The Indian biotechnology industry is growing at a rate of 37.5 percent annually, increasing from $1.45 billion in revenue for the year ending March 2006 to an estimated $5 billion in 2010, said officials at an annual biotech conference Wednesday in Bangalore.

Reeling off statistics, Kiran Mazumdar Shaw, chairperson of Biocon, the largest biotech firm in India, said investments in the biotech industry have grown 36 percent in the past year to cross the $360-million mark.

Bangalore contains the largest bio-cluster in India, housing 158 biotech firms out of a nationwide total of 326 firms. Ms. Shaw attributed the high growth rate in the sector to improving “regulatory and bio-manufacturing standards.”

“Despite these growth rates, we still have meager discovery-led research and there’s a perceived lack of medical infrastructure,” she added.

She believes India needs to focus more on clinical research and improve the patent infrastructure in the country. “We should leverage cost arbitrage to deliver value arbitrage,” said Ms. Shaw.

The Bangalore Bio conference coincided with the Indian drug regulator’s approval for Biocon to market India’s first indigenously developed monoclonal antibody for cancer, BioMab EGFR (Epidermal Growth Factor Receptor).

Reports Bolster Growth Prospects

Ms. Shaw’s argument was corroborated by an industry report released Wednesday by Yes Bank, a private sector bank based in Mumbai. The report predicted that clinical development services will generate in excess of $1.5 billion while bio-services or outsourced research services can garner $1 billion for India by 2010.

The report stresses that the Indian biotech sector should nurture global licensing models and adapt to Indian needs and conditions. Profit-sharing models for India could vary from the high up-front fees common in the case of late-stage or approved molecules to one-time sell-offs (or out-licensing) by one partner.

Under another model, the parties follow a success-based milestone payment structure. In this case, the out-licensing partner receives milestone payments as the molecule progresses through the development phase. The out-licensing partner finally receives a royalty if the drug launches successfully.

The Yes Bank report also points out that as cross-border interactions among pharmaceutical and biotech firms and global companies increase, complex partnership models are emerging.

For instance, joint ventures between two partners have been driven by factors such as the expected business volumes and the advantages of Indian manufacturing. That was the case with the partnership between Emeryville, California-based Chiron and Delhi-based Panacea Biotech.

Co-development Arrangements

Alternatively, companies are entering into arrangements where they co-develop certain molecules through a licensing model or other arrangements.

However, despite the surge in the Indian biotech sector, a common concern among the Indian players is the lack of qualified employees in the industry.

Another report released Wednesday, by the Bangalore-based human resources consulting firm Leader Prospects, indicated the lack of an “innovation and entrepreneurship” culture in Indian universities and colleges.

“While extremely few colleges in India have just about initiated the thought of such an approach, only an insignificant miniscule have put it into practice,” said the report.

EU Eyes Indian Biotech

Four official representatives from European Union countries—France, the Netherlands, Sweden, and the United Kingdom—appeared at the conference to woo Indian biotech firms and investors while lauding the increased collaboration between India and their respective nations.

The announcement of the day, however, came from Andrew Sors, minister counselor of the European Commission delegation.

He said that a forthcoming €55-billion ($70.3-billion) European Union 7th Research Framework Program (2007-2013) will be open to the Indian science and technology research community. Indian companies can both participate in and receive support from the program.

Officials from various European countries also weighed in with various incentives.

British High Commissioner Sir Michael Arthur promoted Prime Minister Tony Blair’s new U.K.-India Education Research Initiative, which is backed by £12 million ($22.3 million) of government money and nearly £5 million ($9.3 million) in cash or kind from the private sector.

The French and Dutch ambassadors said both their industrial and academic sectors had significantly increased their collaboration with India over the past three years.

Swedish officials talked about the significant presence of the country’s prominent medical university, the Karolinska Institute, and its native pharmaceutical giant AstraZeneca, in Bangalore. These two organizations have recently signed several research agreements with their Indian counterparts.

All in all, it was a heady start for India’s largest annual biotech industry event.

Contact the writer:Editorial@RedHerring.com