BIO-CLUSTERS

The Next Success Story

Page 1
bi·o·tech·nol·o·gy
n.

1. The use of microorganisms, such as bacteria or yeasts, or

biological substances, such as enzymes, to perform specific
industrial or manufacturing processes. Applications include
the production of certain drugs, synthetic hormones, and bulk
foodstuffs as well as the bioconversion of organic waste and
the use of genetically altered bacteria in the cleanup of oil
spills.

2. The application of the principles of engineering and

technology to the life sciences; bioengineering.

Page 2
Biotechnology has been around for
years. Farmers have been practicing
the science of crop improvement for
over 75 years. However, a lot has
changed in these 75 years. Scientific
and technological advances now allow
humans to manipulate genomes
directly at the level of single genes and
their constituents with great speed and
precision.
The modern biotech sector is relatively
new, and a new industry name has
been proposed –Life Sciences.
Page 3
Life sciences is an industry where biotechnology,
agriculture, food, drugs and chemicals converge.
Through the combination of these divisions, firms are
able to produce new research & products. Crops are
now being designed to produce feedstocks for plastics,
vaccines, and foods that help to prevent or ward off
disease.

Page 4
Biotechnology Park - A Concept

 Conceptually a life sciences park / cluster is “Planned infrastructure

developed to facilitate business of R&D intensive high technology and
science companies and brings them in close proximity with university,
colleges, hospitals and other related entities”

 The objective of a life sciences park / cluster can be defined as follows:

o Growth of new ventures;
o Transfer of technology and business skills between the university,
colleges and businesses in the Research Park; and
o Promotion of technology-led economic development for the
community at large.

Page 5
A Coherent Network

Universiti Sharing of Initial Funding

es & Infrastructu Setup Agencies
re
Colleges

Funding & Shared R & D Facilities Equity &

Commercialis
Interest
ation Regulatory
Window
Germination & Companies
transfer of
ideas Other shared
resources
Human
Diagnos
Resources
tic Life Sciences Park / Cluster
Service
s

Hospitals & Clinical Trials Training Medical

Healthcare & Shared Colleges
Centers Other Page 6 Resources & Institutes
Facilities
Community Value /
Economic Benefits

 Capital Development: Land, Utilities, Roads, Buildings, Equipment

 Job Creation/Development: Diversification, Industry-University

Collaborations, Workforce Training/Education
 Entrepreneurial Growth: Incubation centers, venture funding etc

 Image: Attract new companies, attract young talent, promotes science-

driven economy (smart community)
 Quality of Life: Arts, Education, Recreational, Livability, Multicultural

 Economic Impact: Employment Quantity (Direct-Indirect), Higher Income

Levels, Larger Tax Base

Page 7
Hotspots/Bioclusters
 BioBusiness hotspot or biocluster - a concentration of life
science and biotechnology-related institutions, laboratories, and
businesses.

 Some internationally recognized bioclusters /hotspots include:

o San Francisco/the Bay area
o Boston/Cambridge
o Medicon Valley in Sweden/Denmark
o Tsukuba Science Park in Japan.

Page 8
Life Sciences Cluster – Bay Area

 More biotechs located here than anywhere else, > 30 companies founded each year
 5 major research universities, 3 medical schools, availability of managerial and technical
staff
 Home to 34% of active US VCs; receives one of the largest share of NIH funding
 820 life science companies, 250,000 direct & indirect employees (85,000 in biosciences)
 Ranked #1 in Market Cap—Northern California holds 24% of the $200 Billion Biotech
Market Cap
 Ranked #1 in Venture Capital Investment—recipient of 34% of total U.S. VC funding
 Ranked # 1 in Entrepreneurial Climate—most companies with an annual revenue growth of
more than 20% for four consecutive years
 Ranked #1 in NIH Research Grants—$ 2.49 Billion in 2002
 Ranked # 2 for the Number of Patents Granted in 2002

Biotech clusters attract more then 60% of NIH funding and

contribute a major share of the domestic biotech industry

Page 9
Life Sciences Cluster – RTP

 136 organizations are located in the Park

 112 research and development-related organizations
 Approximately 82% of the employees in the Park work for multinational
corporations
 An estimated 37,600 full-time employees work in RTP
 97.3 % of employees work for R&D related organizations
 Almost 42% of Park employers have less than 10 employees
 The average salary of an RTP employee is $56,000
 Development surpasses 19 million square feet
 Capital investment exceeds $2 billion
 Total payroll is estimated at $2.7 billion

Page 10
Life Sciences Cluster – Massachusetts

 Massachusetts is a leader in biotechnology research, development, and

commercialization.
 More than 300 biopharmaceutical companies, leading academic and
medical institutions
 Massachusetts Biotechnology Council (MBC), is the largest trade
association representing biotechnology companies in United States.
 Major commercial market sectors:
o Agricultural Biotechnology
o Biological Devices
o Bioinformatics Services
o Contract Manufacturing / Research
o Genomics / Proteomics
o Human Diagnostics / Therapeutics
o Other

Page 11
German BioClusters Bioinitiative BioRegio
Nord Greifswald-Rostock
(Hamburg-
Region Kiel-Lübeck)
Nordwestl.
Region
Nieder-
Bremen
sachsen
BioTOP
Berlin-Brandenburg
BioRegio N
(Braunschweig-
Hannover-
Göttingen)
BioRegio
Rheinland BioRegion
(Köln-Bonn- Halle-Leipzig
Aachen)
BioMIT
Mittelhessen BioRegio
(Marburg- Jena
BioRegion Giessen)
Rhein-Main
(Frankfurt-Mainz)

BioRegio
BioRegion
Regensburg
Rhein-Neckar-
Dreieck
BioRegio
Stuttgart/ Biotech-
BioRegio Neckar-Alb nologie Biotechnologie
Freiburg (Tübingen) Ulm München
Page 12
India’s Biotech Clusters

• IBPL Biotech
Park – Hikal,
Shreya,
Emcure,
Advinus,
others

• R&D – NCL,
NIV, Agharkar

• SP Biotech, ICICI
• MNC R&D Centres
Knowledge Park
– Monsanto,
AstraZeneca, GE, • Biological
Sigma-Aldrich manufacturing -
DRL, Shantha,
• Startups – Strand,
Bharat Biotech,
X-Cyton, Metahelix,
BE, Zenotech
Avesthagen,
Gangagen • Bioagri –
Emergent,
• Services –
Nuzeeveedu, JK
ReaMetrix, MWG,
CROs, Jubilant • R&D – CCMB,
CDFDRI, IICT
• Other – Apotex,
Aurigene

• R&D – NCBS, IISc

Page 13
Biotech Clusters

Page 14
Page 15
 Facts About Maharashtra
9.4 % of Country’s
Population ( Produces
19% of National output )
50%Of India’s Foreign
Trade is Handled By
Seaports &
International Airport

Most Urbanized Average Annual Growth 67% Share of Younger

State: 43% (India in Last 10 Years : 7% Population(Below 34
28%)
(9.3% last 3 years) years)

Urban Population > South

Korea.Only 15 Countries have
22%New Company higher Urban Population
Registration

Page 16
 Sound Social Infrastructure

 12 % of Country’s Universities

 17 % of Medical Education institutions

 13 % of Engineering Education institutions

 19 % of Management institutions

Page 17
 Subsequent
Phases

• Jalgaon
• Horticulture • Nagpur
food • Copper,
processing manganese
coal-power-
intensive
• Nashik
Auto
General Industries • Chandrapur
Industries • Aurangabad

• Nanded
• Mumbai

Knowledge •Pune
Corridor •Sugar-based •Cotton

•Chemicals

•Paper
• Ratnagiri based
• Kolhapur
•Food
processing

Page 18
Bio-Tech and Pharma
• Contribute about 40% of the
total turnover
• Presence of International
players like GlaxoWellcome,
Novartis, Pfizer, Johnson &
Johnson, Abbott
• Major Indian companies
such as Wockhardt, Cipla,
Lupin, Nicholas Piramal are
making big headway in the
areas of biotechnology.
• Bio-Technology Park in Pune
and Agri-Biotech Park in
Jalna are shaping up

Fast Growing Industry

Page 19
 Critical Factors for Cluster Development
Strong Science Base
Entrepreneurial Culture
Growing Company Base
Ability to attract key staff
Availability of Finance
Premises and Infrastructure
Business support services and large companies
in related industries
Skilled workforce
Effective networks
Supportive Policy environment

Page 20
 Experience suggest to consider some issues (1):
Strong Science Base
Which specific fields of excellence ?
Regional brand needed : Biotechnology is a buzzword.

Entrepreneurial Culture
Growing Company Base
Ability to attract key staff
Regional attractiveness not to be neglected
Attracting staff = attracting families
Competitive wages rather than stocks

Availability of Finance
Need for public early money
Funds will eventually come where critical mass is

Page 21
 Experience suggest to consider some issues (2):
Premises and Infrastructure
Adequate facilities at the right moment.
Do not expect empty buildings to attract companies
Take care of your own companies, they attract new tenants

Business support services and large companies in

related industries
Skilled workforce
Effective networks
Find movers, doers and shakers.
Intensity is critical : no dead links in networks
Within networks, energy is a differentiator

Supportive Policy environment

Coherent support : cf regional brand
Long-term political commitment is compulsory

Page 22
Bioclusters

What do we have ?
Inventory of local actors and facilitators. Think WIDE
Federate local actors before attracting external resources

What do we want ?
Sustainable Economic development
New Knowledge-based economy
Wealth from innovation

What do we need ?
Partners and friends : join networks
Political commitment, national, federal, local
Shared vision and roadmap

Build from scratch ? See Scripps Florida model

Biotechnology : be more specific.

Page 23
US Science Park Model : Scripps Florida

A Biocluster from Scratch ?

Florida was not considered a major US BioCluster

Scripps Research Institute opens second US Site in South Florida

Intends to duplicate California Cluster effect (Scripps La Jolla)

Scripps Florida : a magnet for companies, scientists,
research institutions

Big Bang Biotech in the US : will it deliver ?

Florida Federal Govt Investment : 310 MUSD

Palm Beach County Investment : 450 M USD

Estimated benefits in next 15 years : + 6,500 jobs

Additional state Income = 1.6 B USD
increase in state GDP = 3.2 B USD
Page 24
French model : no model ?

No particular incentive towards specific regions …

General initiatives : incubators, YIE status

Regional support : parks and poles, regional funds

… until Now ?

National fund to support « proof of concept »

« Pôles de Compétitivité » : a non-specific national contest to support
« Branded » regions.

But Biotech remains today a regional matter with regional actors

Technopoles
Incubators
BICs

Page 25
Need for Bio-Clusters

• Effectively addressing the outsourcing opportunity

• Contract Research / Sourcing industry in Life sciences is expected to be around USD 60 Bln
• Around 9500 small scale Pharma cos under threat - lack of quality standards
• 30% of the Contract Research / Sourcing rupee is spent on analytical / testing services
(Instrumentation)
• Most of the instrumentation is expensive and has higher throughput vis-à-vis requirement of a small
scale unit / academic institute / research lab

Industry / Research
Entrepreneurs institutes / R&D
programs

Contract
outsourcing

Analytical / Instrumentation High Average

Requirement Capital Investment

High Cost of Utilization low for small

equipment / start-up players
Characteristic of Biological / Chemical
Instrumentation Facility
Page 26
Capital requirement stifling growth

High Average High

HighEntry
Entry
Capital Barriers
Barriers
Investment
SIAS Targets
bringing this Gestation High FewerPlayers
Players
Fewer
down can enter
High Failure
More failures
thanRate
success
Slow down
Stifled of
Industry
Companies burn
Equity Burnout Industry growth
growth
out the Equity

Inadequate
Inadequate Reduced
Low Pvt.
Private
Capitalisation Equity capital
Equity Flow
Capitalisation

Lack
Lackof
ofstrong
strong
Promoter equity
Promoter

The IT success can only be replicated by creating enabling environment

for technopreneurs / small players to enter the field
Page 27
Capacity Building

Incubation Shared Instrumentation and

Infrastructure Analytical Infrastructure

Pure Commercial Entrepreneurs Academic QA / QC

Rental / services I2I, AR2I Research (AR) services

CAPACITY BUILDING
Directed Investments and further
facilitation through
 Managerial Inputs
 Liaison support (Funding agencies /
Regulatory Bodies etc)
 Industry linkages and other support

Page 28
Key Constituents

Shared Instrumentation and Analytical Services (SIAS)

– Provide expensive analytical and instrumentation equipment through public-private
partnership between research institutes and private partners to provide shared
instrumentation services (both infrastructure & operators) to small users
Incubation Services
– Promote research based entrepreneurship by providing built out incubation labs and
provide end-to-end support through the subsidized use of SIAS services minimizing
the upfront capital investment
Direct Capacity Building
– Build capacity through Training services (Academic / Vocational Programs) &
Research facilitation services (funding agency linkages, regulatory window etc.)
Revenue Streams
– Analytical Services (Instrumentation Time / Development and testing effort based)
– Quality Testing / Validation Services
– Income from incubation centres

Page 29
Key Constituents

Centre of Excellence
– A unit established to support and promote a particular activity and open for
collaborations.
– Could include the following:
• Demonstration Park
• Decentralised Technologies
• Central Coordination Office & Regulatory Support Cell
• Clinical Trial Coordination Offices

A Demonstration park is a Bio-based park catering to the R&D sector of the

Biotechnology Industry where companies can come and perform their
desired R&D activities

Page 30
 Case Study – IBPL Pune

Incubation Services Model

incubation and shared resources business to be run on self-
RESIDENTIAL COMPLEX
sustaining fashion out of a Biotech Park.

o Financial and Business modeling identifying the specific

services and attached revenue streams
o Detailed market analysis (including client interviews) of
specific park tenants for the interest in specific shared
services
o Coupling of commercial venture with capacity building
initiatives to enable long-term sustainability
Revenue models
The Proposed Concept
o Sale of Plots and Office Space (Long Term Lease) o Specialised biotech facilities
o Rentals from BioResource Centre, Build-to-suite (BioResource Centre)
o Common Utilities
premises
o Specialised office space for
o A charge on the IPR generated from the park customised labs
o Business Facilitation Centre
o Common Amenities Block
o Developed land area for GMP facilities
Page 31
 Case Study – Mumbai

Developing Mumbai into a Biotech Hub

 Tap into and simultaneously service a large number
of healthcare institutes including hospitals and
corporates located in Mumbai city
 Stakeholders to provide support/services
 Government of India/ Maharashtra
 Private Sector participants
 Life Science and Bio-Tech Consultants
 Academic institutions
 Hospitals
 Diagnostic and Pathology chains
 Key institutions such as KEM, Haffkine developing
specific projects

Page 32
 Case Study – Haryana

Biotech City along KMP Expressway

 Government of Haryana proposes to develop the stretch along
the Kundli-Manesar-Palwal Western Expressway in National
Capital Region (135 kms)
 The proposed Corridor will consist of a cluster of self contained
townships, viz. IT City, Biotech City, Trade City, SEZ,
Entertainment City, Fashion City, Dry-Port City, Medi City, etc.
including land use allocation model.
 The spatial plan of the Corridor will be developed around a
number of specialized economic activities, which can trigger
and sustain economic growth.
 YES BANK mandated alongwith M/s Scott. Wilson Kirkpatrick
India to develop the Biotech City
 The scope of works involves advisory services for all aspects
of planning, development, financing, phasing, marketing &
management along with institutional, financial, legal and
administrative mechanism (including corporate organization
structure) for implementation of the same.

Page 33
 Some thoughts

Public Private Partnership model

o Government support addresses issue of high cost of incubation and

SIAS facilities and land / space Risk Core technology interest
o Private sector partner can work towards identifying and accessing CRO, CMO & Diagnostics
industry linkages for park tenants Low (Services Business)
o Clarity on park focus and hence business model for park development –
Enzymes and Biogenerics
sub sectors of biotechnology, risk profiling, geographical advantages
Med.
(bio-diversity, research linkages etc.)

Create a infrastructure for unique service value proposition

Drug discovery
o
High

Higher risk
model

Tenants
o Need to identify robust anchor companies to set up business in the Park and help in developing the eco-system
o New entrants to Indian Market (Research based firms, contract research organisations and manufacturing outfits)
o Small start-up companies and Incubation centre for nurturing ideas to inception

Regulatory & Funding agencies

o To facilitate the operations in the Life Sciences clusters

Page 34
Bio Services Consortium

Model 1 Model 2
MNC/New entrants,
Existing Players
Entrepreneurs
Park tenants/Other Pvt. Players/
Government run institutes

• Self use equipment in In house

allotted slots research • Intermediate capacity
• Flexible infrastructure

Incubation Companies
• Developmental work

IP driven research
• Sample for testing on call

Analytical Lab Incubation Labs

Sample processing fee, time

IP based Leased bases rentals
based usage and project (differential pricing)
revenue
based pricing

Page 35
Incubation Services
Incubation Services

Incubation + Reduced Time/cost + Premium

Services of transit capacity for short time

+
Flexibility
of accessing
Investor
- Interest
+ Infrastructure
-
Upfront Capital - Funding Probability -
Requirement Market testing
Burn Rate (BR) cost
- +
Entrepreneurs
Probability of
-
Equity partnerships success Probability of
through cheap rentals incubation centre
as trial site
+ + +
IP Creation +
Revenue Probability of
For DSC (R) India exposure

+ implies positive effect of starting +

MNC/Existing Players
parameter on next parameter + Long term
- implies negative effect of starting sustainability of
parameter on next parameter Incubation
Services
Page 36
Business Model – Web of Growth

+
Incubation Services Entrepreneurs
+
CVP

+
+ +
MNC/Existing Players IP Generation

+
+
Low Upfront
Capital Requirement
+ +
+ +
+ Outsourced
Services CRADS
Shared Instrumentation Overall Client Value
Volume (OS) +
and Analytical Services + Proposition (CVP) +
+ +
Revenue
for BSC (R)
Low Cost of Services +
+
Page 37
Thank you

Page 38