Investing In India’s Biotechnology Industry: Biopharmaceuticals And Beyond


Posted: 23rd September 2021 09:47

India’s biotechnology industry has been steadily expanding in the last five decades with several segments. The COVID-19 pandemic and changes due to R&D investment has allowed the biotech industry to build upon its traditional strengths in vaccine manufacturing, agriculture science, and clinical research as well create urgent capacity for industrial applications and bio-services. The industry is also home to over 4000 start-up enterprises.

From a mere US $1.1 billion industry in 2003, the size of India’s biotechnology industry is now more than US $70 billion. India is among the top 12 destinations for biotechnology worldwide and the industry is forecast to reach US $150 billion by 2025, at a compound annual growth rate of 16.4%. This would mean increasing contribution to the global biotechnology market from 3%(2017) to 19%. 

Investors should note that India allows 100% foreign direct investment (FDI) under the automatic route for greenfield pharmaceuticals projects. Up to 100% FDI is allowed for brownfield pharmaceuticals – up to 74% FDI is allowed under the automatic route and beyond 74% is subject to the government approval route. Relatedly, up to 100% FDI is allowed under the automatic route for manufacturing medicalf devices.

Where India Stands Globally

The Indian biotechnology industry plays an important role in the global vaccine market. India leads the global supply of vaccines for DPT (diphtheria, pertussis, and tetanus), BCG (Bacillus Calmette–Guérin, primarily used against tuberculosis), and measles. India contributes to 70% of WHO’s approved vaccines (essential Immunization Schedule).

Outside of vaccines, the bio-agriculture segment of India’s biotech industry is also significant, ranking second worldwide in the production of BT cotton, which is a genetically modified pest resistant plant cotton.

Segments Under India’s Biotech Industry

India’s biotech industry comprises of over 5,000 companies (760 core companies and 4,240 start-ups), divided into five major segments: biopharma, bio-agriculture, bio-industrial, and the combined segment of bio-services comprising of bioIT (bio-information technology), contract research organizations, and research services.
 

As of 2020, biopharmaceuticals is the industry’s largest segment, contributing 62% to the Indian bioeconomy followed by bio-agriculture, which accounted for 16%, and bio-services and bio-industrial that account for 15% and 7%, respectively.

The bio-services and bio-industrial segments, which accounted for a combined 22% of the industry in 2020, are expected to grow at rapid rates. The former segment has witnessed India becoming a leading destination for clinical trials, contract research, and manufacturing activities and the latter is flagged as ‘the next big opportunity’.

Biotechnology segments India

Key Players And Industry Clusters

High Performing States

As state governments push their respective biotechnology sectors to significantly contribute to the Gross State Domestic Product, they have set up specialised state departments for biotechnology and rolled out specific biotech policies. The Indian states leading in this regard have seen the allotment of projects by the federal Department of Biotechnology based on the available facilities and capacity.

The following chart presents the state-wise distribution of projects assigned by DBT in the financial year 2015-16. States, such as Delhi, Tamil Nadu, and Karnataka, were some of the strongest performers in the sector.

India state-wise distribution project distribution

The Department of Biotechnology under the Ministry of Science and Technology has also established biotechnology parks and incubators to support research and production by providing necessary infrastructure facilities.

Biotechnology parks India

Top Industry Players

Domestic

Foreign Investors

Growth Trends

2015-2020 was a period of immense growth for India’s biotechnology industry, with the total industry value doubling from US $35.2 billion to US $70.2 billion in just five years.

The industry witnessed the rise of the bio-pharma segment as a global giant with a CAGR of 13%, while remaining the biggest contributor to the industry overall.

The highest growth was seen by the bio-industrial segment with a CAGR of 15%, the segment is expected to retain this top spot in the upcoming years.

CAGR India biotechnology industry

The Road Ahead

COVID-19 has changed the dynamics of the role of biotechnology and modern medicine globally. While many sectors struggled due to lockdowns and restrictions, biotechnology recorded a 12.3% growth in India. Given its current growth trajectory, India is poised to become a top-five global producer by 2025.

The government has charted out an ambitious target for India’s biotechnology industry between 2021-25 to ensure it contributes to the development of a knowledge and innovation-driven bioeconomy. As per its projections, India’s overall bioeconomy will bounce back in FY 2022, growing at a rate of 14-16% between FY 2022 and FY25. However, to reach the ambitious US $150 billion threshold by FY 2025, an additional push and stimulus might be required.

The four areas of focus for India’s biotechnology industry in the 2021-25 period are:

Projects And Opportunities

Government Support, Policies, And Initiatives

The Government of India is keen to promote the development of biotechnology under the ‘Make in India’ campaign. Multiple policies and initiatives have been introduced by the Department of Biotechnology towards this end, focusing on attracting investments, promotion of industry-institute partnerships, creating entrepreneurship cells to promote biotech start-ups, and skill development.

Biotechnology Industry Research Assistance Council (BIRAC)

Biotechnology Industry Research Assistance Council (BIRAC) is a not-for-profit set up by the Department of Biotechnology in 2012 as an interface agency aimed at strengthening and empowering the emerging biotechnology sector by undertaking strategic research and innovation.

BIRAC has been instrumental in the growth of the industry since its establishment. It hosts an industry-specific Make in India cell for the biotechnology sector. It has created a provision for investment in new ideas by supporting start-ups with funding from INR 5 million (US $70,000) up to INR 70 million (US $1 million per start-up. A fund of funds called Biotechnology Innovation Fund – Accelerating Entrepreneurs (AcE) has mobilized more than INR 3 billion (US $40.72 million) for specific investments in the biotech innovation start-up ecosystem to scale-up R&D and innovation.

Other Announcements, Initiatives

State-specific Biotech Policies

Conclusion

Following several supply chain concerns during the pandemic, diplomatic objectives, and confronting rising geopolitical risks in recent years, the government has essentially reworded its ambition from Make in India to building a ‘Self-Reliant India’ (Atmanirbhar Bharat). The development and deployment of technologies and higher value solutions in the field of biotechnology will be key achievements in this regard. Support and reforms targeting the biotechnology industry aim to establish an advanced ecosystem that will meet the entire supply chain requirements from raw materials and inputs to R&D, manufacturing, and innovating local solutions. This thrust, reflected in ease of doing business reforms, production-linked incentives, setting up industrial parks, financial incentives, etc. will benefit existing players, boost capacity of start-ups and their platform and tech solutions, and open the industry to more investment and foreign partnerships.


Related articles



Comments


close

Subscribe to our newsletter

Sign up here and get the latest news and updates delivered directly to your inbox

You can unsubscribe at any time