Adequate policy framework required to boost biotech industry

Sanjay Sardana

The Indian biotechnology industry, still in a nascent stage, has yet to deliver any path-breaking products. In fact, in the last four years, only three recombinant proteins have hit the market.

Bar a few products like the hepatitis B vaccine developed by a home- grown company, Shantha Biotechnics, the industry has yet to show its worth. Although a slew of products are expected to hit the market soon, their credibility can be known only after these are accepted by the market.

The biotech industry, however, has been complaining against lack of freedom. They have to meet the obligations of five different departments under four different ministries to complete all formalities for setting up a project in India. All these approvals take up at least one year of their precious time.

It is for this reason that the Indian biotech industry has been asking for an independent regulator and guidelines for all applications of biotech-based molecules in all possible stages of development, as well as a national biotechnology commission. Unless this is done, the industry fears it may lose the technology race to other developing countries, especially China, which has been investing heavily and giving a policy push to this sector. In India, a debate is still on over the need for an independent regulator.

In the United States, biotech revenues are over $47 billion with over 1,200 companies employing 4.4 lakh people. Although there are 800 biotech companies employing around 10,000 people in India, the revenue generation is less than $2 billion. Human health biotech accounts for 60 per cent of the revenues, while agri-biotech and veterinary biotech together account for 15 per cent of total revenues.

Another key area of concern here is the issue of Intellectual Property Right (IPR) and the need to have a system that ensures the confidentiality of firm-specific information. India needs a strong IPR regime so as to protect the interests of those who innovate as also those who contribute to the genetic material for research.

Post-2005, patented recombinants will not be allowed to be developed in India. The consumer in India, therefore, expects a cheaper version of the patented synthetic drug as well as recombinant proteins. Thus, IPR regulations need to be fine-tuned for developing biotech products. India’s IPR regulations miss out on key issues like ‘data base rights’ and protection of India’s traditional/indigenous knowledge in the field of pharmaceuticals. The directive for protection of data bases has already come into force in Europe.

What India lacks is an adequate policy framework and singe-window clearance to tap the huge export potential, say biotech industry sources.

Further, India also has vast potential for becoming a base for contract research for international companies as research and development (R&D) costs are high overseas. We need to capitalise our network of laboratories and rich biodiversity. However, lack of good toxicology centres, facilities and limitations on animal experimentation is holding up the development of new products in India to an extent. A biotech-based therapeutic product costs around $500 million and 10-15 years to reach the market. In India, it is estimated to cost $250 million, which places it in a strong position to develop as a research centre for multinationals.

However, the Indian pharmaceutical and biotechnology companies have yet to step up R&D spending which is only around 2 per cent of revenues. The average R&D spending overseas is well over the two digit mark of turnover.

The US invested close to $10 billion in R&D last year in biotech and another $70 billion was spent by the pharma industry. In India, however, only a few companies give due attention to R&D. Among these, Shanta Biotech is spending close to 20 per cent of its revenues in R&D and is all set to deliver vaccines in the areas of cancer, typhoid, malaria. It is also working on an AIDS drug.

Further, excessive duties (up to 68 per cent) on the reagents and equipment imported for use in R&D and manufacture of biotech products are making the the industry unsustainable. Besides, lack of venture capitalists, the link between research and commercialisation, is lacking in India. The industry is, therefore, seeking a dedicated venture capital fund to be set up jointly by the government and the industry to facilitate growth.

While venture capital and angel fund investments in the infotech sector have grown from Rs 70 crore in 1996 to Rs 3,200 crore in 2000, funding in biotech sector is almost negligible. In fact, all these issues were recently discussed at a two-day international conference on biotechnology organised by the Confederation of Indian industry (CII) in New Delhi.

The Indian industry, through the CII national taskforce on biotechnology, has already presented a white paper to the prime minister’s office (PMO), ministries of science and technology, planning, chemicals and fertilisers and health, seeking a regulatory framework and an independent regulator on the lines of the Telecom Regulatory Authority of India (TRAI) and Insurance Regulatory and Development Authority (IRDA).

The CII’s national taskforce on biotechnology is chaired by Kiran Mazumdar Shaw. Biotech majors who participated in the conference also proposed the setting up of a unified regulatory commission.

Investment in appropriate research areas, intellectual asset management, technology transfer, accountability, government support for private sector investments in R&D, involvement of industry in policy-making, integration of biotechnology into the pharmaceutical industry and creating a collaborative long-term competitive agenda are key issues that need to be sorted out if India has to be in forefront of the biotech race.