Biotech firms getting busy

By Ramnath Subbu

MUMBAI, FEB. 10. The successful mapping of the human genome has led to biotechnology (BT) capturing the imagination of companies globally to venture into the field and it is now touted as the next big revolution after the information technology boom.

BT refers to the techniques of modifying or manipulating genes of living organisms mainly to improve the product and allow the product to have specific desired qualities which could be a combination / result of the two genes. It essentially involves the isolation of genes with specific traits and transferring the same to an organism lacking in these traits.

The momentum in biotechnology commenced globally in the early Eighties through pure research and development (R&D) and this continued for a couple of years. Thereafter, the focus shifted to human genomics. The hype died down when it was realised that the R&D costs were high, that products would take between 7-12 years to commercialise and that there were no established revenue streams.

However, in the late Nineties, with the fructifying of most of the earlier R&D, there was a re-kindling of interest with the launch of some blockbuster products by pharmaceutical players. This led to a pick up in worldwide momentum and this saw India also entering the fray.

Where then does India fit amidst all this activity? ``India essentially boasts a vast pool of biotechnology scientists who are available at competitive prices. Also, there are process innovations in technology in the pharmaceutical biotechnology field here,'' said Dr. V. V. L. N. Sastry, associate director, Rabobank India.

With the WTO agreement on Intellectual Property Rights coming into effect by 2005, the Indian pharma industry is gearing up for the new regime. In BT, India has the requisite manpower and expertise but the important factor is long term funding.

Major biotech research in India is government funded with outfits like the Indian Council of Medical Research (ICMR), Indian Council of Agricultural Research (ICAR), the Council for Scientific and Industrial Research (CSIR), Indian Institute of Science and the Department of Biotechnology (DBT) which comes under the Ministry of Science and Technology.

Shanta Biotechnics and Bharat Biotech, two unlisted companies, have done pioneering work in the BT arena. Both have developed genetically engineered hepatitis B vaccines - Shanta has introduced Shanvac and Bharat its Revac. Bharat Biotech has scaled up its capacity from 8.3 million dosages to 100 million dosages at a small capital cost.

Shanta Biotechnics has a joint venture with Oman and is now setting up a Rs. 25 crore R&D centre for genetically engineered products. Its product, Shanvac-B, is among the best products in the category globally. From an installed capacity of five million doses, it has been augmented to 40 million doses.

Following the success of these two companies, many others have followed. However, their substantial capacities give these two a tremendous cost advantage. The Indian market size is estimated at around $500 million and has the potential to go up several times over the next couple of years.

The BT industry is broadly classified into agri-based BT, pharmaceutical-based BT, pure R&D based BT and Bioinformatics. ``The first two are product-driven and are similar to brick and mortar businesses while the last two are similar to dotcom outfits'' according to an industry source.

As an industry, pharma-based BT is popular and accounts for about 60 per cent of all investments. It comprises development of vaccines/therapeutics which find daily applications. There are some problems with agri-based BT as it involves genetic modifications and there have been some regulatory problems particularly in Europe regarding these modifications.

In India, healthcare accounts for about a third of the Indian BT market followed by vaccines accounting for about $125 million and finally the animal healthcare market.

In healthcare, BT is used in medicines, vaccines, diagnostics and gene therapy. While there are a clutch of companies in the pharmaceutical sector which are into biotechnology, agri-based biotechnology is another big opportunity and many Indian companies have gone in for production of hybrid seeds. The seeds market is estimated at Rs. 5,000 crores consisting of seeds retained by the farmer (Rs. 3,500 crores), public bred seeds (Rs. 1,300 crores) and research hybrids (Rs. 200 crores).

Companies now go in for `transgenic' technology which is technology of combining genetic material from two different sources to develop a new variety of seeds.

Companies to have entered the BT area are: In pharma, Dr. Reddy's Laboratories, Cipla, Morepen Laboratories and Zydus Cadila. In agri-biotech, the players include Monsanto, ITC Agrotech, SPIC and MAHYCO. Reliance too has announced its foray into this arena.

Wockhardt is among the leaders among corporates to have invested in BT and in fact, BT is Wockhardt's R&D thrust area. Its R&D efforts have yielded the development of recombinant erythropoetin which is used in cancer treatment and kidney transplant. It is now setting up a manufacturing facility for this product and plans to launch a new BT product annually. In 2002, the company plans to launch a combination vaccine - DPT and Hepatitis B. It has also tied up with the German Rhein Biotech to develop Hepatitis-B vaccine and recombinant human insulin.

Nath Seeds is among the oldest players in the agri-biotech business in India with a collection of about 15,000 germplasms and hybrid seeds. More than 90 per cent of the company's revenues come from seeds of which a large chunk is from its indigenous R&D.

The company has demerged into three companies - Nath Biogenetics, a pure seeds company, Agritech India which is into corporate farming and Nath Seeds which is into plantation, real estate and investments.

Advanced Biochemicals is a Rs. 100 crore company and has tied up with Pacific Corporation of South Korea to set up a plant near Nashik to manufacture genetically engineered industrial enzymes. It will supply enzymes to industries in the northern and western parts of the country.

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