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The Union Cabinet recently passed the BioE3 policy to foster high-performance biomanufacturing in India. While details of the policy are not yet publicly available, it is expected to focus on six verticals: biobased chemicals and enzymes, functional foods and smart proteins, precision biotherapeutics, climate resilient agriculture, carbon capture and its utilisation, and futuristic marine and space research.
This is a welcome development that can boost India’s biotechnology sector. However, the emphasis on research and biomanufacturing must be complemented with access to markets for India-manufactured products. Thus, the BioE3 policy must prioritise sectors where current geopolitical developments have created opportunities for Indian companies to enter international markets.
For example, the United States House of Representatives recently passed the draft BIOSECURE Act which prohibits federal funding, including grants, to US-based companies that engage with certain Chinese service companies or Chinese contract development and manufacturing organisations (CDMOs). Additionally, the Bill restricts US government entities from purchasing equipment, and services, or entering into contracts with such US companies. The Bill received significant support in the House and is expected to receive significant bipartisan support in the US Senate, indicating a strong potential for success. If it becomes law, it creates an urgent and significant opportunity for the Indian biopharma and biomanufacturing sectors to take up that market space. The BioE3 policy should prioritise incentives for Indian entities to take advantage of this opportunity.
The biopharma and biomanufacturing commerce between the US and China are significant. China is among the largest suppliers of pharmaceuticals for the US. In 2023, US pharma majors invested over $44.1 billion in biotech licensing deals with Chinese drugmakers. Pharmaceutical imports from China rose from $2.1 billion in 2020 to $10.3 billion in 2022. The Bill establishes a deadline of 2032 for US pharmaceutical and biotech companies to sever ties with the Chinese companies listed in the Bill, including market leaders such as WuXi AppTec, Complete Genomics, Beijing Genomics Institute and MGI.
The Bill will accelerate the diversification of major US pharma companies from these Chinese manufacturers, a process already underway due to concerns about concentrated supply chains highlighted during Covid-19. It will also likely cast a shadow on business relationships with other Chinese manufacturers as this Bill sets precedence for monitoring and severing ties with Chinese companies.
India is pursuing an industrial strategy to attract the international market through investments in mission-mode projects such as quantum technologies, semiconductors and green technologies and production-linked incentive schemes for sectors such as electronics manufacturing, pharmaceuticals, drones, etc. The BioE3 policy can include similar mechanisms for incentivising companies to prioritise those products that are diversified away from China through BioSECURE. India has strengths in skilled manpower and the potential to scale biomanufacturing at affordable prices, making it a suitable candidate for countries trying to diversify their supply chains.
Governmental negotiations to catalyse preferential co-operation between US and Indian companies would provide Indian companies with a first-mover advantage. The US and India could agree on advance purchase agreements to purchase products with US patents but manufactured in India. In addition to the products and services impacted by BioSECURE, US patents on several other drugs are set to expire in the coming few years. Expanding such agreements for vaccines or therapies will boost India’s biomanufacturing sector.
In addition to BioSECURE, other international engagements can be pursued to create demand for India-manufactured products. The Quad Working Group on Critical and Emerging Technologies can prioritise biomanufacturing to ensure that the strengths, capacities, and talent of Quad partners can be capitalised to bolster supply chain resilience and innovation. For example, establishing a Quad Biomanufacturing Hub in India. Furthermore, India can leverage this opportunity to strengthen biopharmaceutical supply chain resilience by working with partners under the newly formed Biopharma Coalition (Bio-5), which includes the US, the EU, India, Japan, and South Korea.
In addition to biomanufacturing, the bio-services sector also exhibits great potential. The US-China biotechnology trade has a huge service component, which is expected to be impacted by BIOSECURE Act. Indian contract development and manufacturing organisations (CDMOs) can capitalise on this opportunity. For example, one of the companies mentioned in the BIOSECURE Act, BGI Genomics, is a market leader in gene sequencing services globally and in the US. It has a service model of operations where it sequences genomes and provides associate services to hospitals, research labs, pharmaceutical companies, etc. Similarly, WuXi AppTec has one of the largest biologics manufacturing networks globally and has become a significant contract manufacturer among big pharma companies.
India is a dominant provider of services globally. Although India’s services exports initially included offshoring operations for global MNCs, over the last decade, Indian service providers have grown increasingly specialised and moved up the value chain to become ‘global capability centres’. They now support various business processes, such as IT, finance, human resources, and analytics. Furthermore, India has an emerging biotech startup ecosystem with several companies engaged in research and developing solutions for clinical genomics, systems biology, and drug discovery. They now can scale up and make a mark in the global bioservices sector.
The BioE3 policy recognises biomanufacturing and bioservices as important components of the Indian economy, especially as we look toward a Viksit Bharat by 2027. However, the policy's operational framework must prioritise and incentivise sectors where India holds the potential to compete globally and create opportunities for Indian companies to enter international markets. This recognition of India's potential in these sectors should instil optimism about India's future in the biopharma and biomanufacturing industries.
(Shambhavi Naik is the Head of Research, and Saurabh Todi is a Program Manager at Takshashila Institution, Bengaluru.)
Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.