Biotechnology is going to revolutionise the global economy and many countries recognise the need to optimally develop bioresources. According to an OECD report, more than 50 countries have adopted specific policies designed to shape their bio-economies.
In the recent past, the United States and China have also published plans for spurring their bio-economies. India’s Department of Biotechnology has released the 2021-2025 National Biotechnology Development Strategy, which envisions India as a global biomanufacturing hub by 2025.
While the strategy sets a target of $100 billion for the hub, it also identifies that India needs a biomanufacturing policy to achieve this aim. In designing such a policy, it will be important to recognise that India’s ambitions require external support, particularly through the Quad partners, to enable its initial development.
India serving as a key alternative to China in the biomanufacturing sector is not only in India’s national interest, but also in the global interest. Diversified supply chains will be better equipped to tolerate shocks to global public health (as seen with Covid-19) or global geopolitical order (in case of war). India offers a stable, democratic, and expert ecosystem that can lend itself to achieving the scale of China to cater to global needs. As one of the largest countries in the world with economies of scale and availability of skilled labour, India has the potential to compete with China in select portfolios within the biomanufacturing sector.
However, China’s dominance in this sector is comprehensive, especially due to price competitiveness. China is also a major supplier for India’s pharmaceutical sector, with 68 percent of the Active Pharmaceutical Ingredients (APIs) that underpin India’s $42 billion pharmaceutical sector being imported. To counter this dependence, in 2020, India launched a production-linked incentive (PLI) scheme that allocated $2 billion to the pharmaceutical sector to make biopharmaceuticals, APIs, key starting materials, and related products. Under the auspices of this scheme, 35 APIs are now being domestically produced, which will lead to an estimated reduction of up to 35 percent in imports from China by the end of the decade.
India’s efforts to compete with China will take time, and support. For example, The India Bioeconomy Report 2022 assesses the potential for a 10 million litre fermentation capacity to be set up in India in the next 3-5 years, a 10X increase from the current capacity of 1 million litres. However, this scaling up will have to surmount a few challenges.
First, India does not create/possess IP for many patented products and will require licences for production. Second, significant investment will be required to set up new biomanufacturing facilities so that these can achieve scale. Third, the cost of biomanufacturing will remain high, till a threshold scale is achieved. Thus, in the market, Indian products will likely remain more expensive than their Chinese counterparts. In this scenario, China-made products may remain more appealing to potential buyers, creating a low demand for Indian products.
India needs to find like-minded partners to work with at least in the initial stages of developing a robust domestic biomanufacturing ecosystem. These partners should be able to share with India the requisite technological expertise, and funding support. A shared interest in thwarting the dependency on China creates opportunities to make strategic investments in India’s growing biomanufacturing strength. The Quad countries have the potential to build synergies with each other to address these weaknesses. The US, Japan, Australia, and India combined have sufficient resources to build and sustain diversified biomanufacturing capacities. The US bioeconomy is valued at $1 trillion, while Japan’s Bioeconomy Strategy aims to achieve 92 trillion yen ($700 billion) market size by 2030. Australia’s life sciences industry is valued at over AU$100 billion.
India can seek support from the Quad countries on three fronts — technology transfers, funding, and guaranteed demand. For technology transfers, the formation of a Quad training hub in India could focus on activities such as training programmes for Quad researchers, identification of products for manufacturing, and advisory services for technology transfers.
This hub could help train Indian personnel and host researchers or trainers from other Quad countries. Funding to build infrastructure would help accelerate scaling up. Finally, it is important to recognise that initially, India-made products might not be price competitive with Chinese products. Hence, a strategic Quad-preferred vendor procurement policy would help create demand for these products, while India scales to achieve price competitiveness. A Quad-led biomanufacturing initiative would build supply chain resilience, and offset any protectionist policies of individual countries to nearshore all critical bio-based products.
India’s thrust on biomanufacturing is a welcome move that needs to be ably supported through policy interventions. Domestic funding and demand creation are going to be important levers to achieve this goal. However, to achieve economies of scale, India also needs to export key biomanufactured products. India should work with like-minded partners across the globe, including with plurilateral groupings such as the Quad to tap export markets.
India’s biomanufacturing policy needs the idea of collaborative growth and diplomacy baked in from its start.
(Shambhavi Naik is Head of Research, Takshashila Institution. Saurabh Todi is research analyst, Takshashila Institution.)
Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.