The Visible Hand: Government Supports the Biopharmaceutical Industry

The Indian government is providing several incentives for local biopharmaceutical companies to grow and compete globally.
Aug 01, 2008
Volume 21, Issue 8

Eric S. Langer
In most countries, commercial biopharma depends to some extent on taxpayer-sponsored infrastructure and incentives in the form of state-supported universities and research facilities that supply researchers and are centers of innovation. The same is certainly true for Indian biopharma, although, as noted in the recent report, Advances in Biopharmaceutical Technology in India, the Indian government's helping hand goes further than most.

Almost all biopharmaceutical companies in India have had some form of government assistance in recent years such as public loan assistance enjoyed by many small biotech companies and Biocon's government-sanctioned Special Economic Zone (SEZ) in Bangalore, which will confer huge tax breaks on the company through 2015.1

India has never taken a laissez faire approach to its economy. This attitude is a legacy of the anti-colonial movement and the polarizing influence of the Cold War, in which socialism was seen as the most viable option to exploitative Western capitalism. The Indian National Congress, the party that dominated Indian politics for decades after independence, was essentially a socialist party. Even now, two of the other five national parties describe themselves as communist, and Indian economic policies continue to be organized according to old-fashioned, Russian-style five-year plans.

After the mid-1980s' decline of the Soviet empire, the West enjoyed an economic boom, and India's export markets expanded rapidly. The country began to outgrow its anti-Western sentiments, focusing instead on becoming a respected and powerful participant in the global economy.

At the time, the successes of American companies like Genentech and the advent of technologies like the polymerase chain reaction (PCR) were fostering the biotechnology revolution. India, therefore, decided to make biotechnology one of its priorities for industrial development, and in 1986, the Department of Biotechnology (DBT) was formed under the Ministry for Science and Technology.


Because product patents were not legal in India from 1972 until 2005, India's pharmaceutical industry based itself on reverse-engineering Western drugs and patenting new manufacturing processes. Although the pharmaceutical industry developed, biotechnology was still considered new and difficult, and Indian drug makers focused on synthetic chemistry rather than biological processes. By 2005, when product patents became legal again under the Patents (Amendment) Act, India was producing far more qualified graduates in chemistry than in biology.2 Moreover, most Indian biology graduates were doing their postdoctoral work in the West and ultimately emigrating there.3

The relative scarcity of qualified Indian graduates in biotech-related disciplines is now seen as a major limiting factor in the development of India's biotech industry. The DBT is trying to remedy the situation with initiatives that include:4

  • Star Colleges. The DBT supports the improvement of undergraduate programs in the life sciences and biotech-related disciplines by increasing the quality of teaching, promoting creative thinking among students, and improving infrastructure and the supplies of laboratory consumables. The Star College designation is being offered to academic institutions as an incentive to raise standards.
  • PhD Programs. At the postgraduate level, PhD programs are being expanded. Regional training centers are being set up to improve the quality of biotech-related teaching and industry-oriented courses are being introduced, such as degrees in regulatory affairs and biomedical enterprise. New research fellowships and overseas-training schemes are being offered for postdoctoral students, collaborative research programs with Western labora-tories are being set up, and re-entry packages are also being used to entice Indian postdoctorates who currently work abroad to return to India.
  • University-Based Centers of Excellence. The DBT, which already funds a number of autonomous biotech centers, says it plans to assist in setting up several dozen more university-based, interdisciplinary research facilities by 2011. These are meant to specialize in areas from basic biology to biomedicine.
  • The Health Science Biotechnology Cluster. This DBT-funded project in the northern state of Haryana will include a Translational Health Science Technology Institute, a Vaccine Technology Center, a Diagnostics Development Center, a Biotech Platform Technology unit, an animal facility for biopharmaceuticals testing, and a Center for Biotechnology Education and Research, sponsored also by the UNESCO.

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