‘India has high prospects for biotechnology growth’

BioServe Biotechnologies (I) Pvt Ltd [BB(I)PL], located at ICICI Knowledge Park, Hyderabad, is a subsidiary of BioServe Biotechnologies Ltd (BBL), Maryland, USA. BBL has been providing DNA synthesis services and high quality molecular biology services to the research community for the last twelve years using state-of-the-art technologies. BBIPL established in 2002 is into contract research, pharmacogenomics, diagnostics and bioinformatics. Ramakrishna V Modali is one of the main founders and president of Bioserve - USA and India. He is a molecular biology expert in infectious diseases with 25 years of experience and practicing different technologies for the last 13 years. In 1989, he founded Bioserve Biotechnologies Limited, at that time located in the University of Maryland, under the Technology Advancement Program. Since then, he has been instrumental in developing the company to its current status. In an interview with Satyapal Menon, Modali dwells in-depth on the prospects of setting up Biotech ventures in India and also provides an NRI perspective of India as a destination for this industry. Excerpts:

What inspired or motivated you to set up your venture in India, especially in Hyderabad?

Though I have been in US for the past 28 years, I am basically from Hyderabad. I had my education here. As an NRI, I always had a strong urge to transfer the advanced technologies to a technically sound and talented scientific pool of India. What else could be a better place than Hyderabad with so many new initiatives being taken by the techno-savvy government for the growth of IT and BT.

And also the presence of so many world-class institutes in the related field of biotechnology, coupled with the opening of a Knowledge Park by ICICI in collaboration with the state government has provided a good fillip to visualise and envisage a biotech company on the lines of Bioserve-US.

More so, there is a huge unmet business opportunity - more than 80 per cent is currently being met by imports. Currently, there are no companies that provide these basic research services in India.

Do you find the environ here conducive for the growth of biotech industry?

Yes, It is indeed conducive for the growth of biotech as Indian scientists are gearing up to meet any challenge, especially after the completion of the Human Genome Project. There are several factors, which makes the biotech scenario bright in India. Biotechnology especially, is gaining prominence in India & Asia Pacific region with many research institutions, university departments and corporate sector companies engaging in biotech research activities. In India alone, I believe, there are 200 research institutes and universities and more than 100 companies involved in biotech activities.

With IPR coming into play after 2005, many Indian pharmaceutical companies are gearing for the genome battle. India has a large market for biotech-based products, most of these are imported.

It is expected to grow to US $4.5 billion by 2010. Diagnostic market is still untapped with latest cutting edge technologies using molecular science. With increased funding for biotech activities by foreign investors and large Indian corporates and also the growing presence of many MNCs in basic research and clinical research like Pfizer, Eli Lilly, Quintiles, etc due to cost advantage for new drug development, India will be the destiny for larger portion of future drug research.

This is also evidenced by number of collaborations and alliances happening with Indian companies. India also has manpower cost-advantages and easier scalability to higher production levels by increasing the number of people at a marginal increase in cost. India has a very good pool of scientific talent available at a significantly lower cost.

What is your opinion about the various regulations and policies of the Indian government? Are they on par with countries like USA and other European countries?

A few of the policies taken up by the Indian government have really bolstered the growth of biotech in India. In 1986, it had established the Department of Biotechnology (DBT) within the Ministry of Science and Technology with major programme areas being medical and plant biotechnology, training, research and regulatory affairs. DBT has played an important role in biotech developments and recently launched a 5-year $20 million Indian Genome Initiative (IGI) to study the genetic variation of diverse Indian populations.

For genomics research, the government is setting up a Plant Genomics Centre (New Delhi) and Centre for Human Genetics (Bangalore) via a $40 million/ year projected budget for ten years. Other government agencies involved in biotechnology R&D are: Indian Council of Medical Research (ICMR), Indian Council of Agriculture Research (ICAR), Council of Scientific and Industrial Research (CSIR) and Department of Science and Technology (DST).

The Health Ministry, with assistance from the US and Japan, recently established a $40 million National Institute of Biologicals (NIB) in New Delhi to carry out research, manufacturing and clinical studies.

India is also said to have signed the WTO agreement and will provide product patent protection by 2005, by changing its process patenting system.

India has decided to accede to the Paris convention for the protection of intellectual property and the patent co-operation treaty. This move will improve the industrial climate and encourage more research and development in India, by domestic and foreign companies. As for the regulatory matters, each country has its own policy matters for the protection of the genomic diversity.

What is the kind of support extended by government to your venture? Is it enough to encourage growth of biotech industry?

The state government of AP has been very supportive of the venture. The main funding has been acquired through the APIDC-Venture Capital Limited. The government of Andhra Pradesh can extend further support for the industry by providing loan guarantees and low interest loans. This kind of support is very common in the USA and has helped the small businesses tremendously.

Since the biotech industry is very capital intensive this kind of low interest guaranteed loans will enable the industry move much faster and provide jobs. Many institutes in India still rely on importing these services. The state and the central governments should direct all DBT, DST, CSIR, ICMR, and ICAR institutes to encourage locally established companies in molecular biology services.

This gives an opportunity and window for more foreign investors coming up and setting up the labs in India and will create the clime for healthy competition.

The government gives duty exemption for institutes whereas we have to pay 42 per cent duty. This increases our cost of services. There should be uniform policies by government to exempt labs like ours, from duty structure, so that the benefit will be passed on to the institutes. The country is losing a lot of foreign exchange and the Indian institutes are reluctant to encourage companies like us since they get these services at cheaper price. It is very important for the government to take this step immediately.

What is the market potential of biotech products/ services?

There is an enormous potential for the biotech products and services. The products include new diagnostic kits to identify infectious diseases, reagents to extract nucleic acids and several services that can be utilised in drug discovery and development.

The Indian market is not yet matured for high-end services like SNP and gene expression analysis except for few pharmaceutical companies and research institutions. However, biotech market sizes are promising in countries like Singapore and in the Asia Pacific region. And more and more pharma and research institutes from the West are looking at India for contract research business as the scientific pool is talented and operational and infrastructural costs are reasonably low.

Moreover, India has immense market potential for Custom Laboratory Services. Presently, most of the biotech-based products are imported. The current Indian market size for diagnostics is Rs 6,500 crores. Monoclonal and polyclonal antibodies for disease immuno-diagnosis, tissue typing, clinical assays and research constitute a huge portion of the market.

Looking at the futuristic perspective, what kind of development do you perceive in drug discovery and other areas related to biotechnology?

Well, the future is very bright as India has more diversified population and ethnic groups than any other part of the world. And also the fact that we can develop drugs based on polymorphism databases of the Indian population, the business volume will be billion dollars. We see today lot of drugs administered for cardiovascular diseases and cancer, which are expensive and not India-specific. We will be creating a database of SNPs of Indian population, which will provide tremendous scope for developing new drugs.

This is the area where we are keen to put our expertise as we have already developed several assays. The primary driver for the use of SNP technology for the next few years is finding genes and genetic variation to patent. The rush is on achieving new drug targets—the right drug target, preferably in the context of understanding the molecular etiology of the disease, of knowing the genes involved and choosing the appropriate intervention point.

The second priority of the pharmaceutical and pharmacogenomic companies is to identify causes of the underlying adverse effects of genes and undermining drug efficacy, ie., ADMET genes and clinically relevant variants as well as variants in drug targets and interaction proteins. The third priority of genomics and pharmacogenomic companies is disease susceptibility genes for complex, chronic diseases as predictive indicators or as targets in stratified patient populations.

The rationale for dramatic growth for SNP services is that there are 100 major diseases, each with 10 associated genes, each of which interacts with 5-10 proteins, resulting in 500-10,000 genes associated with the disease processes. This is a recent technology and globally there are very few players - Bioserve is one among them - to offer CRO services which expects to grab this huge emerging market opportunity globally and in India.

How do you visualise the future of biotech in India?

Biotechnology has very good future in India. There is a lot that can be done to benefit India, using biotechnology. For example, new pest and drought resistant crops will help India in becoming a leader in rice and other crops. Potential business opportunities exist for foreign bioscience firms seeking research and business alliances with Indian firms.

Other market segments are contract research and manufacturing services, research/ medical instruments, biomedical devices, research reagents, aquaculture, waste treatment and biofertiliser.

A proper balance between strategic research, product planning and effective collaboration will help support biotech growth in India. Partnerships with global biotech industries have the greatest impact on India’s own biobusiness markets.

Did you face bottlenecks before setting up you venture in India?

The main bottleneck we have faced in setting up the venture was finding out all the regulations that govern the biotech industry and NRI investment. It definitely would help if government can publish clear guidelines that are to be followed at all levels of the bureaucracy.

Should the government relax and exempt custom duty and regulations on BT machinery imported from abroad. In larger perspective how would this relaxation benefit the country?

I do believe that government should relax the custom charges on the machinery/ equipment imported from abroad for biotechnology particularly when that specific piece of machinery is not available through an Indian manufacturer. The benefits of this relaxation of custom charges are that the money that would have been spent on customs, would be invested in the venture that in turn would provide jobs to Indian public.

Custom taxes were supposed to be imposed to protect the domestic industry, if the machinery imported is not being manufactured in India, I don’t see the purpose of the tax. We suggest that government should be proactive and come with special sops to support the growth of biotech research and development and clinical diagnostic market in India.

The sops can be extended to the Income Tax and other commercial taxes also. Compared to biotechnology companies, the returns are very fast in the IT companies, and the government has so many sops for the promotion of IT, like tax holidays etc. So why not the same to promote BT as the investments are high and the returns are slow. This step would really give a tremendous boost to the biotech industry in India.