The Indian Bioinformatics Landscape
Pharmaceutical companies are under constant pressure to develop new "blockbuster" drugs to replace older ones that are going off patent. With costs to launch a new drug crossing $1 billion and the number of drugs approved for commercial launch decreasing, pharmaceutical companies are increasingly looking at biotechnology to deliver results.
Traditional "big pharma" companies currently account for about 65% of total R&D expenditure but they have a share of less than one third of drugs in the pipeline. On the other hand, smaller biotech companies account for 35% of total R&D spending with almost two thirds of the total drugs in pipeline. With bioinformatics increasingly becoming the backbone of drug research, the bioinformatics market is piggybacking on the investments made in drug discovery and development, and finds application in every stage of the pharmaceutical and biotech R&D process.
The global bioinformatics market of about $2.3 billion is expected to grow at a CAGR of 16% over 2007-2010 to reach $3.6 billion by 2010.
The rapid rise of the genomics industry and its increasing application in biotech and pharmaceutical R&D have created a huge commercial market for bioinformatics due to the large amount of data being generated. We believe that almost all new drug discovery programs will be based on genomics in future and, the pressure to reduce cost and time of new drug development will lead to increased outsourcing of bioinformatics services.
Indian Bioinformatics Opportunity
Outsourcing to India, compared to other developed countries, offers about 30-40% costs savings in overall drug discovery research, and close to 60% cost savings when outsourcing core bioinformatics services. This is due to the lower wage costs for skilled manpower, and lower infrastructure costs.
The Indian bioinformatics market has grown from $18 million in 2003-04 to $35 million in 2006-07, at a CAGR of 25%. Interestingly, owing to low local demand, $32 million or about 90% of bioinformatics revenues in India are derived from outsourcing activities. "Local demand for bioinformatics services is low due to low investment in new drug discovery. Even though research investments of life sciences companies are increasing, they are still small compared to global standards" says Ashutosh Mundkur, VBU Life Sciences, Service Offerings, Satyam Computer Services Ltd.
The Indian bioinformatics outsourcing services opportunity is estimated to grow at 25% per annum during 2007-2010 raising its share of the global market from 1.4% in 2007 to 1.7% in 2010. These estimates are made based on the current plans of Indian vendors, as well as considering the impact of scarcity in human resources. Improved availability of skilled workers could help take growth rates higher. Similarly, positive actions by the Indian government to enhance IP rights could also help raise growth.
Industry Structure
The Indian bioinformatics industry comprises vendors with origins in the life sciences domain or the IT domain. We estimate that there are about 45-50 companies active in the bioinformatics segment in India. Of these, about 35 are involved in the development of software tools, database solutions and providing bioinformatics services; the remaining largely into marketing third party products and services.
Vendors can also be segmented as domestic pure play bioinformatics companies, domestic IT companies, domestic life sciences companies, multinational IT and multinational pure play bioinformatics companies in India.
Vendor Capabilities
Pure play and life sciences companies have strengths in discovery informatics with niche offerings in data mining and visualization, and databases, while IT companies have a wider portfolio that includes clinical trial informatics as well as capabilities in data mining, visualization, integration tools, and databases.
Pure play companies, Ocimum Biosolutions and Strand Life Sciences have the highest level of specialization and focus on bioinformatics. Indian and multinational IT companies such as IBM, Mphasis, TCS, HCL Technologies, and Infosys are less focused on the life sciences vertical. Avesthagen and Jubilant Biosys are CRAMS companies also offering bioinformatics services. Their level of specialization and focus is higher than (domestic and multinational) IT companies but their core business is contract research and/or manufacturing.
Key Trends
Focus on target validation techniques - Advances in genomics and sequencing has made target identification easier through bioinformatics tools. The focus of bioinformatics in the drug discovery process has therefore shifted from target identification to target validation.
Laboratory Information Management System (LIMS) tools - LIMS are tools that help automate collection and management of data generated in a laboratory. The market for LIMS products in India is estimated at $23 million in 2007, and is expected to grow at above 30% over 2007-2010.
Trend towards enterprise solutions - Presently, majority of the bioinformatics revenues are derived separately from databases, services and software products. Hardly any vendor provides a complete enterprise solution. Driven by the need for integration of various databases/tools with R&D efforts, in the future, enterprise IT solutions should garner a larger share of the market.
Long-term single vendor contracts - Companies with presence across various geographies require bioinformatics services on a global scale and often seek a single vendor that can offer a comprehensive range of services on a long-term basis, across the world. Understand and integrate a wide spectrum of emerging technologies with existing systems.
Forward and backward integration - Pure play companies are opting for forward integration into contract research services, while pharma/Contract Research and Manufacturing Services (CRAMS) companies are also providing (or looking to provide) bioinformatics services.
Inorganic growth - Several vendors are opting for strategic partnerships to strengthen their ability to scale, add to their service portfolio or increase client reach.
Outsourcing of discovery informatics - Global companies were earlier outsourcing only clinical research related services to India. The implementation of Intellectual Property Rights (IPR) in India from January 2005 is gradually bringing global companies to India also for discovery services involving sensitive data.
Challenges and Critical Success Factors
Indian bioinformatics vendors have a huge opportunity in bioinformatics services, customization of existing products and database licensing/creation/manipulation. However, they face certain challenges:
Standardization of Service Platforms & Modular Systems
Bioinformatics vendors work with varying standards and platforms. A major challenge is standardization of service platforms. Also, there is a need to offer more modular systems that can plug into other systems or well-documented application program interfaces already being used by their clients.
Problem of Market / Data Heterogeneity (Flexible tools)
Life Sciences companies may use different data formats, leading to incompatibility. Hence, it is a challenge for vendors to develop data integration tools to facilitate analysis of data sets from different sources. "Flexibility of a bioinformatics tool is essential for it to be a success. The tool should be flexible and allow for use in various applications," says Ajoy Singh, senior coordinator sales, Technoconcept (India) Pvt Ltd.
Tools must be adaptable, readily configurable to support access to new data sources, instruments, tools and new functionality requirements.
Domain Knowledge and Experience
Bioinformatics is a highly specialized field where domain knowledge is more important than just cost. Lack of biological understanding can result in sophisticated computational methods being applied naively thereby leading to under-utilization of advanced tools. Hence finding the right team is vital.
Niche focus
Industry experts believe that vendors must focus on select niche areas. Positioning generic software skills with a wide range of varied services could result in a very non-specialized service portfolio. Pure play vendors in contrast have inherent niche offerings, such as LabVantage's in LIMS, and Ocimum Biosolutions in microarrays.
"Technologies like SaaS offer a unique opportunity for an Indian player to break into the stronghold of globally established players such as Accelrys. Indian bioinformatics companies can re-architect their drug discovery offerings to the SaaS platform to scale up penetration into smaller biotech companies, which wouldn't necessarily want to go for expensive products." says Apurva Chamaria, group manager, Life Sciences, Healthcare, Retail, CPG & 3 PL, HCL Technologies Ltd.
XTractor Premium - A Platform for discovery, analysis and modelling of published biomedical facts.
Traditional "big pharma" companies currently account for about 65% of total R&D expenditure but they have a share of less than one third of drugs in the pipeline. On the other hand, smaller biotech companies account for 35% of total R&D spending with almost two thirds of the total drugs in pipeline. With bioinformatics increasingly becoming the backbone of drug research, the bioinformatics market is piggybacking on the investments made in drug discovery and development, and finds application in every stage of the pharmaceutical and biotech R&D process.
The global bioinformatics market of about $2.3 billion is expected to grow at a CAGR of 16% over 2007-2010 to reach $3.6 billion by 2010.
The rapid rise of the genomics industry and its increasing application in biotech and pharmaceutical R&D have created a huge commercial market for bioinformatics due to the large amount of data being generated. We believe that almost all new drug discovery programs will be based on genomics in future and, the pressure to reduce cost and time of new drug development will lead to increased outsourcing of bioinformatics services.
Indian Bioinformatics Opportunity
Outsourcing to India, compared to other developed countries, offers about 30-40% costs savings in overall drug discovery research, and close to 60% cost savings when outsourcing core bioinformatics services. This is due to the lower wage costs for skilled manpower, and lower infrastructure costs.
The Indian bioinformatics market has grown from $18 million in 2003-04 to $35 million in 2006-07, at a CAGR of 25%. Interestingly, owing to low local demand, $32 million or about 90% of bioinformatics revenues in India are derived from outsourcing activities. "Local demand for bioinformatics services is low due to low investment in new drug discovery. Even though research investments of life sciences companies are increasing, they are still small compared to global standards" says Ashutosh Mundkur, VBU Life Sciences, Service Offerings, Satyam Computer Services Ltd.
The Indian bioinformatics outsourcing services opportunity is estimated to grow at 25% per annum during 2007-2010 raising its share of the global market from 1.4% in 2007 to 1.7% in 2010. These estimates are made based on the current plans of Indian vendors, as well as considering the impact of scarcity in human resources. Improved availability of skilled workers could help take growth rates higher. Similarly, positive actions by the Indian government to enhance IP rights could also help raise growth.
Industry Structure
The Indian bioinformatics industry comprises vendors with origins in the life sciences domain or the IT domain. We estimate that there are about 45-50 companies active in the bioinformatics segment in India. Of these, about 35 are involved in the development of software tools, database solutions and providing bioinformatics services; the remaining largely into marketing third party products and services.
Vendors can also be segmented as domestic pure play bioinformatics companies, domestic IT companies, domestic life sciences companies, multinational IT and multinational pure play bioinformatics companies in India.
Vendor Capabilities
Pure play and life sciences companies have strengths in discovery informatics with niche offerings in data mining and visualization, and databases, while IT companies have a wider portfolio that includes clinical trial informatics as well as capabilities in data mining, visualization, integration tools, and databases.
Pure play companies, Ocimum Biosolutions and Strand Life Sciences have the highest level of specialization and focus on bioinformatics. Indian and multinational IT companies such as IBM, Mphasis, TCS, HCL Technologies, and Infosys are less focused on the life sciences vertical. Avesthagen and Jubilant Biosys are CRAMS companies also offering bioinformatics services. Their level of specialization and focus is higher than (domestic and multinational) IT companies but their core business is contract research and/or manufacturing.
Key Trends
Challenges and Critical Success Factors
Indian bioinformatics vendors have a huge opportunity in bioinformatics services, customization of existing products and database licensing/creation/manipulation. However, they face certain challenges:
Standardization of Service Platforms & Modular Systems
Bioinformatics vendors work with varying standards and platforms. A major challenge is standardization of service platforms. Also, there is a need to offer more modular systems that can plug into other systems or well-documented application program interfaces already being used by their clients.
Problem of Market / Data Heterogeneity (Flexible tools)
Life Sciences companies may use different data formats, leading to incompatibility. Hence, it is a challenge for vendors to develop data integration tools to facilitate analysis of data sets from different sources. "Flexibility of a bioinformatics tool is essential for it to be a success. The tool should be flexible and allow for use in various applications," says Ajoy Singh, senior coordinator sales, Technoconcept (India) Pvt Ltd.
Tools must be adaptable, readily configurable to support access to new data sources, instruments, tools and new functionality requirements.
Domain Knowledge and Experience
Bioinformatics is a highly specialized field where domain knowledge is more important than just cost. Lack of biological understanding can result in sophisticated computational methods being applied naively thereby leading to under-utilization of advanced tools. Hence finding the right team is vital.
Niche focus
Industry experts believe that vendors must focus on select niche areas. Positioning generic software skills with a wide range of varied services could result in a very non-specialized service portfolio. Pure play vendors in contrast have inherent niche offerings, such as LabVantage's in LIMS, and Ocimum Biosolutions in microarrays.
"Technologies like SaaS offer a unique opportunity for an Indian player to break into the stronghold of globally established players such as Accelrys. Indian bioinformatics companies can re-architect their drug discovery offerings to the SaaS platform to scale up penetration into smaller biotech companies, which wouldn't necessarily want to go for expensive products." says Apurva Chamaria, group manager, Life Sciences, Healthcare, Retail, CPG & 3 PL, HCL Technologies Ltd.
XTractor Premium - A Platform for discovery, analysis and modelling of published biomedical facts.
- The only Knowledgebase which provides "manually" annotated facts from PubMed on a weekly basis
- Innovative Features like Semantic Search, Concept Linking, Bibliographic search, Save, Export and Visualize
- Only Knowledgebase with daily updations from PubMed
- XTractor Premium now at Introductory Offer of $450 for Academic Researchers. Subscribe now and save $300!
- Register for WebEx
- Request for a Trial
Comments