“The New Big Thing” - The Indian Biotechnology Industry
“Biotechnology in a powerful currency, stronger than the Euro or the Dollar, and what’s more, the only hardware you need is the human brain – let’s use our billion brains to our advantage.” – Kiran Mazumdar-Shaw, Founder and Chairman of Biocon, India’s first and largest biotechnology company
The discovery of DNA in 1953 laid the foundation for modern biology but it was only in the early 1970’s, with the development of recombinant DNA technology at Stanford University that biotechnology became a specialized scientific field and its own separate commercial industry. Since then biotechnology has grown and developed at an astonishing pace, both as a science and an industry. Though most of the scientific and economic growth has been concentrated in developed countries like USA and Japan, India has recently played an increasingly significant role in biotechnology by making use of its low-cost skilled labor, natural biodiversity, successful IT industry, patent regime, market size, among other things. Due to these strategic advantages and resources, today India is fast emerging as a global front-runner in this field by making new scientific discoveries and offering attractive economic opportunities to domestic and international biotechnology firms. The Indian biotechnology market is projected to generate US$5billion in revenue and create 1 million new jobs over the next 5 years (Ernst and Young, 2004). This paper will examine this relatively new and rapidly growing sector of the Indian economy in terms of its development, structure, effects on the economy and population, future prospects, related government policy and the challenges it faces.
We must first define what biotechnology is in order to differentiate it from related industries and scientific fields. The Federation of Indian Chambers of Commerce and Industry, the leading authority on the Indian business community defines biotechnology as a “set of techniques for the industrial exploitation of biological systems and processes.” Thus agricultural related technologies, processes and products such as crop engineering, biopesticides and biofertilizers; industrial processes; environmental assessment and management activities; and certain aspects of the pharmaceutical industry (e.g. vaccines) that employ techniques which use living organisms to make or modify products are all part of this sector. It is important to note (especially when looking at statistical data) that the pharmaceutical industry is an entirely separate industry, and only a small part of it (defined above) is considered part of the biotechnology industry. Biotechnology can also be divided into two categories: Traditional (mainly microbiological fermentation) and Modern (genetic engineering, recombinant DNA technology and hybridoma technology). However, as almost all global scientific and economic growth now occurs in “modern” biotechnology, available analysis and data on the industry largely assumes this category as representative of the industry as a whole.
By looking at select events in the last 30 years we can trace the basic chronological development of the biotechnology industry in India. The world’s first biotechnology company, Genetech, was set up in USA in 1976. India got off to a quick start and its first company Biocon, was set up shortly after in 1978. Biocon started as small private company producing industrial enzymes with an initial investment of only US$10,000 in a garage in Bangalore. It was a joint venture between an Irish firm Biocon Bicochemicals (whose ownership was limited to 30% as per government regulations at the time) and an Indian entrepreneur Kiran Mazumdar-Shaw (Mazumdar-Shaw, 2003). Initially local banks were skeptical and refused to provide further credit as they felt Biocon and biotechnology in general was an unprofitable undertaking, with too small and uncertain a market for its products. In the 1970’s and...
Bibliography: Ernst & Young. “India Overview.” 2004 Global Biotechnology Report: Asia-Pacific Perspective. 2004.
Chaudhri, Sudip. “The Pharmaceutical Industry.” The Structure of Indian Industry. New York: Oxford, 2004: 144-179.
Walley, Tom. Pharmaeconomics. London: Churchill Livingstone, 2004.
Figure 1: Top 10 Biotechnology firms in India Source: Times of India, 2002
Figure 2: Consumption Estimate for the Biotechnology Indistry in India Source:Confederation of India Industry, 2004
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