NEW DELHI, India - While India is still an attractive prospect for investment in biotechnology, with plenty of potential waiting to be tapped by investors, the country needs to learn from the successful examples of other countries, including its Asian biotech competitors, according to a new report.
Titled “Assessment of Indian Biotechnology Landscape 2019,” the report was prepared by the Institute for Competitiveness, India, the Indian arm of the global network of Institute of Strategy and Competitiveness of the Harvard Business School, and it attempts to provide a future roadmap to help the country achieve its ambition of a $100 billion biotech industry by 2025. It was released during a three-day Global Bio India meeting in New Delhi.
Besides addressing the challenges that the industry faces and providing recommendations, the report assesses the performance of the Indian biotech industry vis-a-vis other top players. It predicts that India’s share of the global biotech sector will increase to 19% by 2025, from 3% in 2017.
The report evaluates 20 countries, including emerging biotechnology economies such as Argentina, China, Egypt, India, Indonesia, Israel, Malaysia and Vietnam, as well as mature economies in the industry such as Australia, Canada, New Zealand, Singapore, South Korea, Sweden and the U.S.
The comparison is based on several indicators, which mainly examine the capabilities and performance of the countries. The indicators fall into three broad categories – the enabling environment, which includes human capital, investment in research and development, and the safety and legal environment; facilitators that include technology transfers, regulatory environment and market incentives; and performance, such as clinical trials, research output and biotechnology output.
The analysis said that in terms of an enabling environment, India, though performing better than Vietnam, Egypt and Indonesia, has substantial ground to cover to be on par with the best of other nations. The country fares relatively well in government spending on R&D and legal jurisprudence, two indicators that are crucial for the smooth functioning of private businesses, and that can help improve India’s rank in Ease of Doing Business (EODB) further.
India fares better in the second category, “facilitators,” compared to the first “enablers” category, as India provides strong R&D tax incentives. Also, its foreign direct investment (FDI) rules allow 100% FDI for greenfield pharma under the automatic route and up to 74% FDI for brownfield projects under the automatic route (approvals were previously required for any FDI in brownfield pharma projects). Greenfield investing refers to companies that build their own facilities, while brownfield investment involves the purchase or use of existing infrastructure. India’s rules allow for more than 74% for brownfield pharma under the approval route, as well as FDI of up to 100% under the automatic route for manufacturing medical devices.
But patent filing and barriers to technology are some issues to which India needs to pay immediate attention.
Room for improvements
India has also been encouraging startups in the last few years and has an estimated 2,600 plus biotech startups. But while India performs well in cluster development and has improved its EODB, it is found to be lagging on filing patents, which drags its overall performance downward.
Kiran Mazumdar Shaw, managing director of Bangalore-based Biocon Ltd., agreed, telling attendees of the recent conference that Indian innovators and entrepreneurs should file patents more aggressively. Shaw pointed out that compared to a 10-fold jump in patent filings by China over the last 10 years, India has recorded only a threefold jump.
And while India has immense potential to improve in the third “performance” category, it has not been able to translate those opportunities into real developments, and its capacity is “largely underutilized.” An example is clinical trials. As of February 2019, India accounted for only 1.2% of the clinical trials in the world. That figure has seen a decline, as previously India accounted for 1.5% of such trials.
The report’s recommendations include improving industry-academia linkages and the quality of research output, an area where it could emulate countries such as Australia, China, Japan and South Korea, where more than 70% of the spending on R&D is by the private sector. “Attracting private equity and venture capital is a tough area in India,” said Rajesh Jain, managing director of Panacea Biotec Ltd., of New Delhi. The top Indian companies have about $2 billion, whereas they need about $20 billion to reach developed and emerging countries markets, Jain said at Global Bio India.
Another recommendation is easing the regulatory environment, where India could follow Japan’s example of applications for approvals of new drugs being fast-tracked in order to expedite the approval process, as those are considered goods with substantial medical benefit, the report says.
The report also suggests creating a marketing database, along the lines of countries such as Canada, the U.K. and the U.S., which use cluster mapping and other such tools to calculate the market size and value the output generated by their respective biotech industries.
Delegates at the Global Bio India meeting in general concurred that India’s biotech industry has the potential to touch $160 billion in the next five to seven years if the government offers more clarity in its policies and regulation, including the easing of regulatory hurdles for the biopharma sector. The industry should improve its intellectual property rights and increase its funding, including that from venture capital funds and corporate investments in R&D, they said.