saamya biotech india ltd Management discussions

INDUSTRY STRUCTURE AND DEVELOPMENT:

The biotechnology sector is one of the sectors which have contributed to enhancing the global profile of India in the last decade. At the beginning of the decade, this industry began to take shape with the sprouting of dozens of start-up companies as well as the diversification of established pharma players which set up biotech divisions to focus on this segment. A lot of significant developments have taken place in the sector since. India is among the top 12 biotech destinations in the world and is the largest producer of recombinant Hepatitis B vaccine.

The sector has witnessed some emerging trends. Bio-pharma, which constitutes nearly two-thirds of the Indian biotech sector, invests in innovative product development. Clearly, a lot of companies see more value in ramping up their service offerings even as they try to master the technological, financial and regulatory challenges, before they are able to offer cutting edge drugs in the market place.

Investments, along with outsourcing activities and exports, are key drivers for growth in the biotech sector. Foreign Direct Investment (FDI) up to 100 per cent is permitted through the automatic route for manufacturers of drugs and pharmaceuticals.

The Government of India (GOI) through the Department of Biotechnology (DBT) has helped nurture the biotechnology field in India since its inception in 1986. India now has a large pool of outstanding people and infrastructure, created through several innovative schemes, which can serve as the capstone for the future growth of this sector and help the country achieve its vision to become a bio-economy and to extend benefits of biotechnology to its people.

India is now recognized as a global destination for vaccines, bio-services and increasingly for contract manufacturing, especially bio-similar. Many firms are exploring exciting areas of stem cell biology, synthetic biology, agri-biotechnology systems biology and evidence-based traditional medicine. The dynamic changes in the economy will make India a leading economic power in the world. The growth in gross domestic product (GDP) over the next decade will expand the domestic market and Indians will be able to afford healthcare products, and demand for food commodities and energy will grow too.

There is a huge opportunity for Indian biotechnology to play an important role in the Indian economy as well as contribute to the global economy. Indian biotechnology has multiplied six times from 2003 to reach more than US$ 4 billion. This pace of growth at 20 per cent for over a decade is impressive. However, if the biotechnology industry operating landscape becomes more innovation friendly spurred by the government s policies then the industry could possibly grow at 30 per cent CAGR. This will make the combined total of the biotechnology and healthcare industry to touch US$ 100 billion by 2025.

OUTLOOK:

According to reports, biotechnology industry in India has become the fourth largest adopter of biotech crop in the world, replacing Canada. India is gaining recognition in the field of clinical trials. A large number of companies are providing research and development expertise to global pharmaceutical companies. The availability of vast pool of English speaking science graduates, good regulatory processes and the cost advantage position India as a favorable investment destination by way of globalization, mergers and acquisitions and alliances. India is the second largest food producer after China, and thus offers a huge market for biotechnology products. Transgenics of rice, brassica, moonobean, pigeonpea, cotton, tomato and some vegetables like cabbage, cauliflower etc. are already into field trials. Some of these would be ready for large scale production in a few years.

OPPURTUNITIES AND THREATS:

Opportunities

As the biotechnology industry outpaces traditional pharmaceuticals, the biotechnology leaders are taking top spots from big pharma peers. At the other end, small, emerging biotechnology companies struggle to find funding among risk-averse investors. As biotechnology companies merge and grow, they are rising in the ranks of the top companies overall. Traditional pharmaceutical companies, meanwhile, are partnering with the biotechnology sector to fill dry pipelines and to replace the dwindling blockbusters. Industry analysts believe that the growth of the biotechnology industry will continue to outpace that of pharmaceutical companies.

Threats

The prominent threats are the large investments involved in developing the biotech products which make the end use products necessarily expensive and therefore, the costs of development need to be controlled to achieve wide marketability of products with affordable prices. The Chinese market needs to be born in mind by the Indian biotech companies in pricing their products, since the Chinese products are available in market at relatively lower prices.