Biotech a sleeping giant

Biotech still a sleeping giant for farmers in North East

The northeastern region considered to be a treasure house of plants, animals and microbial resources, however, continues to remain backward, its potential yet untapped said experts.
The sufferings of the farmers of the northeastern region can be substantially reduced if biotechnology is used in the agricultural sector, they said.

"Biotechnology, if properly applied, can work as the engine of growth for the hitherto underdeveloped North East region." The North East Chamber of Commerce and Industry (NECCI), a premier trade and commerce body of the region, is taking a leading role in bringing about awareness among the farmers about use of biotechnology.

NECCI secretary D K Sharma said his body had organised an interaction of experts from the University of Pune, Regional Research Laboratory, Jorhat, Indian Council of Agricultural Research, Borapani IIT, Guwahati besides several other institutions where the speakers were unanimous in their view that biotechnology has still remained a "sleeping giant" for the North East.

The focus, Pranab Kumar Goswami, head of the department of biotechnology, IIT, Guwahati, said should be on development of entrepreneurs in the biotechnology sector for which the NECCI had selected 25 young entrepreneurs. "Neither the policy makers nor the poor farmers know anything about biotechnology nor has this affected growth" Mr. Sharma said. Mr. Goswami said his department has developed a sound infrastructure for carrying out cutting edge research in biotechnology with active involvement with NECCI.

India is one of the five emerging biotech leaders in the Asia Pacific region and the northeastern region has tremendous potential for development of this sector due to its rich bio diversity, Mr. Goswami said.

"This is an ideal place for biotechnology based cultivation of aromatic and medicinal plants, sericulture, biological control of pests and diseases," he said. "The public sentiment on genetically modified organism, however, may be a barrier for growth, but this has to be changed: he said.

Domestic chronic drugs eye higher market share

(Khomba Singh)

Increase in health awareness, affluent lifestyles and a disposable income is expected to propel the Indian chronic drug segment to double its market share in the next 10 years. The growth will also bring the Indian pharma industry in alignment with global pharma industry, where chronic drugs constitute 70% of the total global drug industry.

At present, the share of the chronic drug segment in the Indian pharma industry vary between 25-35%, depending on whether certain ailments are included in the chronic segment or not. In contrast, for the global pharma industry, chronic drug segment is 70% of the total industry.

"The market share of chronic drugs in Indian pharma industry will double in 10 years. Soon, every Indian company will focus on this particular segment. Pharma companies will have to create new niche marketing initiatives and spend more to create awareness about lifestyle management, according to Chrys Capital MD Sanjiv Kaul.

Currently, the Indian pharma industry is about Rs 27,000 crore and is growing 15-16% annually. The chronic drug segment is already growing at a faster rate, about 18% as compared to 12% for the acute drug segment. Less than a decade ago, the share of chronic drug segment was between 10-20%.

Glen mark MD and CEO Glenn Saldanha said: “Most leading Indian pharma companies have already aligned their strategy or are in the process of alignment to take advantage of the growth in chronic medications.”

Mankind Pharma’s general manager of the product division Sanjay Kaul added: "The chronic drug segment will fuel the growth of the pharma industry. Many of the new product launches in the recent past have been in the chronic drug segment. “The company is venturing into anti-psychotic drugs, which is one of the chronic drugs.

Experts attribute the growth of chronic diseases (also referred as lifestyle diseases) to lifestyle changes which are backed by increase in disposable income.

The major chronic drugs in the country are cardiovascular drugs, anti diabetes drugs, anti-psychotic drugs and hypertension drugs. Chronic drugs also generate more revenue to pharma companies as they are costlier than acute drugs and consumed for a longer period as they are usually meant for life long medication.

Slowdown in US economy(part-2)

To what extent is India likely to be impacted by the slowing of the US economy?

The slowdown in the US will have a ripple effect across the world, though the impact will vary across different regions. All those economies that are export-oriented in nature, which means that a large part of the output in the country is exported, will face a more severe impact than others. Most South East Asian economies fall under this category. India, for example, is not a very highly export-driven economy. What this means is that there is a lot of internal demand in the country that will keep the economy running and while some exports might be affected, there is enough local demand for the time being to keep things going. In the equity market, the impact of the slowdown will vary according to the exposure of a particular company to the US market.

What will be the impact on sectors by a US slowdown?

There are some areas where the goods are being directly imported by the US and this could range from a range of textile products to individual item like jewellery where there would be an impact. But there can also be an indirect threat to several other areas like the information technology area where one might see that companies have reduced the additional contracts that they are going to give to Indian companies. However, there is no clear demarcation of the indirect impact because there might be some companies in the US who undertake additional outsourcing in order to control costs in a tight situation.

Slowdown in US economy(part-1)

Slowdown in US economy and market

(Arnav Pandya)

A key issue worrying equity investors in India is the possibility of a slowdown in the US economy. The fortunes of quite a few sectors in India are linked to the performance of the US economy. Hence if the engines of the world's largest economy begin to slow, the bottom lines of many Indian companies are likely to be impacted.

Technically, how is the slowdown in any economy measured?

A slow down in the economy means a situation where the growth rate of the economy as measured by the gross domestic product (GDP) numbers shows a smaller rise than witnessed previously. For instance, the economy which was growing at 5 % every quarter may ease to 4.5%. The GDP numbers are announced each quarter, but a slowdown should not be confused with a fall in GDP. For instance, a fall in GDP means that an economy that may have been growing by 5 % has now shown a negative growth of 2 %.

How does a slowdown in the US economy affect other countries?

The global economy is now much more interlinked than it was a few years ago with a lot of trade taking place between nations. The US is a major trade partner for many countries and especially a big importer of goods from across the world. If there is a slowdown in demand in the US, then there will be a lesser demand for these goods and this, in turn, will affect the suppliers who are providing the goods to the US. Thus the direct impact of the slowdown is that the number of orders and demand for several products might see a fall leading to an impact on the performance of several companies across the world.

Pharma Industry Needs SEZs(part-2)

India is the world's fourth largest pharmaceuticals producer with an 8% share of global production by volume and 1.5% share by value. The industry produces bulk drugs belonging to all major therapeutic groups requiring complicated manufacturing process and has also developed excellent Good Manufacturing Practices (GMP) compliant facilities for the production of different dosage forms. India is home to the largest number of pharmaceuticals plants (61) approved by the US FDA outside the US, and the country accounts for the largest number of annual drug filings with the USFDA Export growth over the last five years has been over 20%, with the US being the largest market. In biotechnology, India has already been identified as one of the emerging leaders in the Asia-Pacific region. Several Indian companies have already started producing biotechnology-based drugs for diseases such as cancer and diabetes. Here again, China can be a key competitor.

Given our acknowledged strengths in the pharma industry, it's imperative that we step up the momentum, particularly in manufacture and exports. In this context the importance of SEZs cannot be over emphasized, from the point of view of concentrating scarce management and infrastructure resources on an effective programme rather than spreading them over too thinly. The benefits of SEZs can be optimised through active linkage programmes, adequate social and environmental safeguards, and private sector involvement in their development. Other requisites for a successful SEZs such as excellent connectivity, efficient communication and power facilities and finally good social infra-structure need to be ensured.

The change that allocating large tracts of farm land for SEZs would be detrimental to farmers' interests is some what misplaced - for two reasons: one, as the pace of industrialization picks up, area under agriculture is bound to come down. Also, considering the country's total land area, the proportion allocated for SEZs, both already approved and in the works, is minuscule. The more pertinent issue that needs to be addressed is agriculture productivity, which is extremely poor in India. In any case, the commerce minister has since made it clear that prime agriculture land would not be allocated for SEZs. However, there can be no two opinions about timely and adequate compensation to farmers for land, of whatever kind, acquired for SEZs. Two, any possible misuse of land could be checked by making the approval process more stringent, with applicants providing sufficient proof that their intents are genuine. The onus for this is on various state governments; likewise, on ensuring flexibility in labour laws. If the size of SEZs, in terms of geographical area, is a concern, smaller, sector-specific SEZs can be encouraged to come up in central business districts, as already envisaged in the policy.

In sum, the Indian pharma/biotech industry stands to be well served by SEZs. They will boost manufacturing exports, attract much needed FDI increase foreign exchange earnings and create more jobs. It's possible that some corporates might be drawn to set up SEZs for tax benefits alone, some others might profit from misuse of allotted land. But then there are loop holes in any scheme. Overall the SEZs are sound in principle and, if well executed, could fetch considerable dividends over the long run.

Pharma Industry Needs SEZs(part-2)

India is the world's fourth largest pharmaceuticals producer with an 8% share of global production by volume and 1.5% share by value. The industry produces bulk drugs belonging to all major therapeutic groups requiring complicated manufacturing process and has also developed excellent Good Manufacturing Practices (GMP) compliant facilities for the production of different dosage forms. India is home to the largest number of pharmaceuticals plants (61) approved by the US FDA outside the US, and the country accounts for the largest number of annual drug filings with the USFDA Export growth over the last five years has been over 20%, with the US being the largest market. In biotechnology, India has already been identified as one of the emerging leaders in the Asia-Pacific region. Several Indian companies have already started producing biotechnology-based drugs for diseases such as cancer and diabetes. Here again, China can be a key competitor.

Given our acknowledged strengths in the pharma industry, it's imperative that we step up the momentum, particularly in manufacture and exports. In this context the importance of SEZs cannot be over emphasized, from the point of view of concentrating scarce management and infrastructure resources on an effective programme rather than spreading them over too thinly. The benefits of SEZs can be optimised through active linkage programmes, adequate social and environmental safeguards, and private sector involvement in their development. Other requisites for a successful SEZs such as excellent connectivity, efficient communication and power facilities and finally good social infra-structure need to be ensured.

The change that allocating large tracts of farm land for SEZs would be detrimental to farmers' interests is some what misplaced - for two reasons: one, as the pace of industrialization picks up, area under agriculture is bound to come down. Also, considering the country's total land area, the proportion allocated for SEZs, both already approved and in the works, is minuscule. The more pertinent issue that needs to be addressed is agriculture productivity, which is extremely poor in India. In any case, the commerce minister has since made it clear that prime agriculture land would not be allocated for SEZs. However, there can be no two opinions about timely and adequate compensation to farmers for land, of whatever kind, acquired for SEZs. Two, any possible misuse of land could be checked by making the approval process more stringent, with applicants providing sufficient proof that their intents are genuine. The onus for this is on various state governments; likewise, on ensuring flexibility in labour laws. If the size of SEZs, in terms of geographical area, is a concern, smaller, sector-specific SEZs can be encouraged to come up in central business districts, as already envisaged in the policy.

In sum, the Indian pharma/biotech industry stands to be well served by SEZs. They will boost manufacturing exports, attract much needed FDI increase foreign exchange earnings and create more jobs. It's possible that some corporates might be drawn to set up SEZs for tax benefits alone, some others might profit from misuse of allotted land. But then there are loop holes in any scheme. Overall the SEZs are sound in principle and, if well executed, could fetch considerable dividends over the long run.

Pharma Industry Needs SEZs(part-1)

Why pharma industry needs SEZs

(Kiran Mazumadar Shaw)

“Given our acknowledged strengths in the pharma industry, it's imperative that we step up the momentum, particularly in manufacture and exports”

The move to establish a slew of Special Economic Zones (SEZs) has generated considerable heat across the country with critics expressing apprehensions that these enclaves will be detrimental to farmers' interests, further exacerbate regional imbalances, lead to loss of tax revenue, and could result in allotted land being used for profiteering in real estate.

While any major policy initiative is bound to provoke debate in a democratic set-up, the current row over SEZs has raised fears among corporates whether the, " proposal would be put on the back-burner for reasons of political expediency or its provisions so diluted as to defeat its very purpose: lure foreign investment, boost exports, and create new jobs. Thankfully, the prime minister; an economist himself, has been quick to make the government's stand clear by publicly stating that the SEZs are “here to stay”. It's instructive, in this context, to note that thirty years ago, 80 SEZs in 30 countries generated barely $6 billion in exports and employed about 1 million people. Today, 3,000 SEZs operate in 120 countries and account for over $600 billion in exports and 50 million direct jobs.

SEZs are of particular interest to India's pharmaceutical industry, both in absolute terms and in relation to the competition, particularly from China whose meteoric rise is an economic superpower in Asia can be attributed at least in part to its foresight in setting up SEZs some 30 years ago. Coming bundled, as they do, with an attractive tax environment, world-class infrastructure, decentralized administration and a liberal labour environment. China's SEZs have, overall, been a resounding success. The first SEZs, a sprawling 100,000 acre complex in Shenzhen, has alone managed to attract over $30 billion in direct investment and the 49 state level zones across China account for more than 70% of all FDI enterprises in the country. Beijing is fast becoming China's leading biotech centre, boasting several biotech parks designed to meet US FDA standards.

The pharma sector in China recorded an - annual growth rate of I6.7% betweenI978 and 2OO3.Contribution of exports (nearly $ 14.billion) to China's pharma industry was close t0 29% in 2oo5.Already a major competitor to India in the export of APIs (active pharmaceutical ingredients), China is set to run India close in other pharma segments as well. It's making rapid strides in biotechnology, for instance, thanks to a combination of beneficial policy changes, increased programme funding, low labour costs and reorganization of the science and technology system. Chinese bio- generic manufacturers already market 361 recombinant biogenerics and 25 biotech drugs. China currently produces eight of the world's top 10 genetically engineered drugs or vaccines. The revenue from biopharmaceutical production in China reached levels of $4.2 billion in 2005, up from $860 million in 2000, and it's growing at 20% to 30% per year.