Biotech/ Life Sciences

Biotech/ Life Sciences

India’s fast growing biotechnology industry aims to grow to USD 6.5Bn by 2010 and to employ over a million English-speaking scientists and engineers. Key areas of leverage for European companies are commercialisation of new products through Clinical/User Trials and local sales, Contract Research and Development and Bioinformatics, powered by a low cost of infrastructure, a vast pool of talented and skilled man-power and an established information technology sector


The Opportunity

In 2005 India complied with its TRIPS obligation by introducing the required product patent regime for pharmaceuticals and agricultural chemical products, boosting investment potential by multinational companies. The strong Indian IT sector already underpins Indian capability in developing sophisticated data management and analysis tools to mine data such as gene and protein sequences.

About 60% of the industry comprises human health applications, 10% agricultural biotechnology and 30% industrial applications, bioinformatics and genomics. Low cost and a talented large pool of manpower is attracting greater numbers of international companies. Key areas of expertise are research and production of vaccines, diagnostics, enzymes and bio-pesticides.

India produces an average of 700,000 postgraduates and 1500 PhDs every year in the biosciences and engineering fields. Of the 800 companies in the sector, about 50 work on advanced biotech applications, while smaller companies are focused on contract research as a way to building capacity prior to establishing drug discovery divisions.

Both the Central and State Governments provide strong support to the industry with several government-funded research institutions. The industry is primarily located in Bangalore in the State of Karnataka with other clusters in States such as West Bengal, Maharashtra, Andhra Pradesh and Kerala.

With a fast growing Nutraceuticals market, India’s low-cost infrastructure and research capabilities are being leveraged for the low-cost commercialization of newly developed food and food supplement products. India’s large patient/ user pool and low-cost investigators play a major role. Safety tests and user/ clinical trials for food/ food supplements in India can be calibrated for compliance with international requirements, supported by ongoing low-cost research and development.

Considerations & issues

A multitude of legal and regulatory requirements and approvals can be time-consuming and cause for delays, especially in the case of drugs. Import duties on imported raw materials can be high. Issues that need soft due-diligence attention within the business strategy, negotiation, and contracting process, include:

· Cultural issues and practices – sector and community specific

· Reputation, integrity, prior conduct of any local Indian partners

· Protection of IPR in law and in practice

· Due diligence on credentials and integrity of Clinical Research Organisations (CRO)

· Dealings with Government/ Bureaucracy – unwritten, undisclosed promises and expectations

· Lack of transparency

· Middle men, agents and surprises

· Compliance with Regulatory and legal frame-work – relying on local advisors

· Relying on the local authorities to perform their obligations and on time

· Relationship strategy – ‘soft issues’

· Overall contracting strategy – and pragmatic options for dispute resolution


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Of all risk factors, this is most crucial in managing market entry down-side risks. Clients neglect at their peril the history of personal and business conduct of local partners, employees and advisors, their modus operandi with foreign partners, successes and failures, their cultural leanings and tactics, conflicts of interest, and even political affiliations.

A common mistake is to take no steps to uncover these ‘soft’ aspects – particularly in the face of intense friendliness, bonding and warm hospitality for which Indian business culture is well known.

Knowing your local partners can be a complex, multi-layered and prolonged effort throughout the life-cycle of the relationship

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