The Biotech Industry in India – Hurdles to Growth
The story of the Biotech Industry in India is not a happy one. There was a time, not so long ago when Biotech was a sunrise industry in India and along as with Information Technology (IT). India had pretty much pinned its hopes on IT and Biotech and they were supposed to power the country out of poverty.
Someone like Kiran Mazumdar Shaw, the CEO of one of India’s biggest biotech companies, Biocon, had become one of the most famous people in India. Everybody thought that it was just a matter of time before India became a major player in the global biotech industry.
But unfortunately, it didn’t turn out that way. The story of the biotech industry in India has been a case hype over reality. One might say that Indian biotech has become a victim of its own initial success.
It’s not that the Indian biotech industry has been a complete failure. No, India has performed better at biotech than perhaps any third world country, with Indian biotech making close to $10 billion in 2015, which puts India among the top-12 leading countries in biotech. But it’s not really much as that’s just a 2% share of the total global biotech industry.
The government of India expects the biotech industry in the country to grow at an annual rate of 30%, which would make it worth around $100 billion by 2025, but that’s easier said than done, if past experiences are anything to go by.
The biotech industry in India is often compared to India’s IT industry. But the IT industry, one must understand, is a service sector, while biotech is about innovation. Exports account for 80% of the IT industry’s revenues. Only 50% of the money made by Indian biotech companies comes from exports.
[Is China Better Than India in Software]
IT is a labor intensive industry, and it doesn’t take much capital spending to run an IT company in India – just a matter of buying computers, software licenses, routers and servers. The main cost in IT relates to hiring software engineers.
Biotech, on the other hand, is a very capital intensive industry. It takes a lot of skills and resources to develop complex molecules. Biotech companies have to spend over 35 percent of their capital on research and development, while IT companies in India hardly spend anything on R&D. There’s no question that it is a lot harder for a biotech company to make money than for an IT company.
There is a huge gap between expectations and reality when it comes to the Indian biotech industry. One remembers how, back in the early 2000s, dozens of biotechnology courses were offered in universities and colleges across the country, creating tens of thousands of graduates, who thought a biotech degree was the surefire way to a successful career.
That wasn’t to be so as there was to be an oversupply of biotech graduates with not enough quality jobs to take them all in. Today, most of the biotech courses started a decade or so ago have been closed as reality has sunk in that the biotech industry in India is not as big as it was thought to be. Biotech graduates find themselves taking up jobs in other industries, such as teaching or call centers.
The other problem is a lack of funding. The biotech industry received over $1 billion in investments in the early 2000s, and while it still receives considerable investment from private equity and venture capital firms, it’s nothing to get too excited about. Most investors have tempered their expectations about Indian biotech.
[Role Of Women In Modern India]
The other major issue relates to the regulatory hurdles to biotech in India, especially when it comes to agro-biotech. The Indian Supreme Court is yet to decide whether to permit the development of GMOs (genetically modified organisms) in India. A parliamentary committee has also come down against the development of GMO crops, basically saying no to field trials. This has put the future of several agro-biotech companies on hold, which is really unfortunate. Certainly, as we approach 2016, the Indian biotech industry is not a happy place to be.
