The industry is forecast to grow nearly threefold to $11.6bn by 2017, thanks to its expertise and low labour costs. But to realise its full potential, it has to overcome regulatory hurdles, as well as enhancing its workforce amid stiff competition for investment, Rebecca Bundhun reports
India's biotechnology industry is continuing to grow amid a weak economic backdrop, as companies seek to exploit the country's expertise and competitive costs.
Experts say a slew of challenges in the sector – including regulatory hurdles – need to be overcome if the industry is to realise its full potential.
"The sector still continues to remain insulated from the economic recession, at least for now," said Shakthi Nagappan, the chief executive of BioAsia, an annual conference of the biotechnology sector. Mr Nagappan said he expected "phenomenal growth" over the coming years.
Last year, India's biotechnology industry was worth US$4.3 billion, and is forecast to reach $11.6bn by 2017, according to the consultancy Ernst & Young.
The industry in India is heavily dominated by the pharmaceutical sector, which accounts for more than 60 per cent of revenues. Services, agricultural, industrial and informatics are other major segments in the country's biotechnology sector.
The government-backed India Brand Equity Foundation says the country's large population is a huge market for biotechnology products and services.
Rising investments from domestic and foreign players, full foreign direct investment for manufacturers of drugs and pharmaceuticals, and a low-cost and skilled labour force are some of the growth drivers, according to the foundation
Mr Nagappan says India is well-regarded in certain areas of biotechnology such as the development of vaccines, and it has significant potential in other segments.
According to Mr Nagappan, India has the third-largest biotechnology revenues in Asia behind China and South Korea. But the country overtakes these nations in terms of investments in the sector. He cites India's labour costs and its skilled English-speaking workforce for India's allure as a biotechnology hub.
And although India has massive scope to develop its agricultural biotechnology sector, there are challenges constraining that, including concerns about the effects of genetically modified crops.
"India has been a superpower in agriculture, but there has been some ambiguity in terms of regulating the technology," said Mr Nagappan, adding that biotechnology should be harnessed to meet rising food demand, a growing population, climate change and food securitisation.
"There's a lukewarm rate of advancement in agricultural biotechnology," he said. "India has already invested in public research. There are technologies in the proof-of-concept stage that have to be advanced.
"The primary challenge at this point in time is to assess the safety of genetically modified crops. It is important not to stop the technology, which is where the current problem lies."
Other impediments for India's biotechnology sector include a recent Supreme Court suspension of clinical trials for new drugs being developed by pharmaceutical companies.
But Mr Nagappan expects these hurdles would be overcome with time because New Delhi has been making significant efforts – such as instituting incentive structures – in helping to develop the industry.
The India Brand Equity Foundation notes that a proposal has been made to set up a national biotechnology regulatory authority to screen and approve all biotechnology-related products, and streamline the drug approval process.
Furthermore, India has a five-year plan (2012 to 2017) to accelerate the pace of research, innovation and development of biotechnology.
Even so, Ernst & Young says India needs to work harder in improving the quality and quantity of biotechnology graduates to meet the industry's demands.
Meanwhile, other Asian countries are also vying for their share of the lucrative market.
"India is already facing stiff competition from China, Korea, Singapore, and more recently Malaysia, in terms of attracting investments from MNCs [multinational companies]," said Ajit Mahadevan, a partner at Ernst & Young.
Mr Mahadevan says these countries have stronger technological and scientific competence, better infrastructure, tax and duty exemptions, and easier regulatory procedures.
As such, the Indian government needs to quickly enact regulatory reforms, develop infrastructure and provide more incentives to the biotechnology industry.
"The industry, on its part, needs to come up with a concerted action plan to utilise the available infrastructure and resources more efficiently and focus on nurturing innovation to take the biotech industry to new heights," he said.