Biotechnology is steadily emerging as high potential growth sector in India and
is expected to take the country into the next big league of internal and
international investment. The
biotechnology sector of India is highly innovative and is on a strong growth
trajectory. The government is investing substantially for creating human
capital and infrastructure with a special focus on R&D to develop India
into a world-class bio manufacturing hub. The sector in India, which is
currently growing at 20% is expected to reach USD 100 billion by 2025.
Currently, India’s biotech industry holds 2% of the global market share and is
the third largest in the Asia-Pacific region. The sector has immense possibility
to grow and provide plenty of prospects to investors.
Initiatives & Investments
Foreign Direct Investment (FDI) is allowed
up to 100 percent through the automatic route for manufacturing of drugs and
pharmaceuticals in the sector. Biotechnology Regulatory Authority of India
(BRAI) Bill has been tabled in the Parliament for introduction to promote
biotechnology in the country. In a move to make clinical trials’ procedure
transparent, CDSCO (Central Drugs Standard Control Organisation), has made the
registration of clinical trials and clinical research organizations (CROs) mandatory
in the country.
Centre and State Government provide
incentives to boost the biotech industry such as:
§ Customs duty exemption on goods imported in certain cases for R
§ 150% weighted tax deduction on R & D expenditure.
§ 3 years excise duty waiver on patented products
§ 100% rebate on own R & D expenditure
§ 125% rebate if research is contracted in public funded R &D
Indian Government is set to make the market
conducive to the growth of the Biotechnology with its FDI related relaxations
as mentioned below:
100% FDI is allowed under automatic route
for Greenfield projects for pharmaceuticals; for Brownfield projects, 74% FDI
is permitted under the automatic route. For manufacturing of medical devices,
the sector was opened for 100% FDI under the automatic route on January 21,
To attract investments in Industrial parks,
100% FDI is allowed through automatic route to new and existing industrial
Government has introduced several tax
incentives also in the budget 2016-17 to promote the sector.
§ The turnover limit to avail the Presumptive Tax Scheme under section
44 AD has been increased to INR 2 crore from INR 1 crore.
§ New manufacturing companies incorporated on or after March 1, 2016
to be given an option to be taxed at 25% + surcharge and cess on fulfilment of
Market Entry & Opportunities
The Government of India allows Biotechnology
imports under “Open General” category. Reduced import duty and simplified
import procedures encourage imports of capital goods and raw materials.
Price, quality and after-sales service
support are major factors in purchase decisions. A letter of credit is the
usual payment mechanism for imports. Importers are required to find foreign
their export earnings, or to buy foreign
exchange from government approved foreign exchange dealers.
The buyers of biotechnology products and bio
molecules are the research institutes and pharmaceutical companies. Opportunities
exist for companies to offer consultancy services and build infrastructure for
Indian biotech companies as well as offer consultancy services for water
treatment facilities. Many companies seek assistance on certifications,
regulatory and FDA clearances.
A new entrant to the Indian market should
consider one of the following options, depending on the expected volume of
business, the nature of business (whether it’s an active pharma
ingredient/generic bulk drug or a pharma product), market potential and its
long term strategy in the Indian market.
§ A foreign company may appoint a distributor as this is the ideal
entry option which does not require as many resources. But the selection of the
right distributor is essential. For most industrial products, one exclusive
indenting agent or distributor is the most common arrangement.
§ A foreign company may open its liaison office in India. However, a
liaison office is not allowed to transact any business. It could only undertake
market development activities. Expenses of this type of office must be met
through inward remittances from the head office abroad. The Reserve Bank of
India ( RBI) grants approval for
the opening of such offices.
§ Opening of a Branch Office by foreign companies engaged in manufacturing
and trading abroad is another option which is available to undertake buying and
selling activities in India. A branch office may render technical support and
professional consultancy services but it is not allowed to undertake
manufacturing activities. Permission from the RBI is required to set up this
type of office.
Venture/Wholly Owned Subsidiary: A foreign company can commence operations in
India through incorporation of a company under the provisions of the Indian
Companies Act (2013).
Biopharma: It is the largest component of biotech industry, India is
extensively investing in improving the R capabilities and
bio-manufacturing infrastructure. The market will gain momentum as the market
is fuelled by overall GDP growth and increasing prosperity especially the
growth of the middle class who can afford medicine and the changing profile of
disease prevalence. Majority of multinationals collaborate with major
bio-pharma companies for early stage clinical trials as well as to sell the
finished product for better market penetration.
Vaccines and recombinant therapeutics are
the leading sectors driving the biotechnology industry’s growth in India.
Protein and antibody production and the fabrication of diagnostic protein chips
are a promising area for investment.
Bio Agri: The biotechnology agriculture methods for grain production can
address the daunting challenge of widening demand-supply gap in
food grain production. Technology provides methods to improve the effectiveness
of agriculture inputs bringing down input costs and increased output. However,
there is a need to educate public about the benefits of Bio-agriculture
methods. The country holds immense potential to become a major producer of
transgenic rice and several genetically modified or engineered vegetables.
Others: Some other potential areas of development are; biosimilar, stem
cells, medicinal and aromatic plants, animal biotechnology,
aquaculture and marine biotechnology, genome analysis and others.
Competition in the Market
The Indian biotech industry is fairly
competitive. Karnataka is the major hub providing base to almost half of the
country’s biotechnology companies. Apart from Karnataka, states such as Andhra
Pradesh, Maharashtra, Tamil Nadu and Kerala have been proactive in supporting
the biotech sector by establishing world-class biotech parks and clusters.
India has approximately 350 companies
operating in the biotechnology sector. Some of the major biotechnology
companies in India are:
v Serum Institute of India,
v Panacea Biotech,
v Nuziveedu Seeds,
v Reliance Life Sciences,
v Rasi Seeds,
v Novo Nordisk,
v Shantha Biotechnics,
v Venkateshwara Hatcheries,
v Indian Immunologicals,
v TransAsia Biomedics and
Last one decade witnessed a change in
biotech industry with major mergers and acquisitions deals. Some of the
§ Matrix lab acquired by US Based Mylan Inc
§ Piramal Healthcare acquired by US based Abbot Laboratories
Biocon has entered into an agreement with
Mylan for the global development and commercialization of Biocon’s generic
insulin analog products (Long lasting insulins), which has a global addressable
market of US $ 11.5 billion.
With the country offering numerous competitive advantages in
terms of R&D facilities, knowledge, skills, and cost effectiveness, the
biotechnology industry in India has immense potential to emerge as a global key
India constitutes around 8 per cent of the total global generics
market, by volume, indicating a huge untapped opportunity in the sector.
Outsourcing to India is projected to spike up after the discovery and
manufacture of formulations. Hybrid seeds, including GM seeds, represent new
business opportunities in India based on yield improvement.
India currently has a marginal share in the global market for
industrial enzymes. Hence, there is an opportunity in focused R&D and
knowledge-based innovation in the field of industrial enzymes, which can
innovatively replace polluting chemical processes into eco-friendly processes
that also deliver environmental sustainability. Another interesting field of
study is the area of bio-markers and companion diagnostics, which will enable
to optimise the benefits of biotech drugs.