Industry is steadily emerging as one of the high
potential growth drivers in India and expectedly it will take India into the
next big league of local and international investment. The biotechnology sector of India is strongly relying on
innovation and creating a robust growth trajectory. The government is making
the investment to a substantial degree
for creating human capital and infrastructure, keeping in mind the focus
especially on R&D to develop India into a world-class biotech manufacturing
hub. The biotech sector in India, currently growing at CAGR of 20% over the
last decade and will expectedly reach USD 100 billion by 2025. Currently,
India’s biotech industry comprises 2% of the global market share and stands as the
third largest in the region of Asia-Pacific. The sector has a huge possibility to grow and provide a multitude of prospects to investors.
Initiatives & Investments
Foreign Direct Investment (FDI) is open up
to 100 percent through the automatic route for drugs and pharmaceuticals manufacturing
in this sector. Biotechnology Regulatory Authority of India (BRAI) Bill had
been tabled in the Parliament as a continued attempt to promote biotechnology
in the country. In a step to make the procedure
of clinical trials transparent, CDSCO (Central Drugs Standard Control
Organisation), has made the registration of clinical trials and clinical
research organizations (CROs) mandatory in the country.
Centre and State Government provide
incentives to boost the biotech industry such as:
§ Customs duty being exempted from
goods imported in certain cases for R
§ 150% weighted tax deductions on R & D expenditure.
§ 3 years of excise duty waiver on patented products
§ 100% rebate on one’s own R & D expenditure
§ 125% rebate if research is contracted with public funded R &D
Indian Government is determined to make the biotechnology
market conducive to the growth of the sector
with its FDI related norm relaxations as mentioned below:
100% FDI is permissible under automatic
route for Greenfield projects for pharmaceuticals; for Brownfield projects, 74%
FDI is allowed under the automatic route. For manufacturing of medical devices,
the sector has been opened for 100% FDI under the automatic route since January
To attract investments in Industrial parks,
100% FDI is approved through automatic route to new and existing industrial
The government of India introduced certain tax incentives as well in the budget of
2016-17 to promote the sector.
§ The turnover limitation to avail the Presumptive Tax Scheme under
section 44 AD has been increased from INR 1 crore to INR 2 crore.
§ New manufacturing companies incorporated on or after March 1, 2016, to be given an option to be taxed at 25%
+ surcharge and cess on the fulfillment
of certain conditions.
Market Entry & Opportunities
The Government of India allows Biotechnology
imports under “Open General” category. Reduced import duty and simplified
import procedures together make it favorable for imports of capital goods and raw
Price, quality and after-sales service
support are major factors in purchase decisions. A letter of credit is the
usual payment mechanism for imports. Importers are required to find foreign
exchange from their export earnings, or to buy foreign exchange from government
approved foreign exchange dealers.
The buyers of biotechnology products and
bio-molecules are the research institutes and pharmaceutical companies. Opportunities
exist for companies to offer consulting services and build infrastructure for
Indian biotech companies. They can offer consulting services for water
treatment facilities as well. Many companies seek assistance in acquiring certifications, regulatory and FDA
A new entrant to the Indian biotech market should
consider one of the following options, depending on the expected volume of
business, the nature of business (whether it’s an active pharma
ingredient/generic bulk drug or a pharma product), market potential and its long-term strategy for the Indian market.
§ A foreign company may appoint a distributor as this is the ideal
entry option which does not require as many resources. But the selection of the
right distributor is essential. For most of the industrial products, one
exclusive indenting agent or distributor is the most common arrangement.
§ A foreign company may open its liaison office in India. However, a
liaison office is not allowed to transact any business. It could only undertake
market development activities. Expenses of this type of office need to be met
through inward remittances from the head office abroad. The Reserve Bank of
India ( RBI) usually approves for
the opening of such offices.
§ The opening of a
Branch Office by foreign companies engaged in manufacturing and trading abroad
is another alternative which is available to undertake to buy and to sell in India.
A branch office may render technical support and professional consultancy but
it is not allowed to undertake any manufacturing or related activities.
Approval from the RBI is necessary in order to set up this type of office.
Venture/Wholly Owned Subsidiary: A foreign company can begin its operations in
India through the incorporation of a
company under the provisions of the Indian Companies Act (2013).
Biopharma: It is the largest segment of the biotech
industry in India that enjoys extensive investing in improving the R
capabilities and bio-manufacturing infrastructure. The market will gain
momentum as the market is driven by overall GDP growth and increasing
prosperity especially the increase in the disposable income of the middle class
who can now easily afford medicine and nevertheless, the changing profile of
disease prevalence. Majority of multinationals collaborate with major biopharma companies for early-stage clinical trials as well as to sell the finished product
for as the new form of competition and obtain better market penetration unlike
Vaccines and recombinant therapeutics are
the leading sectors driving the biotechnology industry’s growth in India.
Protein and antibody production and the fabrication of diagnostic protein chips
are a promising area for investment.
Bio Agri: The biotechnology applications in agricultural methods for grain
production can address the daunting challenge of the widening demand-supply gap in food grain production.
Technology provides methods to improve the effectiveness of agriculture inputs
bringing down costs of input and increased output. However, there is a need to
educate public about the benefits of Bio-agriculture methods. The country holds
immense potential to become a major producer of transgenic rice and several genetically
modified or engineered vegetables.
Others: Some other potential areas of development comprises of; biosimilar, stem cells, medicinal
and aromatic plants, animal biotechnology, aquaculture and marine
biotechnology, genome analysis, and
Competition in the Market
The Indian biotech industry is fairly
competitive. Karnataka is the major hub providing a base to almost half of the country’s biotechnology companies. Apart
from Karnataka, states such as Andhra Pradesh, Maharashtra, Tamil Nadu and
Kerala have been proactive in supporting the biotech sector by establishing
world-class biotech parks and clusters.
India has approximately 350 companies
operating in the biotechnology sector. Some of the major biotechnology
companies in India are:
v Serum Institute of India,
v Panacea Biotech,
v Nuziveedu Seeds,
v Reliance Life Sciences,
v Rasi Seeds,
v Novo Nordisk,
v Shantha Biotechnics,
v Venkateshwara Hatcheries,
v Indian Immunologicals,
v TransAsia Biomedics and
Last one decade witnessed a change in the biotech industry with major mergers and
acquisitions deals. Some of the examples are:
§ Matrix lab acquired by the US
Based Mylan Inc
§ Piramal Healthcare acquired by the US-based
Biocon has entered into an agreement with
Mylan for the global development and commercialization of Biocon’s generic
insulin analog products (Long lasting insulins), which has a global scale
market of US $ 11.5 billion.
With the country offering numerous competitive advantages in
terms of R&D facilities, knowledge, skills, and cost-effectiveness, the biotechnology industry in India has immense
potential to emerge as a global key player.
India contributes around 8 percent
to the total of global generics market, by volume, indicating a huge untapped
opportunity in the sector. Outsourcing to India is projected to rise after the
discovery and manufacture of formulations. Hybrid seeds, including GM seeds,
represent new business opportunities in India based on yield improvement.
India currently has a marginal share in the global market for
industrial enzymes. Hence, there is an opportunity for focused R&D and knowledge-based innovation in the field of
industrial enzymes. It can be used innovatively to replace polluting chemical
processes into eco-friendly processes. It will also help deliver environmental sustainability
through innovation. Yet another interesting field of study is the area of biomarkers and companion diagnostics, which
will create enablement to optimize the
benefits of biotech drugs.