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India's pharma industry looks beyond generics toward biotech bonanza

Posted on 13 March 2020

Kiran Mazumdar-Shaw laid the groundwork for Indian biotech from her garage in the late 1970s, extracting enzymes from papaya for the food industry. She transformed her company Biocon into a billion dollar enterprise that expanded into generic drugs and today develops antibody treatments for cancer.

The journey captures India’s transformation from the world’s generics supplier into an innovator at the frontiers of biotechnology – from gene therapy to immuno-oncology.

Last year, India’s biotech sector was valued at $64 billion and is forecast to surge to $150 billion by 2025, according to India’s science ministry. In 2018, India launched a record 937 biotech startups, bringing the total to 2,669. Overall, India’s healthcare market is projected to triple from $110 billion in 2016 to $372 billion in 2022.

A wave of government enthusiasm, free-flowing venture capital and growing demand from an increasingly wealthy population,” says Nature, a leading scientific journal, “are helping to drive India’s biotechnology industry beyond its historical focus on unbranded generic drugs and into the innovation limelight.”

India’s aggressive push into high-value specialty drugs stems in part because the Trump administration is threatening Indian generics by boosting the US generic industry through price cuts. For now, India’s main target market in drug discovery is North America, which accounts for more than 40 per cent of the global healthcare market.

The bigger picture is that India’s 1.4 billion people – fast acquiring affluence, longevity and lifestyle expectations – increasingly require affordable first-class healthcare solutions. India’s pharma innovators are stepping in to provide them. In addition to cancer therapies, focus areas include treatments for heart disease, diabetes and other lifestyle-linked disorders.

Homegrown solutions will be powered by medical and genetic data from a country on course to be the world’s biggest within years, opening huge investment opportunities. As the US healthcare market grows at about 4 per cent a year, India’s is barrelling ahead at more than triple that pace.

India has shown time and again that it can deliver with limited resources, from an ambitious space programme that launched a Mars orbiter to world-class infotech giants such as Infosys. Its pharma industry is set to take centre-stage in this narrative, due to a combination of government priority, venture capital support and a tradition of research excellence.

According to Martyn Hann, Partner and Head of the Life Sciences Group at Mishcon de Reya, “India has realised that for too long it has been the highly skilled provider of research and clinical services to the World’s pharma and biotech industries, giving away the fruit of its innovative labour. Going forward, we can expect much more of this innovation and IP to be retained by Indian companies; India is now doing it for itself.”

The Biotechnology Industry Research Assistance Council (BIRAC), an accelerator launched by the Department of Biotechnology in 2012, is key to this transformation. Its vision is to “stimulate, foster and enhance the strategic research and innovation capabilities of the Indian biotech industry, particularly start-ups and SMEs”.

The results match the rhetoric. Since launching, BIRAC has fostered more than 316 startups, which have generated $125 million in revenue through 122 products and innovations. BIRAC has also spearheaded an ambitious training programme to foster biotech acumen in India’s massive talent pool.

Biosimilars (a twin of an already approved biological drug) are seen as a key growth market for Indian pharma, as the country has invested funds and human resources in this complex, high-margin area. Biocon, for example, has launched a biosimilar insulin in Japan – a first for India in a developed economy.

According to Deepak Malik, senior analyst at Edelweiss Financial Services, 60 per cent of $100 billion worth of patents in the complex drug industry (which includes biologics and biosimilars) are set to expire in the next five years. KPMG expects India’s biosimilar market to skyrocket this year from $186 million to $1.1 billion.

Meanwhile, India is deploying its renowned outsourcing prowess to elite areas of medical research. India’s biotech majors are increasingly tapping clinical research organisations (CROs) – startups contracted to carry out drug discovery – to handle their R&D.

Cytxon Biosolutions is one such venture. It has won dozens of contracts from major Indian pharma companies such as Genei Laboratories. By saving major companies between 20 to 30 per cent of the cost of drug development projects, companies such as Cytxon promise to make India a global centre for biotech outsourcing.

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