Biopharmaceuticals in India: A New Era

India's biopharmaceutical industry, which was relatively modest only a decade ago, is expected to generate almost $2 billion in sales in 2008, making it one of the largest biopharmaceutical segments in Asia.¹ According to BioPlan Associates, Inc., and the Society for Industrial Microbiology's newly published joint study, Advances in Biopharmaceutical Technology in India, the Indian biopharmaceutical industry is growing 25 to 30% per year.¹

Most biopharmaceutical organizations today have established their India and Asia strategies or they are rapidly recognizing the importance of the historic changes occurring and the potential opportunities that are emerging there. This column is the first in a monthly series on the growth and challenges facing this market. Future columns will cover biogenerics, the regulatory situation, intellectual property (IP) protection, how clinical trials are driving this industry segment, bioinformatics, distribution hurdles, government support for the industry, contract manufacturing, and other key topics.

Eric Langer

THE HIGH-GROWTH CURVE

A few of the key findings in India's biopharma-ceuticals industry that are shaping international collaborative and investment strategy include:

• Growth in India is primarily export-driven. Export sales of Indian biopharmaceutical products are currently rising at an annual rate of 47%, while domestic sales of Indian biopharmaceutical products have risen only 4–5% per annum for each of the past two years. The value of India's biopharmaceutical exports is already double the value of its domestic biopharmaceutical sales.¹

• Vaccines are the largest and fastest-growing sector. Indian vaccine sales currently account for about 43% of the country's total biopharmaceutical sales, compared to 16% for diagnostics and 13% for therapeutics. Most of the growth in Indian biopharmaceuticals is because of vaccines, sales of which rose by about 42% from 2005 to 2007, compared to just 23% for therapeutics, and only 5% for diagnostics. India is one of the world's leading suppliers of vaccines for measles and other childhood vaccinations.¹

• Industry growth is concentrated in a relatively small number of companies. About 30 Indian companies account for the great majority of the country's biopharmaceutical sales. This group is led by companies in India such as Biocon (Bangalore), Serum Institute (Pune), and Panacea Biotec (New Delhi), which are all domestic players. The list also includes Indian-based subsidiaries of Novo Nordisk (Bagsvaerd, Denmark), GlaxoSmithKline (Middlesex, UK), Eli Lilly (Indianapolis, IN), and others.^1,2

• Indian companies manufacture an increasingly wide range of biopharmaceutical products. These include recombinant insulin, erythropoietin (EPO), G-CSF, recombinant hepatitis-B vaccine, streptokinase, interferon alpha-2b, rituximab, and an anti-EGFR MAb product.^1,2

• Indian biopharmaceutical R&D is increasing rapidly. Since 2003, the R&D budgets of the top 10 Indian pharmaceutical companies have more than doubled. Much of this increase has come in biopharmaceutical R&D, and the pipelines of Indian biotech companies are filling with novel large-molecule drugs for diabetes, cardiovascular disease, oncology, and anti-inflammation applications, among others.^1,2,3

The speed with which the Indian biopharmaceutical industry has developed in the past decade highlights the country's reserves of well-educated, relatively inexpensive workforce. But it also shows the power of cultural change.

INDIA'S ATTITUDE ADJUSTMENT

A leader of the non-aligned movement after its independence, India was, in fact, a close trading partner of the Soviet Union from the 1960s through the 1980s. But by the end of the Cold War it had begun to more closely align itself with Europe and the US—economically as well as geopolitically. By 1991, the US had become India's largest trading partner. Spurred on in part by this improving relationship and by the recognition of its own potential in the global marketplace, India in the 1990s began to push its own industries to become global competitors.

Tax incentives to key sectors have played a central role in pharmaceutical, biopharmaceutical, and other export industries. R&D expenditures in these industries are often eligible for 150% deductions, and there are liberal incentives for export profits.^1,2

The Department of Biotechnology (DBT), set up under the Ministry of Science and Technology in 1986, has also been a factor in the economic revitalization. In the 1990s, the DBT began funding vaccine and other biotech research. The DBT now also provides grants and loans to Indian companies to cover international patent and other R&D costs, and has set up biotech industrial parks with special economic zone privileges.

Another sign of India's economic adjustment was its 1995 agreement to the World Trade Organization's TRIPS (trade related aspects of intellectual property rights) regime, committing the country to a reform of its patent law. Previously, Indian companies were encouraged to reverse-engineer western drugs, and devise and patent new production processes. India adhered to TRIPS. In 2005, its patent law was extended to cover product patents, including those for new drug molecules.⁴

One major effect of the new patent law has been to shift the focus of India's pharmaceutical companies away from generics and process optimization towards innovative drug research, including R&D on biopharmaceuticals.

The new patent law, India's friendlier tax regime, its skilled labor force, and its evident seriousness about building a biotech industry, has helped to bring about western investment. Many Indian companies now conduct contract research and manufacturing for major multinationals and use the earnings to fund their R&D efforts.

ROOM FOR IMPROVEMENT

India remains weak in a number of crucial areas. There is only a limited system for attracting postdoctoral students who are a key research workforce in the west. Most Indian postdoctoral students go abroad and rarely return. In India, the academic research that normally leads to the development of biopharmaceuticals is largely carried out by young students working towards their PhDs.

Partly for this reason, and also because the industry is still so young, India's expertise in standard R&D techniques remains weak. Cell culture development, biochemistry, toxicological assays, and animal tests—all are areas where Indian laboratories traditionally have less capability. That is likely to change soon, but India's strengths lie presently on the chemistry side of the industry.

Another drag on India's ability to innovate is its IP environment, which shows room for improvement despite the 2005 patent law reform. There is a taint of the old attitudes in India's business and regulatory culture, and western companies complain of intellectual property rights (IPR) abuses. Citing "unfair commercial use of undisclosed test and other data submitted by pharmaceutical companies seeking marketing approval for their products," and "procedural barriers and delay," the Office of the US Trade Representative kept India on its IPR watch list in 2006 and put India on its priority watch list in early 2007.⁴

LOOKING FORWARD

In November 2007, the DBT announced the approval of its National Biotechnology Develop-ment Strategy,⁵ which increases the DBT's budget to more than $300 million annually, and includes promotions in the following areas:

• The establishment of more university-linked research centers, with facilities and teaching standards of international quality.

• The rapid expansion of biotech-related PhD and postdoctoral programs.

• Incentives for the repatriation of Indian-born scientists currently working abroad.

• Support for academic laboratory and private biotech partnerships.

The world market for biopharmaceutical drugs is approaching $100 billion, and many first-generation products have lost or will soon lose their patent protection. India intends to take advantage of the opportunity. It aims at nothing less than a world-class, end-to-end biopharmaceutical capability in the next decade.

REFERENCES

1. Kulkarni N. A window into India's biopharma sector. In: Langer E, editor. Advances in Biopharmaceutical Technology in India. Gaithersburg, MD: Bioplan; Jan 2008.

2. Kumar A. Biogeneric Manufacturing in India. In: Langer E, editor. Advances in Biopharmaceutical Technology in India. Gaithersburg, MD: Bioplan; Jan 2008.

3. Biocon Ltd. [homepage on the Internet]. Bangalore, India: c2007 [accessed 16 Nov 2007]. Available from: www.biocon.com/biocon_products_bio_biological.asp?subLink=bio.

4. Schnabel J. Outsourcing Biopharma R&D to India. In: Langer E, editor. Advances in Biopharmaceutical Technology in India. Gaithersburg, MD: Bioplan; Jan 2008.

5. Dept of Biotechnology [homepage on the Internet]. India: c2006 [accessed 16 Nov 2007]. Available from: dbtindia.nic.in/biotechstrategy/National%20Biotechnology%20Development%20Strategy.pdf.

Eric Langer is president of BioPlan Associates, Rockville, MD, 301.921.9074, elanger@bioplanassociates.com