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India's Biotech Aspirations

Steve Usdin, Senior Editor, BioCentury, November 19, 2001

Cover Story: India looks to the "BT" of biotech to lead it into the post-IT economy. But significant barriers must be overcome to achieve this potential.

The alignment of a vast pool of scientific talent, a worldclass information technology industry, and a vibrant generic pharmaceutical sector are positioning India to emerge as a significant spot on the global biotech map.

India is home to the largest number of English speaking scientists outside the U.S. and in the U.S. Indians are well represented on the boards of startup high tech companies and in academic research laboratories. India's success in IT - the south Asian country grew its computer software and services industry from zero to more than $7 billion in exports over the last decade - may lend credibility to its biotech aspirations, as do the strong business and cultural connections between the subcontinent and Silicon Valley.

But building biotech companies is far more complex. And to achieve its potential in biotech, India will have to overcome some significant barriers, including a confused regulatory environment, uncertainties about intellectual property protection and the slow pace of integration between academic and commercial science.

Hitting the radar: The involvement of Indian companies and researchers in two of the year's biggest biotech public policy stories, bioterrorism and stem cells, provides signs that the gaps between university lab and commercial markets are being bridged. It 
also illustrates the range of biomedical activity underway in India.

When U.S. Sen. Charles Schumer (DN. Y.) began his campaign to increase supplies of Bayer AG's Cipro ciprofloxacin antibiotic, his staff contacted RanbaxyLaboratories Ltd. in New Delhi, one of several Indian companies that have received tentative FDA approval to market generic ciprofloxacin as soon as Bayer's patent expires. In addition, researchers at the Center for Biotechnology at Jawaharlal Nehru University in New Delhi announced in late October that they have been working for four years on a recombinant anthrax vaccine, have completed preclinical studies and soon would start Phase I trials in collaboration with Panacea Biotech Ltd. (New Delhi).

In the stem cell arena, Reliance Life Sciences (Mumbai), a recently formed division of one of India's largest industrial conglomerates, and the National Center for Biological Sciences (Bangalore) are among 11 institutions in five countries named by NIH as sources of embryonic stem cells that can be used in U.S. government funded 
research.Business models Unlike the U.S. and Europe, where biotech companies 
are typically started by academic scientists, Indian companies have taken four distinct routes to the biotech space: diversifying from large scale industrial activities such as chemical manufacturing; creating startups focused on indigenous production of first 
generation recombinant proteins; investing profits and expertise from generic pharmaceutical manufacturing to move into discovery; and grafting biology branches onto strong IT stems to create bioinformatics and genomics companies.

Biocon Ltd., the first and largest biotech company in India, started in 1978 formulating industrial enzymes provided by an Irish company. The company's founder and CEO, Kiran MazumdarShaw, has taken it through a complex pathway that included becoming a joint venture with Unilever plc, acquisition of Unilver's stake by ICI plc, and emerging in 1998 as an independent company.

Using a proprietary solid surface fermentation technology, Biocon retains its roots in the world markets for food and industrial enzymes. It also has turned its fermentation technology to the manufacture of drugs, developing a pipeline of statins and winning 
U.S. FDA approval this year to market generic lovastatin for cholesterol reduction. Biocon also has created contract drug discovery, clinical trials, genomics and chemistry research units and sister companies. Biocon's Syngene unit has 150 scientists working on drug discovery, chemical synthesis, molecular biology, gene 
expression and related areas. Indian companies entered the recombinant protein field in response to urgent needs for inexpensive vaccines to treat easily prevented infectious diseases that plague the nation. Varaprasad Reddy, an electronic engineer with no experience in the life sciences and modest financial resources, initiated a project to produce a recombinant hepatitis B vaccine in 1992, sending six researchers to the labs of Indian molecular biologists in the U.S. for training.

Hyderabad, Bharat Biotech International Ltd., and Biological E Ltd., acquired competency in recombinant protein R&D and created their own manufacturing technologies. In addition to these startups, India's fifth largest pharmaceuticals company, Wockhardt Ltd. (Mumbai), manufactures and sells a hepatitis B vaccine based on licenses from Rhein Biotech NV (NMarkt:RBO, Maastricht, the Netherlands).The Indian vaccine startups now are turning to indigenous versions of 
other recombinant proteins, including granulocyte colony stimulating factor (GCSF) and other growth factors, erythropoietin (EPO) and insulin. Dr. Reddy's Laborato In 1995 he secured lab space and technical assistance from the Centre for Cellular and Molecular Biology (CCMB, Hyderabad) and funding from the Bank of Oman for 
construction of a manufacturing plant. Two years later, India's first genetically engineered vaccine was on the market, selling for 20 times less than the imported product. Today, Shantha Biotechnics Pvt. Ltd. has 360 employees, manufactures interferon IIa and has five other proteins in the pipeline. Pfizer Inc. distributes Shantha's hepatitis B vaccine in India and has right of first refusal on the 
company's new products.

In the process of developing low priced hepatitis B vaccines to compete with imported products that most Indians could not afford, Shantha and its rivals in Indian research centers Traditional barriers between government funded research laboratories and industry are crumbling, enabling Indian biotech companies to tap into 
expertise, resources and manpower. The Council of Scientific and Industrial Research (CSIR) operates a network of government laboratories with mandates to collaborate with industry. CSIR's Centre for Cellular & Molecular Biology incubated India's first 
recombinant protein product, Shantha Biotechnics' hepatits B vaccine, and it has numerous industrial relationships, including a joint venture with Biological E and Amersham Pharmacia to build DNA microarrays. The National Brain Research Centre, operated by the Department of Biotechnology, part of the national government, conducts intramural and supports extramural neuroscience research. 
Many of the country's major universities, including Jawaharlal Nehru University (New Delhi) and the University of Hyderabad, have strong molecular biology and chemistry expertise. The Indian Institute of Science (Bangalore), a private institution, operates a Centre for Scientific and Industrial Consultancy to facilitate technology 
transfer and industrysponsored research.

Shantha and Bharat are positioning themselves to partner with U.S. generic companies to enter the American and European markets when patents on these products expire (see "India's Deal Flow", A3). They also are collaborating with Indian and western companies and research funders to develop new prophylactic and therapeutic vaccines for AIDS, and for malaria, rotavirus and other diseases that are relevant for tropical developing countries. While the first indigenously produced recombinant biologic hit the market in 1997, Indian generic companies have deep roots - and much deeper pockets - than the startups. Protected by high tariffs and a Sovietstyle command economy, featur ing fiveyear plans targeting capital investments to government affiliated businesses and a rigid system of licenses and permits controlling commerce, India built a large chemical manufacturing industry in the 1960s and 1970s.

The chemical sector turned its attention to bulk drug components in the 1980s when the Indian economic system crumbled in synch with the Soviet Union's, and in 1990 the government initiated reforms to reduce restrictions on industrial development, increase competition and open domestic markets to imports. Stimulated by the new 
competitive environment and helped by the lack of product patent protection for pharmaceuticals, Indian industry turned its chemical manufacturing knowhow to generic drugs. Perhaps paradoxically, the generic companies became adept at devising novel, efficient drug manufacturing techniques in part because process patents are valid in India. Today, the larger generic companies are moving into biologics 
and have discovery programs. RDY, which was the first company to get FDA approval for generic fluoxetine (Prozac), has discovery efforts targeted at diabetes, inflammation, lipid metabolism, oncology, and cardiovascular disease.

The company plans to launch monoclonal antibody products in India by 2004, according to Chairman Anji Reddy. In addition, RDY has licensed two insulin sensitizers to Novo Nordisk A/S, which is slated to start Phase III trials in North America in the first quarter of 2002. RDY also has established a research subsidiary in Atlanta, Reddy US Therapeutics Inc., as well as a contract research subsidiary that 
will focus on genomics. Last week, Wockhardt announced that it filed an IND application with the Drug Controller General of India to conduct clinical trials of WCK771, a broadspectrum antibacterial agent with activity against both Gram positive and Gram negative pathogens. The company is developing two other antibacterial agents. Ranbaxy, India's largest pharma company with 2000 sales of more than $500 million, also views innovation as key to its future. The company has branched out from creating new formulations of existing drugs and has half a dozen molecules under development, Brian Tempest, president pharmaceuticals, told BioCentury.

Ranbaxy has collaborations with several U.S. and European companies to develop new formulations and delivery technologies. For example, Ranbaxy and Vectura Ltd. (Bath, U.K.) announced in June that the Indian company's Ranbaxy B.V. subsidiary (Antilles, the Netherlands) will develop oral formulations using Vectura's controlledrelease drug delivery technology, with Ranbaxy providing clinical development, scaleup, manufacturing and marketing expertise. Partnering model 
Ranbaxy is looking for global partners to help it move more aggressively into the biotech space and can bring costeffective basic science, clinical research and manufacturing capabilities to the table, Tempest said.

"From the U.S., it looks like cost of manufacture is our edge. But our cutting edge is actually the low cost of innovation," he said. "A number of companies in the U.S. have banks of molecules, including some that are not commercially viable to exploit. If they partner with a big pharma company, they won't get anything. On the other hand, an Indian company can bring a huge ability to manufacture and to conduct clinical trials." Guljit Chaudhri, senior vice president of strategic business development at a basic and specialty chemicals manufacturer that is diversifying into pharmaceuticals, Jubilant Organosys Ltd. (New Delhi), also sees a mesh between the capabilities and needs of Indian companies and global biopharmaceuticals players.

"Internationally, the cost of R&D is constantly increasing and the pace of new discoveries is slowing down," she noted. "This provides an opportunity for Indian players to lever there is a fairly substantial opportunity for the Indian firms and for U.S. firms because they can go further down the food chain. India has a large untapped pool of talent in protein chemistry, medicinal chemistry and classic synthetic and organic chemistry." Some U.S. and European collaborations are tapping into Indian expertise, some reflecting the expatriot links already seen between India and Silicon Valley. For example, the CCMB recently won a contract from Onconova Therapeutics Inc. (Princeton, N.J.) to create transgenic fruit fly high throughput 
assay systems and use them to screen drug targets for anticancer effects.

Onconova president Ramesh Kumar said he was attracted by CCMB's capabilities, low cost, and eagerness. "We could collaborate with companies or academic groups in the U.S., but we found that most of the good academic labs were working with target validation companies and those companies were working with large pharma companies," he said. According to Kumar, CCMB is providing worldclass science at a cost 50fold lower than Onconova would have to pay in the U.S.

The company also raised much of its startup funding in India, including $3 million from Zydus Cadila Healthcare Ltd. (Ahmedabad), a generic company that is moving into discovery and biotech. Zydus also is partnering in Europe, in January announcing a deal to develop an antibiotic with Pantheco A/S (Copenhagen, Denmark). Zydus will 
undertake chemistry, preliminary screening and initial characterization of compounds with antibacterial activity. Pantheco will perform preclinical and early clinical development. Each company will cover its own R&D costs, and profits will be shared 5050. In 1998, when Symyx Technologies Inc. (SMMX, Santa Clara, Calif.) 
considered out sourcing the synthesis of organic chemicals used in its discovery programs, it evaluated companies in the U.S. and offshore.

"We did a parallel evaluation and found that the folks at Biocon's Syngene were certainly as fast as folks elsewhere, had a higher success rate with the compounds they attempted and were almost an order of magnitude less expensive," said Peter Cohan, vice president for discovery. Cohan told BioCentury that SMMX did not sacrifice quality or speed. "A lot of people believe that work done in China, 
manage their lowcost advantage and strong chemical synthesis skills to enter into collaborative research projects with multinational companies." Ajay Dhankar, an industry analyst for McKinsey and Co. in Mumbai, agreed that the ability to provide lowcost research, high quality chemistry, and informatics and manufacturing expertise could make Indian companies attractive partners for mid sized U.S. and 
European biotechs that are looking for help climbing the value chain.
"If you take a medium sized biotech company in the U.S. that is reasonably cash rich but doesn't have money to throw away, maybe it has five targets and 20 leads. It can't develop them all, but it makes no sense monetarily to license them out to big pharma that early. They could be in a good position to form an alliance with an Indian company that could develop their leads at a much lower cost," he said.

The Indian software industry was built on a service model, initially "body shopping" programmers to the U.S. and Europe, and then doing contract programming on legacy computers and providing Y2K solutions. Dhankar argued that the service model similarly could jump start the Indian biotech sector. "India has created a very successful model around remote IT services. We see an analog in biotech happening 
where we expect that Indian companies will be able to provide high value services to global pharma and biotech companies," he said.

"Most biotech firms in the U.S., particularly those focused on small molecules, lack chemistry skills, the downstream capabilities crucial for developing products. They are starting to realize that they've been focused on upstream activities and haven't been focused on lead optimization," Dhankar added. "We expect that if a certain number of 
Indian companies can focus on this as an area of development, India or elsewhere is second rate. The fact of the matter is there are highly talented, motivated scientists offshore who are looking for opportunities to succeed and delight their customers and Syngene is one of those companies," he said.

Other Sygene clients include Abbott Laboratories (ABT, Abott Park, Ill.), Neogenesis Drug Discovery Inc. (Cambridge, Mass.), AstraZeneca plc (AZN, London, U.K.), GlaxoSmithKline plc (GSK, London, U.K), Affymax (Palo Alto, Calif.), BristolMyers Squibb Co. (BMY, Princeton, N.J.), Dow Biotech (San Diego, Calif.) and others. Following on this line, in September, RDY chairman Reddy announced the formation of a new company, Aurigene Discovery Technologies, to provide proteomics and discovery services to biopharmaceutical companies.

The informatics crossover Given India's strong IT base, bioinformatics is an obvious choice for entrepreneurs seeking a ticket into the biotech space. Scores of large IT companies have established bioinformatics units and Bangalore is bristling with bioinformatics startups. "There are opportunities in India for data mining, gene annotation, and the development of software interfaces. These will require enormous computing power and money and there is no better place than India to do this," said D.P. Verma, a prominent plant molecular biologist. While a great deal of the action may prove to be froth, India is building substantial infrastructure and some 
companies are linking up with the biomedical expertise necessary to make real businesses. The Department of Biotechnology plans to award a $120 million contract for a supercomputer based network to link 11 bioinformatics centers and provide researchers with access to genomics and proteomics databases. Satyam Computer Services Ltd. (SAY, Hyderabad) is working with the CCMB to develop annotation and other genomics data products and to offer bioinformatics services to 
international clients.

There are hundreds of bioinformatics companies springing up like mushrooms, but most don't have any understanding of what customers need. They think they can just put a bunch of programmers and cally retarded India's progress in biotechnology, according to Pushpa Bhargava, a molecular biologist who founded the CCMB. In 1988, Bhargava said, he estimated that low wages and overhead would allow 
India to sequence the entire human genome for a small fraction of the cost in industrialized countries. However, he said, government officials rejected his plans and other proposals to take bold scientific initiatives.

Exploiting the possibilities opened by the genome sequence provides India with a second chance, particularly in areas like proteomics that rely on IT expertise. And in a departure from precedent, the challenge is being grasped by both the public and private sectors, according to Bhargava, who advises several biotech startups. While 
advances in technology have reduced the relevance of lowcost manpower, India still can apply a different kind of human resources to genome discovery. "We have the largest human biodiversity in the world," Bhargava said. In this subcontinent there are close to 600 welldefined ethnic groups which over the centuries, for millennia, 
have kept their identity. Twenty percent of India is tribal and they have maintained their identity. That's marvelous in terms of material, something no other country can match," he said.

Thus Biocon is working with Surromed Inc. (Palo Alto, Calif.) to identify biomarkers for diabetes in the Indian population. Nicholas Piramal India Ltd., a Mumbai pharmaceutical company, has formed a partnership with the government's Centre of Biotechnology to conduct genomic research with the nation's diverse populations and to explore India's traditional medicines.

Barriers to overcome Viewed from a distance, the impressive technical achievements of the Indian elite can obscure the difficulties of conducting 21st century science and business in a developing country. While it has created nuclear weapons and written much of the software that coordinates the financial transactions of multinational companies, India spends $3 per capita annually on drugs. The future of the Indian biotech industry depends to a great extent on the government's ability to balance competing demands for cheap drugs with the imperative to stimulate innovation by enforcing intellectual property rights. computers in a room and start doing bioinformatics," said V.N. Balaji, CEO of the Jubilant Biosys Ltd. subsidiary 
(Bangalore) of Jubilant Organosys.

He predicted that while most of these companies will disappear, real opportunities will remain. "Most of the U.S. and European genomics and bioinformatics companies are turning themselves into pharmaceutical companies and at the same time the decreasing costs of microarray chips and moves toward in silico research will generate 
enormous amounts of data," Balaji said. Jubilant's model is based on performing contract bioinformatics services, at client sites and in Bangalore, creating and curating 
databases, building customized tools, and performing contract research. Sreenivas Devidas, vice president of business development and strategy at Strand Genomics Pvt. Ltd. (Bangalore), predicted that the market will break into two segments, with some companies providing lowmargin, lowend services such as annotation, and a 
handful of companies providing highend services.

Devidas, a former vice president and life sciences advisor to venture fund ConnectCapital Holdings (Mumbai), said Strand is positioning itself at the top end. Strand, a spinoff from the Indian Institute of Science, is developing a suite of tools for genomics annotation, in silico research and macromolecular structure analysis. In June, 
AlphaGene Inc. (Woburn, Mass.) announced a collaboration to use bioinformatics technology from Questar Bioinformatics Ltd. (Hyderabad) to mine AlphaGene's protein library. Questar will provide support for structure determination, pathway identification, and small molecule library development. The Indian government's reluctance to take risks and the scientific establishment's dependence on government have history

First and foremost on Dhankar's list is putting a tight patent regime in place. "That includes adhering to the GATT agreement India has signed, and making sure there is enforcement. Often in India laws come into place but companies ignore them and things get tied up in courts for years," he said. Second, Dhankar said, is "fostering an 
environment of greater innovation and entrepreneurship. It is very difficult for someone to start up a new company today, but it can be done."

Finally, he said, India still has work to do to create a more business friendly environment, "including removal of certain duties and recourse to the courts." Although there is a modern legal system and independent judiciary, delays in moving cases through the courts limit their utility for resolving commercial disputes.

Other barriers include expensive and unreliable power, and high prices for transportation and real estate. While low wages more than compensate for high infrastructure costs, as the coun try becomes more integrated into the global economy, skilled manpower costs are likely to increase.

The government is mobilizing to address the biggest obstacle to foreign investment in biomedical research: intellectual property protection. Under the TradeRelated Intellectual Property Rights (TRIPs) agreement, India must implement patent protection on pharmaceuticals and biotech products by 2005 (see "TRIPS deal: Much ado about...", A14). In the runup to 2005, the nation's major 
biopharmaceutical companies are anticipating that the era of piggybacking on foreign i.p. is drawing to a close. Thus they are accelerating efforts to get bioequivalent versions of patented wellcharacterized recombinant proteins onto the market before the window closes.

"Come 2005, we will not be able to do any more recombinant proteins that are patented. You have four years to do whatever you like for the people of India," RDY's Reddy told a group of biotech and pharmaceutical executives

Pushing clinical trial capacity establish 10 clinical centers and has prequalified physicians and hospitals capable of conducting trials for oncology, central nervous system, endocrinology, infectious diseases, internal medicine and cardiovascular drugs. It costs less to conduct trials in India than in developed countries, but the 
primary reason for working there is the availability of patients and investigators, according to Ferzaan Engineer, managing director of Quintiles India. "In absolute terms, certainly India is cost effective. But I'd add the time factor. If we can do a study in half the time, that is more important to a customer than us doing it 20 
percent cheaper," he said.

With a population of 1 billion, the larger patient pools are an important factor. Engineer noted that the incidence of oral cancer and diabetes are far higher in India than in the U.S. and Europe. India is also a natural place to conduct trials of therapies for infectious diseases. AstraZeneca plc has established a laboratory and clinical research center in Bangalore dedicated to discovery and clinical trials for diseases of relevance to the developing world, particularly tuberculosis. The company also operates a research foundation in India that conducts and sponsors basic molecular 
biology research. Similarly, Pfizer Inc.'s Indian subsidiary conducts clinical trials for its parent. - Steve Usdin

The Drug Controller General of India recently announced that new regulations for reviewing applications to test investigational drugs will be released by the end of November. The regulatory regime, modeled on World Health Organization and International Conference on Harmonisation guidelines, is intended to increase the number and scope of international trials conducted in India. In addition to 
conducting bioequivalence trials of approved products and studies involving new indications for drugs approved in developed countries, companies have begun selecting India as the site to conduct human studies of new drugs. Indeed, according to Ranjit Roy Chaudhury, chairman of an Indian Council of Medical Research toxicology panel that advises the Drug Controller on applications to conduct clinical 
trials, India has been the site of the first human studies of at least six new molecular entities since 1996.

Attracted by large patient populations, networks of academic medical centers, and genetically distinct population groups, international and domestic companies are establishing clinical research organizations in India. Since it started working in India in 1997, Quintiles Transnational Corp. (QTRN, Research Triangle Park, N.C.), 
has conducted more than 35 trials, primarily Phase III trials to support regulatory submissions in the U.S. and Europe. The company has helped products or when foreign companies are vying with domestic entities, according to Chandra Prakash, chairman of the Biotech Committee of the All India Biotech Association (AIBA).

"The commitment of finances in Indian biotechnology is risky because the biotechnology product approval process in India is even more complex and timeconsuming than in the U.S.," he said. "It is impossible to state if or when a given biotechnology product, which is approved in many countries, will get approval in India." Prakash is officer on special duty for the Punjab State Council of Science 
and Technology. The CII's National Task Force on Biotechnology has developed a series of recommendations for regulatory reform. Prime Minister Atal Bihari Vajpayee announced the government's intention to implement many of the steps suggested by CII and other business groups in September when he released a document outlining the nation's vision for biotechnology. The document commits the Department of Biotechnology to streamline approval procedures for biotech products and to finalize intellectual property laws and regu meeting in New Delhi last summer. He said that RDY plans to announce six other patented recombinant proteins over the next two years.

"India will adopt the spirit and the letter of intellectual property laws," Ranbaxy's Tempest. "Our plans are based on the assumption that we will be operating in a climate in which product patents will be enforced," he said. Improving the regulatory environment is another essential precondition for the emergence of a worldclass biotech sector, according to Jubilant's Chaudhri, who was one of the organizers of last summer's Confederation of Indian Industries (CII) conference on regulatory reform. She noted that the "pathway for approval of recombinant products is unclear, multiple government entities have overlapping jurisdiction, and there is ambiguity regarding the timelines for approvals for diverse types of biotechnology products." Approvals are sometimes complicated by conflicts of interest when government researchers are developing competing ......?lations for product patents by 2003. Finally, over 
the last 15 years, the Department of Biotechnology has invested about $500 million in academic research and training. But ironically, the university and pharmaceutical company laboratories of the industrialized nations have benefited greatly from this investment, as the dearth of opportunities at home led generations of Indian 
scientists to go abroad.

The government is determined to stem the brain drain, in part by integrating its national laboratories and universities, which have been isolated from commerce by law and custom, according to Ragunath Mashelkar, director general of the Council of Scientific and Industrial Research. Under the new schemes, the government is putting 
its weight behind technology transfer into the private sector (see "Indian Research Centers", A2).

"The mindset of Indian academics has changed, now there is an orientation to transfer technology to industry," Manju Sharma, secretary of the Department of Biotechnology, told BioCentury.

Senior Writer Gita Kumar contributed to this report.


  • Institution Affiliation Centre for Cellular & Molecular Biology 
    (Hyderabad) CSIR 
  • Indian Institute of Chemical Technology (Hyderabad) 
  • CSIR Central Drug Research Institute (Lucknow) 
  • CSIR Centre for Biochemical Technology (New Delhi) 
  • CSIR Centre for Development of Advanced Computing (Pune) 
  • Ministry of Information Technology Indian Institute of Chemical Biology (Kolkata) 
  • CSIR Indian Institute of Science (Bangalore) Independent academic institution
  • Indian Institute of Technology (Chennai, Delhi)
  • Public academic institution Kanpur, Kharagpur, Mumbai) 
  • Industrial Toxicology Research Centre (Lucknow) 
  • CSIR International Centre for Genetic Engineering & United 
    Nationsaffiliated Biotechnology (New Delhi) organization 
  • National Brain Research Centre (New Delhi) 
  • Department of Biotechnology National Centre for Biological Sciences (Mumbai) 
  • Tata Institute of Fundamental Research National Chemical Laboratory (Pune)

CSIR National Institute of Immunology (New Delhi)

Hyderabad: A BT Hotbed
In addition to putting strong patent protections into effect, the 
key milestones for the Indian government will include implementing 
streamlined, transparent and predictable regulatory pathways. In the 
private sector, startups created to copy patented biologicals will be 
challenged to move into research, independently or under contract 
from U.S. and European companies, and for lowcost generic producers 
to make the transition to discoverybased endeavors. The Indian 
pharmaceutical industry, including domestic and export sales as well 
as contract services, totals about $5.5 billion, according to 
McKinsey and Co. "Assuming the industry, and to a lesser extent the 
government, can put in place solutions to three or four barriers, we 
see it growing to about $25 billion in 10 years," said McKinsey's 
Dhankar. But, he added, "we don't see that happening unless 
government and industry make some fairly significant India, a nation 
that has enthusiastically embraced and been transformed by 
information technology, is in the midst of a biotech frenzy. 
Newspapers and politicians hail "BT" as the savior for the dotbombed 
IT sector, and scores of computer software firms have announced the 
formation of bioinformatics spinoffs.

Hyderabad, capital of the southcentral state of Andhra Pradesh, 
competes for biotech preeminence with Bangalore, the country's 
cosmopolitan IT center. Bangalore, capital of Karnataka in south 
India, boasts Biocon India Ltd., the first and largest biotech player 
in India, the Indian Institute of Science, scores of startups 
oriented to informatics and genomics, and a number of venture 
companies looking to diversify from IT to the life sciences. 
Hyderabad is home base for the Centre for Cellular and Molecular 
Biology (CCMB), the most entrepreneurial of the country's national 
laboratories, a large segment of the generic pharmaceutical industry, 
startup recombinant vaccine makers Shantha Biotechnics Pvt. Ltd. and 
Bharat Biotech International Ltd., and Dr. Reddy's Laboratory Ltd. 
(RDY), a multinational generics manufacturer that is planning to 
challenge the firstgeneration toptier biotechs with offpatent 
versions of blockbuster genetically engineered proteins.

Hyderabad is also ground zero for BThype. While its scores of 
biopharmaceutical companies and thousands of life sciences and 
chemistry graduate students highlight the reality and promise of 
Indian biotech, the city's Biotech Barber Shop, an insalu brious 
lowtech establishment in the city center, exemplifies the hope that 
achieving bioprosperity is simply a matter of rebranding. On the 
outskirts of the clogged streets of Hyderabad and its twin city 
Secunderabad, on roads that wind through fields tilled by 
buffalopower and dusty villages, the state and national governments 
and the private sector are trying to recreate Silicon Valley's fusion 
of academic science and entrepreneurialism. The state's Genome Valley 
is being carved from the badlands 40 kilometers north of the city, 
where Andhra Pradesh is offering tax concessions and infrastructure 
support for companies to locate in Biotechnology Park.

The first occupant is Bharat Biotech, which was established by a 
group of Indian scientists living in the U.S. and led by Krishna 
Ella, a molecular biologist who moved to Hyderabad from Wisconsin in 
1996. ICICI, one of the country's largest investment funds, has built 
a life sciences R&D incubator adjacent to the state's Biotechnology 
Park. ICICI has gone to great lengths to recreate the atmosphere of a 
California biotech campus at its Hyderabad Knowledge Park, equipping 
it with climatecontrolled modern plugandplay labs. But there also are 
contrasts with California that go well beyond the bright saris the 
grounds workers wear. ICICI's self sufficiency is perhaps 
unparalleled, including its own electricity substation, water and 
sewage plants. - Steve Usdin

India's deal flow

Selected collaborations between Indian companies and institutions 
with companies in North America and Europe since the beginning of 
1998. List excludes deals to distribute drugs and diagnostics inside 
India. Date Indian company/ institution

Other company Deal Oct01 Wockhardt (BSE:532300) Rhein Biotech 
(NMarkt:RBO, Wockhardt is in the process of buying RBO's equity 
Maastricht, the Netherlands) holding in their 1996 Wockhardt Rhein 
Biopharm joint venture, which is producing a recombinant hepatitis B 
vaccine, BiovacB. Jun01 Questar AlphaGene (Woburn, Mass.) The 
companies will use Questar's bioinformatics technology to mine 
AlphaGene's protein library. Jun01 Ranbaxy Labs (BSE:500359) Vectura 
(Bath, U.K.) Ranbaxy's Ranbaxy B.V. subsidiary and Vectura will 
develop an oral controlledrelease drug delivery technology using 
Vectura's controlledrelease drug delivery solutions. May01 Zydus 
Cadila (BSE:532321)

Onconova Therapeutics Zydus Cadila entered into a joint venture with 
Onconova (Lawrenceville, N.J.) Therapeutics for collaborative 
oncogenomics research, manufacturing and marketing. May01 Dr. Reddy's 
Labs (NYSE:RDY; Novartis (SWX:NOVN; NVS) RDY granted NVS exclusive 
worldwide development and BSE:500124) marketing rights to its DRF 
4158 insulin sensitizer to treat Type II diabetes. Jan01 Zydus Cadila 
(BSE:532321) Pantheco (Copenhagen, The parties will develop 
antibiotic compounds based on Denmark) existing classes of antibiotic 
drugs. Apr00 Tumkur Chemicals

Phytopharm (LSE:PYM, Tumkur will manufacture two PYM compounds 
derived from Godmanchester, U.K.) native Indian plants, P54 and P56. 
Apr00 Shantha Biotechnics Pfizer (PFE, New York, N.Y.) PFE obtained 
right of first refusal to become the exclusive comarketer for any new 
products developed by Shantha. Mar99 Proagro Hoechst Schering AgrEvo 
AgrEvo acquired Proagro, which specializes in seed (Berlin, Germany) 
breeding of rice, corn, cotton and oil seed rape, for an undisclosed 
amount. Feb99 Indian Institute of Science MitoKor (San Diego, Calif.) 
MitoKor will fund research at the Institute to synthesize 
intermediates for use in the company's programs. MitoKor retains 
exclusive rights to compounds developed in the program, and to 
certain synthetic processes. Sep98 Shanta Biotechnics American 
Diversified American Diversified will exclusively distribute Shanta's 
(Hickory, N.C.) ShanvacB hepatitis B vaccine in South America, Asia 
and Africa.