2013, heralds the dawn of a new economic era that can aptly be called a “Bio-economy”. This new era will unleash the power of biotechnology to promote socio-economic progress by transforming agriculture, healthcare, energy and the environment, offering India the opportunity to emerge as a leading bio-economic power.
The Indian biotechnology sector grew 21.5% in 2011-12 in the midst of an economic slowdown. With focused strategic intent, this industry can chalk up a CAGR of 30% to cross $100 billion in revenues by 2025. Let me explain how.
Imbalance between the agriculture, manufacturing and services sectors has skewed India’s economy. For instance, 52% of the working population is employed in agriculture despite it contributing a mere 14% to the GDP. Clearly, the sectoral structure of India's growth has provided insufficient employment opportunities for the poor. With agricultural productivity low and manufacturing sub-optimal, the poor have failed to get the employment opportunities needed to participate in India’s growth story. We require well-balanced growth with the three sectors reinforcing each other. Indian Biotech sector as it stands today at $ 7.5 Bn has the potential to generate growth and employment in each of these sectors whilst addressing the grave challenges we face in terms of food security, healthcare needs, energy scarcity and environmental degradation.
To realize this, we need a two-pronged strategy: 1. A policy roadmap that balances the contribution of the sectors and 2. An enabling framework that promotes biotechnology.
Agriculture: This moribund sector is trapped in an endless loop of low productivity and farmer distress. Biotechnology can usher in a second Green Revolution, offering unprecedented opportunities to ensure food security along with the economic well-being of the farmer. Biotechnology can boost yields while optimizing the use of available resources. We need only look at how Bt-cotton has transformed the lives of the 6 million farmers engaged in cultivating Bt cotton. Productivity has nearly doubled and pesticide use has significantly reduced. Today Bt cotton accounts for 90% of the 11 million hectares under cotton cultivation with an annual output of 35.5 million bales (7.1 million tons) making India the world's second largest cotton producer, next only to China. From being a net importer, this has helped India emerge as a net exporter of cotton while strengthening its textile industry to generate increasing employment opportunities. Bio Agri at $ 4 Bn is the largest segment of Indian Biotechnology.
Action: Instead of making ad-hoc decisions under political compulsions, the government must articulate a clear bioagriculture policy that allows the use of safe GM technologies for increased yields and enhanced nutritional value.
Manufacturing: This sector is shackled by high capital costs and antiquated land and labour laws. India’s expertise in fermentation-based technologies gives us an edge as the world seeks to manufacture biopharmaceuticals, biofuels, and enzymes cost-efficiently. We have already proven our leadership in vaccines and attained global scale in generics and antibiotics. Indian Biopharma as the second largest segment at $2.5 Bn is fast gaining global recognition.
Action: If India is to reboot the sector and become the ‘Pharmacy of the World’, the government must create an enabling physical, financial, legislative, and regulatory infrastructure.
Services: Global pharma giants are reeling under high R&D costs and an impending loss of patent protection in the coming years. With its low-cost, world-class scientific talent, India can position itself as the ‘Laboratory of the World’ to develop groundbreaking drugs, vaccines and diagnostics through affordable innovation. Bioservices business in India has attained a critical mass at S$ 1Bn, and poised to exponentially grow from here.
Action: We require an innovation ecosystem that provides access to risk capital. We also need special listing norms for innovation-led biotech companies through a secondary stock exchange that allows access to capital markets.
Biotechnology can be a game changer and steer India on to a strong economic growth path that inherently provides opportunities to all strata of society. However, implementing the right fiscal, regulatory and infrastructure policies is fundamental in order to ensure a Bio-economy for India that can deliver an age of inclusive growth.