Updated on 14 May 2013
Although the government is keen on attracting foreign direct investment in pharma sector, the recent acquisition of local companies by MNCs made the government to reconsider its decision. The government through the Ministry of Commerce and Industry (Department of Industrial Policy and Promotion) amended the FDI policy in November 2011 by permitting FDI up to 100 percent for investments in existing companies in the pharma sector through the Foreign Investment Promotion Board's (FIPB) approval route. At the same time, FDI was also approved for greenfield investments in the pharma sector.
Medtech lags behind
The Indian market for medical equipment and supplies ranks among the world's top 20 but, despite strong growth rates, the market remains disproportionately small with per capita spending of just $2.4. Increased demand for medical equipment and supplies will come mainly from private sector hospitals and medical centers, according to a report from Espicom Business Intelligence.
Moreover, Government proposals to boost health insurance cover from 25 to 75 percent by 2017 will be hampered by a lack of healthcare infrastructure in India. Given the lack of healthcare infrastructure, the government's plans mark an opportunity for investors and manufacturers as new facilities are constructed and existing ones are upgraded.
Bioagri leads biotech
The Indian biotech industry registered 17 percent growth in 2012 and the total industry size stood at $ 4.4 billion by the end of 2012. The industry is expected to increase in size to $11.6 billion by 2017, driven by a range of factors including growing demand, intensive R&D activities and strong Government initiatives. The bio-pharmaceutical sector accounted for the largest chunk of the biotech industry, with a share of 60 percent in total revenues in 2012. In the same year, bio-services and the bio-agri segments followed the bio-pharmaceutical segment with shares of 18 percent and 15 percent, respectively. Growth was fastest in the bio-agri segment (21 percent in 2012), followed by bio-pharma (19 percent) and bio-services (13 percent).
With many government initiatives and setting up of Biotechnology Industry Research Assistance Council (BIRAC), a government of India Enterprise by Department of Biotechnology and launch of SME exchange at India's leading bourses, National Stock Exchange and Bombay Stock Exchange as their separate platforms for SMEs - Emerge and BSESME, respectively on March 13, 2012 will support the growth of the biotechnology industry. As of April 5, 2013, of the 19 companies listed on this platform three companies , including Monarch Health Services, HPC Bio-science and Esteem Bio Organic -are focused on the bioscience segment.
The Indian biotechnology sector is one of the fastest growing knowledge-based sectors and is expected to play a key role in shaping India's rapidly developing economy. With numerous comparative advantages in terms of R&D facilities, knowledge, skills, and cost effectiveness, the biotechnology industry in India has immense potential to emerge as a global key player.