Biotechnology and business: Discussion

Abstract

A subject as generic as biotechnology was chosen for this Round Table discussion in the hope that it would yield multiple perspectives. Rising to expectations, the panellists in the IIMB Management Review Round Table on Biotechnology and Business, representing industry, research and academia, covered a broad sweep of issues, including the types of activities within the biotech industry and the business, policy, economic, legal and philosophical implications therein.

Enumerating the milestones in the modern biotechnology industry, Raja M, President, Genotypic, said that the industry was perhaps born when people first started paying for reagents, in the mid-80s, which was followed by companies selling IP in the mid-90s and the outsourcing of research, analysis and library work with the development of specialised techniques like cDNA library construction. The Human Genome Project and other sequencing processes and outcomes have aided biotech research and the growth of bioinformatics. However the industry still has to find efficient ways of converting data into knowledge.

Prof R T Krishnan of IIMB pointed out that despite its changing nature, the biotech industry is still highly research driven with long delays in the commercial exploitation of technologies and it requires extremely specialised human resource capabilities, aspects that Indian industry has traditionally not been comfortable with. Our success in the software industry has had more to do with business and market opportunities, and mathematical and generic skills. In the long run, we must concentrate on building human resource capabilities and infrastructure.

Elaborating on why BT is not IT, Swaminathan Subramanian, CEO, Sanmar Speciality Chemicals, drew attention to the multidisciplinary nature of research in the field and the fragmented business module. Many biotech companies the world over are being started by academics who are not too market savvy. With research eluding the market and being too risky for industry, ideas in biotechnology could gestate from ten to twenty years before reaching product stage. Beyond that, the path to the market was mined with regulatory issues. Given the people-centric and collaboration-based business model, Indian companies must network among themselves and with academia.

Unrepentant academics, Prof Upinder Bhalla, National Centre for Biological Sciences, and Prof Manju Bansal, Institute of Bioinformatics and Applied Biotechnology, held however that any relevance to application of basic research was purely accidental. While scientists recognised the need for interaction with industry, the research institutional framework made technology transfer extremely difficult. Prof N M Agrawal of IIMB commented that Indian academia seemed to attach a stigma to making money, and ways had to be found to facilitate knowledge workers to becoming entrepreneurs.

Indian collaboration in the areas of clinical trials, preclinical research and manufacturing of global formulations could well be the route to success for an American biotech, with a win-win outcome for both sides, Atul Varadhachary, President, Agennix, signalled.

Coming to Indian agriculture, Gautham Nadig, Director, Metahelix Life Sciences, pointed out that the thrust in agriculture must be towards high yielding varieties of seeds and efficient inputs. Biotech priority areas include the introduction of new technologies, including transgenic crops, checking environmental and health hazards, improvement in regulatory procedures, protection of IPR and R&D, leveraging cost effective Indian talent and accessing global markets, and encouraging research based companies. Addressing policy issues arising out of the experience with GM crops in India, Prof Gopal Naik, IIMB, cautioned that the long-run implications of GM seeds, bio-safety and equity in benefit-sharing among different stakeholders are aspects that have to be taken into account by policy makers. But ultimately, as S Natesan, Deputy General Manager, R&D, Rallis Research Centre pointed out, the decision to be in BT is not just a competitive one, but has a human face as we have a population of over a billion to feed.

Law, according to Pramod Reddy, Legal Consultant, enters the picture when there is a conflict. The principle of harm could inform one's fears about Bt crops or one's reproductive choices. With environmental issues, the law has moved from the polluter-pays principle, to the notion of prevention of harm. Notions of equality and the question of inclusion and exclusion pertaining to access to technologies, could affect biotech options available from a public policy perspective.

A financier looks at investment opportunities along the parameters of risk and return and, according to Prof G Sabarinathan, IIMB, the opportunities in biotechnology lie in the high risk-high return segment or in the high-risk low-return socially desirable economic activities. Biotech businesses require patient but not necessarily large capital, sophisticated investment structuring and a nurturing ecosystem. Before committing finances, investors look for profitable market opportunities, sustainable advantage, favourable policy and institutional environment, factor endowments in terms of human resources, technology and infrastructure. Indian industry offers market opportunities of up to Rs 14 bn across sectors provided we make our IP regime more credible, the government learns to play a facilitating rather than operational role, we restructure funding delivery so as to circumvent failure in early stage financing, and encourage creative business models.

In conclusion, Prof B Mahadevan, Chief Editor, IIMB Management Review, pointed out that the biotech industry was still in the early stages of value creation and value migration, and the questions of innovation and value appropriation were yet to be fully answered. Prof Sourav Mukherji, IIMB opined that despite the scepticism of the panellists, the IT and the BT industry had historical positioning in common and further it was necessary to think on what side of the equation one needs to have a play, the cost/ supply side of the equation or the revenue/demand side.

Prof Pavan Mamidi, IIMB, anchor of the Round Table discussion, ended with the concept of the changing notion of identity in biotechnology, invoking the fable of the Ship of Theseus from Greek mythology.