The AV Birla Group is reportedly considering a foray in biotech. What is it about the sector that's drawing India's big industrial houses like the Tatas, Reliance, and now the Birlas?
Reliance and Tatas are already going the whole hog at it. And it is only time before the AV Birla Group comes out with a concrete plan to enter the sunrise biotechnology sector. However, indications are that the Rs 30,000-crore conglomerate is looking for acquisitions in the biotech industry both in India and in the US.
Kumar Mangalam Birla, Chairman of the Aditya Vikram Birla Group, has been quoted as saying that the group is on the lookout for an opportunity in the biotech space. "India has an enormous competitive advantage and a resource pool in intellectual property," he had said.
Reports indicate that the AV Birla group has been in talks with two Hyderabad-based biotech companies, Bharat Biotech and Shantha Biotechnics. It's also talking to two US-based companies, Biosyn Biotech and Fortuna. Bharat Biotech and Shantha Biotechnics are closely-held companies, and have apparently been looking at various options to raise funds.
Recently, Tata Group Chairman Ratan Tata had said that his group is interested in the biotech sector. "In the area of biotech applications in the pharmaceuticals industry and in the area of drug research, there is considerable opportunity for us, which we are indeed looking at today," Tata had said.
In the biotechnology field, Tata Industries now has a small stake in the Bangalore-based Avestha Gengraine, a biotech firm founded by Villoo Morawala Patell. In fact, last year, when an Indian company developed the world's first recombinant human insulin, the Indian government sanctioned a flurry of biotechnology parks, and several research and development agreements were announced. With a new national biotechnology policy on the way, India has begun to look beyond the software and IT enabled services sectors at a new growth point for the country's economy: biotechnology and pharmaceuticals.
India's biotechnology sector is currently made of four major segments: bio-industrial products such as enzymes and bio fuel; bio-agricultural products such as genetically modified seeds, bio-fertilisers and bio-pesticides; bio-services such as contract research, contract manufacturing and clinical trials; and bio-pharmaceuticals. Bio-pharma covers vaccines, therapeutics, diagnostics and animal health care, and has emerged as the largest segment, thanks in part to strong clinical and research capabilities developed through bio-services.
In October, plans to set up special economic zones (SEZs) for biotechnology, including biotechnology parks and free trade warehouse zones, were announced. Biotech parks sanctioned include a Rs 100-crore venture in West Bengal, which will include a research centre for traditional medicine. Having identified IT solutions for the life sciences sector as another big opportunity for the country, the government has also sanctioned a bio-IT park, aimed as a geographic hub for bioinformatics, bioengineering, and pharmaco-genomics companies and research institutes.