Biotechnology - IBEF

Biotechnology

MARCH

2013

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Biotechnology

MARCH

2013

Contents  Advantage India  Market overview and trends  Growth drivers  Success stories: Biocon  Opportunities  Useful information


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Advantage India Demand potential

Innovation opportunities

•

India’s billion-plus population base offers a huge market for biotech products and services

•

Increasing economic prosperity and health consciousness will continue to fuel demand for healthcare services

•

Public funding for product innovation and research in the biotech sector

•

The private sector has been aggressive in pursuing focused R&D

FY17F Market size: USD11.6 billion

Advantage India Increasing investments

FY12

Policy support

•

FDI investment up to 100 per cent is permitted via the automatic route

•

•

A low cost and skilled labour force is attracting outsourced research activity

•

Market size: USD4.3 billion

•

The sector has experienced significant growth in government spending since 1985 Increasing budgetary allocations to the biotech sector Setting up of Biotechnology Industry Research Assistance Council

Source: Association of Biotechnology Led Enterprises (ABLE) June 2012, Global Industry Analysts report (GIA), Aranca Research Notes: 2017F - Forecast for 2017


ADVANTAGE INDIA

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Major milestones in Indian biotechnology industry 1978-1990

•

1978: India’s first biotech firm, Biocon, was setup

•

1981: Centre for Cellular and Molecular Biology was setup in Hyderabad

•

•

1984: Institute for Microbial Technology, Chandigarh was setup

1990-1999

Post 2000

•

1991: National Centre for Biological Sciences pursues R&D in molecular biology

•

2001: The drug authority implements Good Clinical Practice (GCP) guidelines for clinical trials

•

1994: Syngene, India’s first Contract Research Organisation(CRO), starts its R&D services

•

2002: Genetic Engineering Approval Committee (GEAC) approves Bt cotton for commercial planting

•

1997: Centre for Biological Technology (CBT) was established to focus on bioinformatics and genomics

•

2007: National Biotechnology Development Strategy launched

•

2009: National Biotechnology Regulatory Authority Bill 2008 to be introduced in parliament

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2011: Government approved setting up of Biotechnology Industry Research Assistance Council (BIRAC)

1986: Department of Biotechnology (DBT) was formed

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1987: National Institute of Immunology was setup by DBT

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1998: Monsanto Research established an R&D centre for plant genomics

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1989: Bangalore Genei commenced operations

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1998: DBT approves MahycoMonsanto to grow Bt cotton

Source: EXIM bank of India research, Aranca Research Notes: R&D - Research and Development


MARKET OVERVIEW AND TRENDS

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Key segments in the Indian biotechnology industry Biotechnology

Bio-pharma

Bio-services

Bio-pharmaceutical products are therapeutic or preventative medicines that are derived from materials naturally present in living organisms, using recombinant DNA (rDNA) technology

Bio-services mainly include clinical research and CRO along with custom manufacturing

Bio-agri

Bio-agriculture is segmented into hybrid seeds, transgenic crops, bio-pesticides and bio-fertilizers

Bio-industrial

Bio-informatics

Bio-industrial predominantly comprises enzyme manufacturing and marketing companies

Bio-informatics deals with the creation and maintenance of extensive electronic databases on various biological systems; it is the smallest part of the current domestic biotechnology industry

Source: ABLE - Biospectrum industry survey, June 2012; Aranca Research



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Major products/services of the Indian biotechnology industry Biotechnology

Bio-pharma

Bio-services

Bio-agri

Bio-industrial

Bio-informatics

Vaccines

CRO

Hybrid seeds

Industrial enzymes

Database services

Diagnostic

Custom Manufacturing

Bio-fertilizers

Integrated research app software

Bio-pesticides

Biotech software services

Therapeutic

Sources: ABLE - Biospectrum Industry Survey, June 2012; Aranca Research



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Robust growth in the biotech industry

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Keeping on with the growth momentum of the previous years, the Indian biotech industry registered 18.5 per cent growth in FY12; total industry size stood at USD4.3 billion by the end of the financial year Fast-paced growth is likely to continue; the industry is expected to increased in size to USD11.6 billion by 2017, driven by a range of factors including growing demand, intensive R&D activities and strong government initiatives Source: Global Industry Analysts report (GIA)

Market size over the past few years in USD billion 5.0 4.3 4.0

3.6 3.0

3.0

2.5 2.1 1.8

2.0 1.4 1.0

1.0

0.0 FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

Source: ABLE - Biospectrum industry survey, June 2012, Aranca Research Notes: CAGR - Compound Annual Growth Rate



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Bio-pharma accounts for a major share of the market; fastest growth in FY12 by bio-agri

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The bio-pharmaceutical sector accounted for the largest chunk of the biotech industry, with a share of 62.0 per cent in total revenues in FY12

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In the same year, bio-services and the bio-agri segments followed the bio-pharmaceutical segment with shares of 18.3 per cent and 14.9 per cent respectively

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Growth was fastest in the bio-agri segment (23.0 per cent in FY12), followed by bio-pharma (19.0 per cent) and bio-services (15.5 per cent)

Market break-up by revenues (FY12)

62.0%

Bio-pharma Bio-services

1.3% 3.4%

Bio-agri Bio-industrial

14.9%

Bio-informatics 18.3%

Source: ABLE - Biospectrum industry survey, June 2012, Aranca Research



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Growth was driven by both domestic and export markets … (1/2)

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Domestic bio-services sector grew an astounding 102 per cent in FY12 to USD109.3 million The domestic bio-pharma sector, which accounts for more than 61 per cent of the domestic biotech industry, registered a 26.6 per cent growth in FY12; in comparison growth in domestic bio-informatics sector was 24 per cent

Domestic business growth of biotech industry (FY12) 120% 101.9% 100% 80% 60% 40%

26.6%

24.0%

20.4%

20%

11.1%

0% Bio-services

Bio-Pharma Bio-Informatics

Bio-agri

Bio-industrial




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Growth was driven by both domestic and export markets … (2/2)

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Bio-pharma export revenues contribute more than 63 per cent to total export revenues of the biotech sector; the segment registered a growth of 12.2 per cent in FY12 to touch USD1.3 billion Most impressive was the growth in bio-agri sector export revenues which more than doubled in FY12 to USD31.9 million; this yet again points to the export potential in the segment and one that the industry looks set to exploit in the coming years

Export business growth of biotech industry (FY12) 120%

106.8%

90% 60%

30%

12.2%

11.3%

8.0%

0% -19.8%

-30% Bio-agri

Bio-pharma

Bio-industrial

Bio-services Bio-informatics




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Bio-pharma leads the export earning business →

Biotech export revenue reached USD2.1 billion in FY12, nearly half (48 per cent)of total industry revenue

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Over the years export revenue has growth considerably from USD0.4 billion in FY05 to USD2.1 billion in FY12 (a CAGR of 25.6 per cent) Export share among major sub sectors (FY12)

2.5

1.6% 1.7% 0.9% 32.8%

Exports of biotechnology products (FY12) (USD billion)

2.1 Bio-pharma Bio-services

CAGR 25.6 %

2.0

1.5

1.5

1.6

1.2

Bio-agri Bio-industrial

1.8

1.0 1.0

Bio-informatics 0.5

0.7 0.4

63.1% 0.0 FY05

FY06

FY07

FY08

FY09

FY10

FY11

FY12

Source: ABLE - Biospectrum industry survey, June 2012,

Source: ABLE - Biospectrum industry survey, June 2012,

Aranca Research

Aranca Research



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The Indian biotech industry is fairly competitive Top 20 companies accounted for 76.1 per cent of industry revenues in FY12

Top 10 players in the Indian biotech industry

Company

Revenue (USD

Company

million) FY12

Revenue (USD million) FY12

Serum Institute of India

355.8

Rasi seeds

81.7

Biocon

349.3

Panacea Biotec*

80.0

Nuziveedu Seeds

155.2

Bharat Biotech

67.9

Reliance Life sciences*

144.4

Ankur Seeds

67.7

NovoNordisk *

134.9

Mahyco

65.4

Source: ABLE - Biospectrum industry survey, June 2012,Aranca Research Notes: * - Estimates



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Notable trends in the Indian biotech sector Remarkable global positioning

Pharma companies are focusing on biotech

• India is amongst the top 12 biotech destinations in the world • India ranks second in Asia, after China • India is the largest producer of recombinant Hepatitis B vaccine in the world

• Ranbaxy, Cadila Healthcare, Lupin, Wockhardt and Dr Reddy’s are among the major

Indian pharmaceutical companies that operate in the bio-pharma segment

• Lonza, the global leader in the production and support of pharmaceutical and biotech

Global companies setting up base

products, is planning to set up a manufacturing base in India at an investment of USD150 million in Hyderabad. The investment outlay has been planned over two phases: • Phase I (from 2011 to 2013) would include the development of R&D labs for

more than 100 resources • Phase II (from 2014 to 2015) would include the expansion of manufacturing

capabilities and the provision for increasing R&D lab capacity for biologics with 200 additional resources Source: Aranca Research, Indian Law Offices



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Sector benefits from both rising income and population

Increasing investments

Policy support

Growing demand Growing demand

Strong government support

India’s large population is a huge market for biotech products and services

Significant growth in government spending on biotech sector since 1985

Rising investments from domestic and foreign players

Increased healthcare expenditure due to rising income

R&D focus; Indian government has been funding institutes for biotech research

100 per cent FDI is permitted through automatic route for manufacturers of drugs and pharmaceuticals

Inviting

Strong growth in export demand

Increasing budgetary Large domestic allocation to the market

Department of Biotechnology in fiveyear plans

Resulting in

A low cost and skilled labour force is attracting outsourced research activity

Source: Aranca Research


GROWTH DRIVERS

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Increased healthcare expenditure driving domestic demand

Funds availability (USD million) 3,726

Exponential growth in government funding • Healthcare expenditure, as a percentage of GDP, for the 11th Five

1,354

Year Plan was around 5.0 per cent • Government expenditure on healthcare as a percentage of total

expenditure on health in the country was 29.2 per cent in 2010 • During 2007-10, the percentage of allocated resources utilised by

129

302

Ninth FYP

Tenth FYP

Eleventh FYP

Twelfth FYP

DBT was 94.5 per cent Source: Mid term appraisal," Eleventh Five Year Plan, National Biotechnology development strategy, DBT, Aranca Research Notes: FYP - Five Year Plan

Specialised treatment • The disease profile that inflicts the Indian population has

experienced a gradual shift. The number of lifestyle-related diseases being reported is rising; this has led to demand for various kinds of specialised treatments • Ailments such as cancer and diabetes have boosted demand for

biological products

Preventive healthcare • Around 1.2 billion ailments are reported annually, and this number

is expected to rise by at a CAGR of 30 per cent to reach 15 billion cases by 2015. Better access to healthcare facilities and rising lifestyle diseases are driving this trend • Population growth have elevated the vaccine demand for the

geriatric and paediatric population Source: WHO Statistics 2012


GROWTH DRIVERS

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Rising income and incidence of chronic diseases 70

Rising incomes; growing middle class • Growing per-capita incomes; rural incomes also rising • Expanding middle class population; this segment’s size is

estimated to touch 550 million by 2025 from 50 million in 2010 • Rising per capita income leads to increased spending on medical

and healthcare services

million households

Seekers: annual income INR200,000 500,000

Aspirers: 60 annual income INR90,000 50 200,000

Strivers: annual income INR500,000 1,000,000

40 30 Deprived

Globals: annual income >INR1,000,000

20 annual income 10