India's thriving biotechnology industry is threatened by a change in the law. Will the current high levels of investment be enough to secure its future?
Every year, on the presumed birthday of Krishna, the blue-skinned Hindu god, New Delhi's Mathura Road is choked with traffic. Buses, cars and bullock carts packed with devotees advance toward Vrindavan, where Krishna is believed to have been born 5,000 years ago.
This August, pilgrims to Krishna's legendary birthplace will pass an imposing three-story structure of sandstone and glass. Inside, at The Centre for Genomic Applications (appropriately shortened to TCGA, the letters of the genetic alphabet), white-coated scientists are devoted to a god of a different kind. On the center's first birthday in May 2005, scientists acquired a new Hewlett-Packard supercomputer, the fastest in India, worth a whopping $2.2 million. Capable of four trillion operations per second, the computer places the center among the ranks of international institutions such as the Wellcome Trust Sanger Institute in UK and the Institute for Molecular Science in Japan.
TCGA is the youngest of several biotechnology laboratories that have sprung up in India in recent years. It is a shared venture between the Chatterjee Group, a Kolkata-based industrial house, and two government agencies—the Council of Scientific and Industrial Research and the Department of Science and Technology—which shared the $5.7-million cost of construction.
The center, which aims to provide world-class facilities for genomics and proteomics, is the first to be built by a public-private partnership. It also symbolizes the current revolution in India's biotechnology industry.
With fewer than 300 registered companies, the biotechnology sector is small but is gaining in global stature. According to the World Health Organization, India is the fourth largest producer of pharmaceuticals, and 66.7% of its exports go to developing countries. For example, the Pune-based Serum Institute of India, once a small manufacturer of tetanus toxin, now makes 80% of the world's measles and DTP (diphtheria, tetanus and pertussis) vaccines.
Other companies that have made a global impact include the Mumbai-based company Cipla, which rewrote the rules of the international AIDS drug market when, in 2001, it introduced inexpensive generic antiretroviral drugs. Strand Genomics in Bangalore has formed a partnership with Japan's MediBIC to develop informatics solutions for pharmaceutical companies in Japan. And Avesthagen, also based in Bangalore, has joined up with France's bioMérieux to develop diagnostic instruments for medical and industrial applications.
Profits soar In 2003−2004, Indian biotechnology companies had combined revenues of more than $700 million. This year, they have surpassed $1 billion. "The biotechnology sector is witnessing an impressive 40% annual growth," says Kiran Mazumdar Shaw, chief executive of Biocon, Bangalore. "The profile of Indian biotech companies is undergoing a change, and they are becoming international." Biocon, the most profitable biotechnology company in India, this year posted revenues of $150 million, a 30% increase over the previous year.
Shaw, sometimes called India's 'biotech queen', and several other company chiefs are quickly becoming household names in India. Five of them won this year's Padma awards, the nation's highest honor for civilians. "Never in the history of these coveted awards has a small section of the industry grabbed the entire limelight," says N. Suresh, editor of BioSpectrum magazine, published in Bangalore.
The biggest boost to the biotechnology industry has come from the government itself. "Biotech is the government's priority area," says science minister Kapil Sibal. Less than a year after Sibal took office, the Department of Biotechnology (DBT) released an ambitious plan to create a biotechnology industry that would generate $5 billion in revenues per year and create one million jobs by 2010.
As a part of its strategy, the DBT is planning to make it easier for foreign-owned companies to set up in India. Foreign investors have in the past had to knock on the doors of several different government agencies. But the DBT's new plan is to set up a single independent authority to replace the committees at different ministries.
The DBT has also subsidized the construction of three biotechnology parks and aims to help finance at least ten such parks by 2010. Together with the Ministry of Information Technology, the DBT plans to build the country's first biotech−information technology park. This is expected to attract bioinformatics contracts from around the world and foster development of innovative companies.
"We not only want to build on the existing platform but expand the base to create global leadership in biotechnology," says Maharaj K. Bhan, secretary of the DBT. "This will require larger investments."
The science ministry has already announced a 50% increase in its budget over the past year for drug-discovery research and called for proposals from the industry.
To encourage small businesses, the DBT gives out grants of Rs5 million ($115,000) for proof-of-concept research and low-interest loans for subsequent product development and commercialization. Any money that companies spend on maintaining patents is also exempt from income tax.
Patent crackdown One reason for this increased investment is that from 1 January 2005, a new patent law, which brings India in line with World Trade Organization (WTO) rules, came into effect. Indian companies will have to honor international patents and stop producing unlicensed generic drugs, a major source of their revenue over the past 30 years.
The pharmaceutical industry's R&D spending has shot up from Rs2 billion ($46 million) in 2000 to Rs8 billion ($184 million)in 2004, says D. G. Shah, secretary-general of the Indian Pharmaceutical Alliance. Chennai-based Orchid, which earned $82 million in 2004, is building a $15-million plant. Biocon is adding a $170-million research lab and manufacturing plant to its assets in Bangalore. And Wockhardt, a large pharmaceutical company, last year built a $50-million complex—India's largest—in Aurangabad. Nicholas Piramal India, which opened its $25-million research facility in September 2004, says it already has eight original products, including potential treatments for cancer and diabetes, in preclinical tests. Other generic producers such as Dr. Reddy's Laboratories in Hyderabad and Delhi-based Ranbaxy Laboratories are moving along this innovation route even as they continue to scout for patent-expired generics in the US market.
Still, "the odds are not in India's favor in the innovation-driven global drug markets," says Prasanta Ghosh, a consultant to Cadila Pharmaceuticals in Ahmedabad and former adviser to the DBT. "We are nowhere compared with China, South Korea, Cuba or Brazil," he says. "Our research has not gone into product development."
Local companies will also have to compete on Indian soil with powerful multinational companies, others warn. Companies such as Merck and Bristol-Myers Squibb left India years ago because cheap copycat drugs cut into their profits. But with the WTO rules enforced to protect their patents, those companies will return, says Yusuf Hamied, Cipla's chairman. "Multinationals will invade India in force and wipe us out in five years," he warns.
Companies face other obstacles too. "Biology is extremely technology-driven and yet we do not make any instruments in this country," says Syed Hasnain, director of the Centre for DNA Fingerprinting and Diagnostics in Hyderabad. "Except for flasks and syringes, every instrument is imported. We do not trust the local centrifuges, so we import even these." Most institutes also have limited access to good animal-research facilities.
Another problem is the shortage of people trained in the latest techniques. India's role in information technology is supported by the massive number of software experts in cities such as Bangalore, but such a pool of biotechnologists is not available.
When the Bangalore-based Institute of Bioinformatics (IOB) needs someone who knows the computer programming language Oracle, it can find a good candidate within a week. That's because there are so many good programmers in the Industrial Technology Park, where the institute is based.
Akhilesh Pandey, a professor at the Johns Hopkins University, founded the IOB in 2002. In three years, its researchers have published more than 40 papers, including several in high-impact journals. In April 2005, IOB researchers published their annotation of the X chromosome (Nat. Genet.37, 331; 2005). The study, carried out in direct competition with the UK Wellcome Sanger Institute, marks the first time that any institute other than a genome-sequencing center has characterized an entire human chromosome.
Training biotechnologists With a booming biotechnology business and a demonstrated prowess in information technology, there should be a dozen such bioinformatics success stories in India. But even the big Indian pharmaceutical companies have been slow to adopt bioinformatics.
Although the country grants nearly 300,000 degrees and diplomas in biotechnology, bioinformatics and the biological sciences each year, companies struggle to find skilled staff. "Most of them get their degrees without seeing a biotech lab," says Krishna Ella, managing director of Bharat Biotech International in Hyderabad. Most of those qualified also leave for greener pastures: up to 90% of those who finish their PhDs at the Indian Institute of Science (IISc) go abroad. India needs to find ways to stem that massive brain drain, says Ella.
In the meantime, companies are wooing scientists to India from around the globe. According to estimates from the Indian Pharmaceutical Alliance, 10% of the new recruits at senior levels are expatriate Indians or foreigners.
Geetha Vani Rayasam, an IISc graduate, joined the Ranbaxy Research Labs in November 2004 after spending several years in Europe and the US. Rayasam says many more like her would return to India if a few essential things were fixed. "There are several things that need to be improved, like a more professional approach, less bureaucracy and providing better salaries," she says. "But the day is not far off when India might be leading the way in drug discovery."
