When the Andhra Pradesh government identified biotechnology as one of the engines of economic growth for the state, it came as a surprise for many. After all, Shantha Biotech and Bharat Biotech were the only home grown names one could recall.
According to official figures, the number of biotech companies with research and development facilities in the state stands at 33. According to A Ashok, director of biotechnology, government of Andhra Pradesh, inquiries are on the rise. Ashok adds that "proactive state government policies have made the difference."
"Andhra Pradesh is the biotech capital of the country. It has many firsts to its credit ranging from setting up the first biotech park in the country, to developing India's first venture fund focussed on biotechnology," he rattles off.
The state earmarked an area of 600 sq km in Hyderabad as the Genome Valley. The 200-acre ICICI Knowledge Park and the 400-acre Shapoorji Pallonji Biotech Park are part of this cluster.
Some of the entities that have set up shop here include Albany Molecular Research Inc, Mithros Chemicals, Sami Labs, GVK Biosciences and Biogenics.
However, as the names suggest, not all of these are pure-play biotech companies. Many border on bio-pharma. In fact, the official website of Genome Valley lists out Dr Reddy's, Satyam and TCS also as some of the leading biotech players in the state.
Adds Varaprasad Reddy, managing director, Shantha Biotechnics, "There may be less than 10 biotech companies doing real R&D in the state. Others are either involved in trading biotech products or belong to the pharma sector." Nevertheless, he adds, that the state does contribute the maximum to the biotech industry in the country.
Shantha Biotech was set up by Reddy at a time when the government did not have any major initiatives to promote this industry. Reddy, however, is not quite gung-ho about the incentives being offered by the government now.
"The Shapoorji Pallonji Park is not an incentive for the industry. It is plain realty business. The government sold the land to the developers at Rs 200,000-300,000 per acre and the developers have been selling the land at around Rs 20 lakh (Rs 2 million) per acre. Such high land prices cannot attract small and medium companies to come here," he says.
Ask him what attracts companies to set up base in Hyderabad and Reddy claims: "They realised that companies like Shantha Biotechnics are doing well and therefore followed suit."
But adds that the presence of institutes like Centre for Cellular and Molecular Biology in the city did provide some benefits. Reddy had initially started his company as an R&D outfit at Osmania University in Hyderabad under the industry-university interactive programme and later at CCMB, until an independent R&D facility was built.
Apart from CCMB, the state is also home to institutes like National Institute of Nutrition, International Crops Research Institute for the Semi-Arid Tropics and Centre for DNA Fingerprinting and Diagnostics also.
Krishna Ella, chairman and managing director, Bharat Biotech, brings forth other issues that need to be taken care of to promote the industry in the state. "We need consistent power and water supply for running our facilities," he says.
Reddy agrees, "If the government wants to encourage biotechnology companies, especially the small and medium ones in the state, these issues need to be addressed."
Ashok points out that the state has already started looking at these issues. "The third phase of the biotech park will be developed by us instead of private developers. Andhra Pradesh Industrial Infrastructure Corporation has been appointed as the nodal agency and land will be provided at nominal price so that small and medium companies can set up shop here," he says.
With regard to power, Ashok adds that the government is looking at reducing the tariffs for biotech companies.
Meanwhile, the state also has a biotech venture fund with a corpus of $30 million, set up as a joint venture between Andhra Pradesh Industrial Development Corporation Venture Capital Ltd and Dynam Venture East, USA, to fund start-up companies.
BioServe Biotechnologies and Silico Insights (now Nuvera Biosciences) are some of the companies where APIDC -VCL has invested $5,40,000 each. Both these companies are based in the US.
The government now plans to set up a township for the employees of Genome Valley. "This is to ensure that the talent employed by this industry can reside in the vicinity of their workplace," Ashok says.
Talent however, remains a cause of concern for the industry, Shantha Biotech's Reddy says. "We need to spend 18-24 months to train the students."
Ashok agrees, "The education system needs to be revamped." He adds that it comes under a separate department. "We will, however, take it up with the education department and see what can be done about it," he says.The state government also plans an International Animal Resource Facility and an International Life Science Institute here. However, as Ella of Bharat Biotech says, "The state government has several good plans. But they have to implement these plans on time."