of products. India is expected to be one of the top five innovative hubs with contributions of around 50 per cent of drugs discovered worldwide from India.
India offers a significant cost advantage over the US and is recognised globally for its low-cost fermentation technology and generic biologics. Manufacturing costs in India are approximately 35 to 40 per cent of those in the US, supported by low installation, manpower and manufacturing costs.
Low manufacturing cost
Advantage India
Innovative product development
Vast skilled talent pool
India possesses the second-largest English-speaking population in the world. In 2009, 15,000 scientists were engaged in the biotechnology sector. As of 2009, every year, 3 million graduates, 0.7 million postgraduates and 1,500 PhDs are added to Indias talent pool. It is equally supported by education infrastructure of more than 200 research institutes.
Source: Taking wings, Ernst & Young, 2009; ICE publication, ice website, www.ice.gov.it/paesi/asia/india/upload/182/Sector%20Report%20Biotechnology%20-%202009.pdf , accessed 12 November 2010
BIOTECHNOLOGY
November 2010
Contents
Advantage India
Market overview
Industry infrastructure Investments Policy and regulatory framework Opportunities Industry associations
4
MARKET OVERVIEW Biotechnology November 2010
Market overview
In 20092010, the industry recorded revenues worth US$ 3 billion, registering y-o-y growth of 12.36 per cent (in US$ terms) over 200809.
US$ billion
Indian biotechnology market size
3.5 3 2.5 2 1.5 1 0.5 0
20042005 20052006 20062007 20072008 20082009 20092010
3.00 2.28 1.88 1.43 1.04 2.67
The industry is expected to witness robust growth and reach US$ 15 billion by 2015, driven by various government initiatives.
Sources: ABLE-Biospectrum industry survey, June 2010; Ernst & Young analysis
MARKET OVERVIEW Biotechnology November 2010
Market segments
Biotechnology
Bio-pharma This segment accounts for majority of the biotech industrys revenues. It contributed 62 per cent to total revenues in 2009 2010.
Bio-services In 20092010, bioservices was the second-largest contributor to the industry, constituting 18.7 per cent of total revenues. This segment contributed 33 per cent of exports.
Bio-agri This segment generated around US$ 410 million revenues in 2009 2010, accounting for 13.7 per cent of total revenues.
Bio-industrial The bio-industrial segment contributed approximately 4 per cent to total revenues in 20092010.
Bio-informatics The bioinformatics industry is at a nascent stage, contributing 1-2 per cent of total revenues in 20092010.
Sources: ABLE-Biospectrum industry survey, June 2010; Ernst & Young analysis
MARKET OVERVIEW Biotechnology November 2010
Exports
Revenues from biotech exports have been valued at US$1.57 billion in 20092010, constituting 52 per cent of the biotech industrys revenues.
Exports of biotechnology products
1.8 1.6 1.4 1.10 1.57 1.2 1 0.8 0.6 0.4 0.2 63 per cent
Share of exports per segment
2 per cent
1 per cent
33 per cent
1 per cent
US$ billion
1.2 1.0 0.8 0.6 0.4 0.2
0
Exports 200708 20092010 Bio-pharma Bio-industrial Bio-services Bioinformatics Bio-agri
0.0
Sources: ABLE-Biospectrum industry survey, June 2010; Ernst & Young analysis
MARKET OVERVIEW Biotechnology November 2010
Domestic demand
Specialised treatment
The disease profile that inflicts the Indian population has experienced a gradual shift. The number of lifestyle-related diseases being reported is rising, which has led to the demand for various kinds of specialised treatment. Ailments such as cancer and diabetes have heightened the demand for biologic products.
Preventive healthcare
Around 1.15 billion new cases of ailments are reported annually. The reported number of ailments is expected to rise by a compound annual growth rate (CAGR) of 30 per cent to reach 15 billion cases by 2015. A growing population, increasing affordability, easier access to healthcare facilities and a shift toward lifestyle diseases are driving this trend. Demographic changes have led to an increase in the demand for vaccines, both for geriatrics and pediatrics population.
Source: Ernst & Young research
MARKET OVERVIEW Biotechnology November 2010
Growth drivers increased healthcare expenditure and funding for the biotechnology sector
Healthcare expenditure, as a percentage of GDP, was recorded at 1.09 per cent for 2009 2010, with the growth being driven primarily by the rise in private expenditure. During 20072010, the percentage utilisation of allocated resources by the Department of Biotechnology (DBT) is 94.49 per cent as compared to science and technology sector average of 90.56 per cent.
Trend in funds availability for the biotechnology sector Funds availability (US$ in million)
1600 1400 1200 1000 800 600 400 200 129.4 302.1 1354.2
0
Ninth Five year plan Tenth five year plan Eleventh five year plan
Source: , "Mid term appraisal," Eleventh Five Year Plan, National Biotechnology development strategy, dbtindia website, http://dbtindia.nic.in/biotechstrategy/National%20Biotechnolog y%20Development%20Strategy.pdf , accessed 15 November 2010
MARKET OVERVIEW Biotechnology November 2010
Growth drivers government support
New facilities
The Department of Biotechnology (DBT) set up 35 facilities between 2002 and 2007 to produce and supply biologicals, reagents, culture collections and laboratory animals to scientists, industries and students at nominal costs. To fill the viability gap in developing new technologies, the Government of India (GoI) started a biotechnology industry partnership programme for funding support. Regulatory
According to the National Biotechnology Development Strategy (NBDS), there is a positive inclination to set up a centralised national biotechnology regulatory authority to provide a single-window clearance mechanism for all bio-safety clearances for products.
International collaborations
Various international collaborations with different countries are in the pipeline, directed at enabling the effective transition of knowledge. A re-entry fellowship grant has been initiated with the UK-based Wellcome Trust. India has also partnered with countries such as the UK, Russia, Italy, the US and France to enable knowledge transition.
Source: Biotechnology facilities, dbtindia website, http://dbtindia.nic.in/uniquepage.asp?id_pk=41 , accessed 15 November 2010, Eleventh Five Year Plan- mid term appraisal
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MARKET OVERVIEW Biotechnology November 2010
Growth drivers rising incidence of chronic diseases
Lifestyle diseases are set to assume a greater share of the healthcare market.
Lifestyle diseases such as cardiac diseases, cancer and diabetes require biotechnology products for treatment, thereby increasing the revenues of biotech companies.
Changing disease profile
120 100 2 3 7 2 13 14 16 19 20 22 0 2001 Acute infections Genito-urinary Accidents Other circulatory Maternity / gynaec Musculoskeletal 18 15 17 14 2012 Heart disease Digestive
F
4
3 3 19 4
Percentage share
80 60 40
Cancer Others
Source: Fortis Healthcare Limited 200809 annual report.
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MARKET OVERVIEW Biotechnology November 2010
Key trends pharma companies are focusing on biotech
Ranbaxy, Cadila Healthcare, Lupin, Wockhardt and Dr Reddys are among the major Indian pharmaceutical companies that have entered the bio-pharma segment.
Source: Ernst & Young research
Global companies setting up base
Lonza is planning to set up a manufacturing base in India at an investment of US$ 150 million in Hyderabad. The investment outlay has been planned over two phases:
Phase I (from 2011 to 2013) will include the development of R&D labs for more than 100 resources. Phase II (from 2014 to 2015) will include the expansion of manufacturing capabilities and the provision for increasing R&D lab capacity for biologics with 200 additional resources.
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MARKET OVERVIEW Biotechnology November 2010
Key players
The leading 20 companies (in terms of revenues) accounted for 52 per cent of industry revenues in 20092010. Biocon and Serum Institute of India are the two leading players in the industry. MNCs such as Novo Nordisk and Novozymes feature among the leading 15 biotech companies. Of the top 10 companies, 5 generated revenues close to or greater than US$ 100 million in 20092010.
Sources: ABLE-Biospectrum industry survey, June 2010; Ernst & Young analysis
Leading 10 companies (20092010) Company Biocon Serum Institute of India Panacea Biotec Nuziveedu Seeds Reliance Life sciences Quintiles Rasi seeds NovoNordisk Shantha Biotech Mahyco Revenue (US$ million) 20092010 245.83 177.08 146.49 99.34 93.75 78.12 74.74 71.25 69.58 65.00 Per cent change since 200809 29.34 -23.70 17.76 6.07 -4.48 3.64 35.32 47.78
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BIOTECHNOLOGY
November 2010
Contents
Advantage India
Market overview
Industry infrastructure Investments Policy and regulatory framework Opportunities Industry associations
14
INDUSTRY INFRASTRUCTURE Biotechnology November 2010
Industry infrastructure (1/2)
The Eleventh Five Year Plan aims to establish biotechnology parks to involve small and medium enterprises in product development and translational research. Biotechnology infrastructure is witnessing a shift from traditional clusters to specialised industrial infrastructure such as biotech or science parks. States such as Andhra Pradesh, Maharashtra, Tamil Nadu and Kerala have been early movers in establishing world-class biotech parks and clusters. Investors such as TCG and Alexandria have significantly contributed in establishing biotechnology-related infrastructure in the country.
Source: Ernst & Young research, "Mid term appraisal," Eleventh Five Year Plan
Chandigarh Sohna Jodhpur Gandhinagar Jamnagar Baroda Jaipur Anand Ahmedabad
Jogindernagar Shimla Pantnagar Alwar Lucknow
Midnapore
Bhubaneshwar
Konark Aurangabad Pune Hyderabad
Visakhapatnam
Karwar Bengaluru Chennai Madurai Puducherry Kochi Operational biotech parks
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INDUSTRY INFRASTRUCTURE Biotechnology November 2010
Industry infrastructure (2/2)
Around 27 operational parks are operational in India.
Details of key biotechnology parks Parks Shapoorji Pallonji Biotech Park ICICI Knowledge Park International Biotech Park Lucknow Biotech Park Golden Jubilee Biotech Park Ticel Bio Park
Source: Ernst & Young research
City Hyderabad Hyderabad Pune Lucknow Chennai Chennai
Area (in acres) 300 200 103 20 8 5
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INDUSTRY INFRASTRUCTURE Biotechnology November 2010
Enabling research infrastructure
In 20092010, postgraduate teaching programs in biotechnology were launched at 8 new universities in addition to existing 62 universities. Fellowships increased from 100 to 250 per year for PhD students in addition to 100 postdoctoral and 50 biotechnology overseas associate ships. The Eleventh Plan aims to provide grant-in-aid to industry for R&D in certain diseases such as malaria and kala-azar.
Sources: Ernst & Young research, "Mid term appraisal," Eleventh Five Year Plan
Key research institutes in India
Central Drug Research Institute (CDRI), Lucknow
National Institute of Pharmaceutical Education and Research (NIPER), Mohali
Indian Institute of Chemical Technology (IICT), Hyderabad
Centre for Cellular & Molecular Biology (CCMB), Hyderabad Indian Institute of Chemical Biology (IICB), Kolkata Indian Toxicology Research Institute (ITRI), Lucknow
Institute of Genomics and Integrative Biology (IGIB), New Delhi
Institute of Microbial Technology (IMTECH), Chandigarh
National Chemical Laboratory (NCL), Pune National Centre for Biological Sciences (NCBS), Bengaluru
Jawaharlal Nehru Centre for Advanced Scientific Research (JNCASR), Bengaluru
Indian Institute of Science (IISc), Bengaluru
National Institute of Immunology (NII), New Delhi
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BIOTECHNOLOGY
November 2010
Contents
Advantage India
Market overview
Industry infrastructure Investments Policy and regulatory framework Opportunities Industry associations
18
INVESTMENTS Biotechnology November 2010
Investments (1/2)
Four deals were completed in 2010. In June 2010, Piramal Healthcare Ltd acquired Canadian biotechnology company Biosyntech, Inc for US$ 4.196 million.
M&A scenario details Period: January 1, 2010 to October 31, 2010 Deal type Inbound Outbound Domestic No of deals 2 1 1 Deal value (US$ million) 24.25 4.2
Source: Fact Sheet on Foreign Direct Investment (FDI), Department of Industrial Policy and Promotion website, www.dipp.nic.in, accessed 15 November 2010.
Cumulative FDI inflow Period: November 2000 to August 2010 Sector Drugs and pharmaceuticals Amount of FDI inflow (US$ million) 1,822.6
Sources: Thomson One Banker, accessed 15 November 2010; Ernst & Young analysis.
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INVESTMENTS Biotechnology November 2010
Investments (2/2)
Deal summary Deal type Acquirer Acquirers country Target name Celon Laboratories Ltd MNE Technologies Pvt Ltd BioSyntech, Inc Stilbene Chemicals Ltd Target country Completion date
Inbound
Sequoia Capital India Invest
Telematic & Biomedica
Mauritius
India
October 5, 2010
Inbound
Italy
India
March 31, 2010
Outbound
Piramal Healthcare Ltd Anu's Laboratories Ltd
India
Canada
June 21, 2010
Domestic
India
India
April 16, 2010
Source: Thomson One Banker, accessed 15 November 2010.
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BIOTECHNOLOGY
November 2010
Contents
Advantage India
Market overview
Industry infrastructure Investments Policy and regulatory framework Opportunities Industry associations
21
POLICY AND REGULATORY FRAMEWORK Biotechnology November 2010
Policy and regulatory framework (1/2)
The National Biotechnology Development Strategy (NBDS), approved in 2007, was aimed at strengthening the industrys human resources and infrastructure while promoting growth and trade. To further support the NBDS, the GoI allocated US$ 375 million for biotech R&D in 2009, which constitutes around 30 per cent of the total budget allocation for this sector. The authority to approve biotech products rests with various agencies such as the Review Committee on Genetic Manipulation (RCGM), the Genetic Engineering Approval Committee (GEAC) and the Drugs Controller General of India (DCGI). The NBDS has proposed the establishment of an independent and autonomous statutory body, the National Biotechnology Regulatory Authority (NBRA), to provide a consistent mechanism for regulatory approvals. In July 2008, Indias DBT drafted a new legislation, the National Biotechnology Regulatory Act, to establish and empower the NBRA. In the Eleventh Plan, the approval process for legal framework The Protection and Utilisation of Public Funded Intellectual Property Bill, 2008 was initiated. The bill aims to promote innovation and patenting between innovators and institutions on a profit-sharing basis.
Source: Policy and rules, Department of Biotechnology website, www.dbtindia.nic.in, accessed 15 November 2010; "Mid term appraisal," Eleventh Five Year Plan
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POLICY AND REGULATORY FRAMEWORK Biotechnology November 2010
Policy and regulatory framework (2/2)
Government of India
Ministry of Science & Technology Department of Biotechnology
Ministry of Environment & Forests Department of Environment, Forests & Wildlife
Recombinant DNA Advisory Committee (RDAC)
Regulatory Committee on Genetic Manipulation (RCGM)
Institutional Biosafety Committee (IBSC)
Genetic Engineering Approval Committee (GEAC)
Source: Policy and rules, Department of Biotechnology website, www.dbtindia.nic.in, accessed 15 November 2010.
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BIOTECHNOLOGY
November 2010
Contents
Advantage India
Market overview
Industry infrastructure Investments Policy and regulatory framework Opportunities Industry associations
24
OPPORTUNITIES Biotechnology November 2010
Opportunities product segments (1/3)
Vaccines
According to the Eleventh Plan, India is well-poised to become the worlds vaccine manufacturing hub with vaccines for various therapy areas at various stages of clinical trial. Development of vaccines for a wide array of diseases are in various stages of approval. Phase iii clinical trials for rotaviral vaccine have been initiated and vaccines for diseases such as rabies, typhoid, leprosy, anthrax, cholera, malaria and Japanese encephalitis are in various stages of trials. India is well positioned to launch about four vaccines a year beginning 2012. Vaccine for H1N1 has been developed under governments programme for development of indigenous products.
In India, the oncology market in 2008 was valued at around US$ 225 million and is expected to reach US$ 850 million by 2012, growing at a CAGR of nearly 30 per cent. Companies such as Dabur, Biocon, Dr Reddys, Intas, Roche, Cipla and Sun Pharmaceuticals have a significant market presence in the Indian oncology market. In addition, current size for cancer diagnostics and treatment equipment is close to US$ 270 million in 2009, which form the largest segment in medical devices segment and is an opportunity for segment related diversification.
Oncology
Insulin
Novo Nordisk, Eli Lilly, Biocon and Shantha Biotech are the leading players in this segment, while Ranbaxy, Sun Pharma and Glenmark are among the new players. Companies are targeting the development of drugs with non-invasive insulin delivery technology.
Sources: "Mid term appraisal," Eleventh Five Year Plan, Cancer drug market to touch $48b in 2008, The Times of India website, www.timesofindia.indiatimes.com, accessed 18 January 2010, ICE publication, www.ice.gov.it/paesi/asia/india/upload/182/Sector%20Report%20Biotechnology%20-%202009.pdf , accessed 15 November 2010
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OPPORTUNITIES Biotechnology November 2010
Opportunities product segments (2/3)
Stem cell research
Stem cell research is an emerging opportunity area. India is the second country after the US to allow human clinical trials for drugs using stem cell research. Stem cell research centres at AIIMS and CMC Vellore have been launched. A new treatment for heart attack is under development at the research centre of Indias biggest stem cell banking company, LifeCell, in collaboration with US-based device manufacturer for stem cell harvesting, Harvest Technologies. In addition, stem cell finds application in the treatment of Parkinsons disease, Alzheimer's disease and diabetes.
Nanotechnology
The GoI supports nanotechnology through its Vision Group initiative. The GoI plans to build three national institutes for nano-science by investing US$ 250 million in infrastructure programmes. Nanotechnology has the potential to revolutionise the Indian agriculture scenario and transform the entire food industry. Several Indian firms and research institutes are also working on developing drug delivery products using nanotechnology.
Sources: Ernst & Young research, "Mid term appraisal," Eleventh Five Year Plan, ABLE-Biospectrum industry survey, June 2010; Biotechnology industry in India: Opportunities for growth, http://www.eximbankindia.com/op/op137.pdf , accessed 17 November 2010
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OPPORTUNITIES Biotechnology November 2010
Opportunities biosimilars (3/3)
The increasing use of biologics in disease areas such as cancer and auto-immune and orphan diseases, in addition to healthcare cost containment, has driven the growth of biosimilars. Companies in this space include Reliance Biopharma, Shantha Biotech, Panacea Biotec, Wockhardt, Dr Reddys, Biocon, Intas Biopharmaceuticals and Avesthagen.
Future opportunity in biosimilars (US$ billion)
23.0
39.0 115.0 76.0 14.0 Patents expired before 2010 Patents expiring 2010-2015 Patents expiring 2016-2020 Biosimilar opportunity-2008 brand value Biosimilar opportunity-2015 brand value
Sources: Teva investor presentation, Teva Pharm website, www.tevapharm.com, accessed 28 January 2010; Ernst & Young research.
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BIOTECHNOLOGY
November 2010
Contents
Advantage India
Market overview
Industry infrastructure Investments Policy and regulatory framework Opportunities Industry associations
28
INDUSTRY ASSOCIATIONS Biotechnology November 2010
Industry associations
Association of Biotechnology Led Enterprises (ABLE) # 123/C, 16th Main Road, 5th Cross, 4th Block
Near Sony World Showroom/Headstart School
Koramangala, Bengaluru 560034 Phone: 91 80 41636853 25633853 E-mail: info@ableindia.org Website: www.ableindia.org All India Biotech Association (AIBA) "VIPPS Center" 2. Local Shopping Centre Block EFGH, Masjid Moth, Greater Kailash-II, New Delhi-110048 Tel: 91 11 29211487 (Direct), 29220546/547 Fax: 91 11 29223089, 29229166 Email: unmalik@aibaonline.com Website: www.aibaonline.com
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NOTE Biotechnology
November 2010
Note
Wherever applicable, numbers in the report have been rounded off to the nearest whole number. Conversion rate used: US$ 1= INR 48
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BIOTECHNOLOGY
November 2010
DISCLAIMER
India Brand Equity Foundation (IBEF) engaged Ernst & Young Pvt Ltd to prepare this presentation and the same has been prepared by Ernst & Young in consultation with IBEF. All rights reserved. All copyright in this presentation and related works is solely and exclusively owned by IBEF. The same may not be reproduced, wholly or in part in any material form (including photocopying or storing it in any medium by electronic means and whether or not transiently or incidentally to some other use of this presentation), modified or in any manner communicated to any third party except with the written approval of IBEF. This presentation is for information purposes only. While due care has been taken during the compilation of this presentation to ensure that the information is accurate to the best of Ernst & Young and IBEFs knowledge and belief, the content is not to be construed in any manner whatsoever as a substitute for professional advice. Ernst & Young and IBEF neither recommend nor endorse any specific products or services that may have been mentioned in this presentation and nor do they assume any liability or responsibility for the outcome of decisions taken as a result of any reliance placed on this presentation. Neither Ernst & Young nor IBEF shall be liable for any direct or indirect damages that may arise due to any act or omission on the part of the user due to any reliance placed or guidance taken from any portion of this presentation.
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