Special Report

Biotech offers hope to drying drug pipelines

Our News Bureau - Mumbai

Over the last few decades, the area of biotechnology has evolved as an important contributor to the pharmaceutical industry. The Yes Bank report, 'Indian Biotechnology Industry— fostering the knowledge revolution' reports on the status of biotechnology industry in India.

Research on the line

Drug pipelines for big-pharma are on the wane and there is increasing focus on developing "blockbuster" drugs in order to maintain financial growth parameters.

Despite technological advances, the processes of drug discovery, development and commercialisation are growing more complex, time-consuming and costly. The generic industry is putting further pressure on pharmaceutical companies through speedier launch of cheaper products. The report says that biotechnology companies hold the promise to fill product pipelines increasing focus on outsourcing R&D, collaborative research and licensing with other companies and academia.

Opportunity areas

The Indian biotechnology sector crossed the $1 billion mark in 2004. The Indian industry is currently at two percent of the world market, but is expected to grow by 25-30 percent over the next five years. According to the report, the select opportunity areas are:

Contract manufacturing: Indian pharmaceutical manufacturing has come of age and an increasing number of generic companies are sourcing from India. Key advantages for Indian companies in this area, are process development, synthesis skills and quality cost effective manufacturing facilities. In the area of biologicals manufacturing, some Indian companies have established capacities for manufacture of recombinant therapeutics and vaccines. We believe that contract manufacturing for biologicals could become an important growth area.

Contract research and custom synthesis: There is a clear realisation that small volume intermediates can be economically sourced from countries like India without any compromise in quality. This opportunity is expected to grow as the product patent regime has kicked in and global players are targeting Indian market for their under-patent products. There is a market opportunity for development and supply of biological material for trial use.

Drug discovery and development includes areas such as analogue research, combinatorial chemistry, chiral chemistry, new drug delivery systems and phyto-medicine. Many of these areas also present themselves as contract services opportunities for innovator companies (both domestic and international). These services include—bioinformatics, lead discovery, library generation and optimisation, pharmacokinetics and pharmacodynamics (PKPD), and drug development services including clinical trials.

Clinical trials and research services is one of the most immediate opportunities in the area of contract services in the life sciences space. More than 40 percent of drug development costs are incurred in clinical trials. India, in addition to its vast and diverse genetic pool has a distinct cost advantage in the area. As per industry estimates, the cost of conducting clinical trials in India is between 40-60 percent of equivalent trials in US or Europe.

Enabling factors

The global biotechnology industry is undergoing transition, creating enabling factors that can aid growth of the Indian biotech industry. India has the potential to play a key role in reducing cost and time to market for new drug development through outsourcing of various components of the drug development process. There is an opportunity for R&D focused Indian biotech companies to enter into in-licensing alliances through collaborative development projects. Early stage deals are more common compared to middle and late stage deals—Indian companies with limited financial resources can optimise business models by partnering with larger companies for product development and licensing at an early stage.

However, the Indian biotechnology industry is still at a nascent stage and needs significant government and private sector support and investment to achieve its full potential. While there has been progress over the last few years, in terms of infrastructure development and increasing awareness, a lot remains to be done in areas such as human resource development, innovation, funding and regulatory issues.