Partnerships driving biotech companies

Partnerships have become an important component of growth strategy for both big and smaller biotech companies in India.

Over 25 partnerships or joint ventures have been signed in the last two years, said Nithin Deshmukh, head private equity, Kotak Mahindra Bank and director ABLE (Association of Biotech Led Enterprises).

Addressing a session on 'creating an investment landscape for Indian biotech' at BangaloreBio-2006, he said through this unique model, the bio-pharma sector is scaling up the value chain and has begun to attract global big pharma's attention.

Big biotech companies are looking for ways to expand their product pipeline and co-develop products, such as Biocon has done with its alliance with Nobex and Vaccinex to develop oral insulin and therapeutic antibody products.

Similarly, Panacea has an alliance with Chiron and Cambridge Biostability for vaccines and ready to inject vaccines.

On the other hand, smaller biotech companies constrained by limited capital, are entering into alliances to generate revenue, like Avestha Gengraine with Sequenom and Nordic Biosciences for genetic markers and biomarker based diagnostic kits, he added.

Global companies are also entering into joint ventures with local firms to market their range of products, like Nicholas Piramal with Biogen Idec and Genzyme for interferon beta la and viscose supplement.

However, Aditya Sapru, managing director - South Asia & Middle East of Frost & Sullivan in his overview of the Indian biotech industry said the private sector's investment remains relatively low and it is the state and Central governments which are driving investments in research and development (R&D).

Government R&D investment in biotech in 2005 stood at $55 million, whereas private investment was around $45 million.

"CAGR (2003-06) for government R&D funding was around 19 per cent and CAGR (2003-06) for private funding was 8.49 per cent. With this Indian biotech companies can work towards replicating successful global models for attracting investments," said Aditya Sapru.

According to Deshmukh, drug discovery in India is gaining reputation after India's compliance with WTO norms since January 2005. With this, large pharma companies have been the early movers and made significant headway in attracting global attention like Ranbaxy, Dr Reddy's, Sun Pharma, and Glenmark Pharma.

Younger companies such as Syngene, VLife Science and GVK Biosciences have begun to attract attention with indigenous drug discovery efforts and through global partnerships.

Frost & Sullivan has said the drug discovery outsourcing market in India and China alone is estimated to touch $19.8 billion by 2011. These activities have attracted venture capital interest with quite a few companies getting funded in 2005-06.