India walks gingerly towards biotech dream

Narayanan Madhavan

BANGALORE: A recent venture formed by four professors embodies a strategy
India could use to carve itself a niche in the biotechnology industry -- nimble
little firms that deploy software to decipher genetic data.

The founders of Strand Genomics Pvt Ltd. in Bangalore say the elliptical
multicoloured-strands in their three-dimensional logo represent genetic
molecules -- and the teamwork that will bring pay-offs. "If you cut one,
the other three will fall apart," says V Vinay, one of the founders who
have taken time off to chase an entrepreneurial dream.

Strand announced last month that it has licensed to US-based firm Syrrx a
software package to help classify images in three-dimensional structural
analysis. As software giant India shifts its focus to biotechnology, the next
big thing in the knowledge economy, it is tempering its dreams with caution over
the daunting risks involved.

Scientists, investment bankers and industry experts meeting in Bangalore
recently threw up a range of ideas on milestones the industry must achieve in
research and regulation if it is to attract investors. Early signals point to
many small and nimble firms grabbing for the lowest hanging fruit in the complex
field, with contract research for overseas players as one possibility.

Experts have little doubt that India is poised to be a big player.
"Pharmaceutically speaking, I don't think India is a developing
country," Oppel Greeff, President for Africa, India and Latin America of
Quintiles Transnational Corp, a US-based clinical trials firm said.

Greeff said global research spending on pharmaceuticals was estimated at $55
billion in about a decade. "India can easily have by 2010 five to 10
billion dollars of that kind." Consultants Frost and Sullivan estimated
research spending on drugs, including those driven by biotech, at $30 billion in
2001.

The software industry has the capacity to crunch enormous amount of data
necessary to success in the race to deliver drugs based on information
scientists won by mapping the human genome.

Think-tanks and software

India has the world's largest English-speaking pool of scientific workers
outside the United States and pharmaceutical firms like Cipla give global giants
a headache in the cost-driven competition to make generic drugs.

A dozen state-funded institutes have quietly laid the groundwork, with solid
research work in biotechnology. When the United States named 11 bodies in five
countries last year for funding in cutting-edge embryonic stem cell research,
the Bangalore-based National Centre for Biological Sciences suddenly shot into
the limelight.

India's petrochemicals leader Reliance group has also ventured into stem cell
research.

The Karnataka government recently opened an Institute for Bioinformatics and
Applied Technology to build a credible lead in the area. Both Karnataka and
neighbouring Andhra Pradesh have launched initiatives to build biotech parks to
house emerging startups.

"We intend to focus on niche opportunities for India," Kiran
Mazumdar-Shaw, chairman of the Biocon group and the head of a "vision
group" set up by the Karnataka government, said.

But the keenness of the authorities is matched by concerns among bureaucrats
and non-governmental organisations (NGOs) over ethical issues like animal rights
and the safety of genetically modified crops, and protecting the nation's
bio-wealth.

Newspaper advertisements -- some by private firms with no credentials -- have
begun offering bioinformatics courses. Shaw told Reuters Indian regulations do
not have an open door for contract research.

"There are restrictions when it comes to new molecules," she said.
Greeff, whose firm has 100 employees in India, argued it should open the gates
to clinical research, and said as much as 15 per cent of all scientists in the
US were of Indian origin. "It (regulatory hurdles) is costing this country
a fortune," he said.

Globalizes research

Candace Kendle, chief executive of contract researcher Kendle International
Inc, said about 10 per cent of global clinical trials take place in Latin
America, Asia and Central Europe, and the figure would rise to 25 per cent by
2008. She said the Internet would help scientists collaborate and sift through
piles of information, driving research.

Shaw called for an elaborate regulatory environment in India to aid
investors, conform to World Trade Organization (WTO) rules, lay down appropriate
healthcare policies and conform to international protocols for its biotech dream
to come good.

India has been a late and reluctant entrant into the WTO regime on patents,
and its drug firms have faced carping from global rivals on the issue.

Shaw also said India must incubate biotechnology startups, although this will
be more difficult after the collapse of Internet stocks.

Indian firms should seek funding from academic institutions in the current
climate, said Al Berkeley, vice-chairman of the Nasdaq stock exchange.
"It's hard to raise public money now. This is the time to prepare to raise
public money," he said. "You've got to spot the next wave and paddle
up to it."

(C) Reuters Limited.