Most of the biotech companies are focusing on discovery-led innovation in biopharmaceuticals. The segment has been witnessing innovations in follow-on (new variants) biologics (commercial products derived from biotechnology) and vaccines with an emerging activity in discovery-led new drug development programmes.

"The vaccines business is the prime driver in biopharma segment, and this accounts for close to 50 per cent of the biopharma segment and is followed by therapeutics, diagnostics and others," said BioSpectrum, a publication which tracks the Indian biotech sector. 

"Most biopharma firms are focusing on discovery-led innovation and have begun to invest substantially in infrastructure and R&D. The segment is seeing increased collaborations and newer investments. Most companies expect their investments to yield returns in two years," BioSpectrum added.

Presently, the segment accounts for over 70 per cent of the biotech sector and is growing over 30 per cent annually. The segment has seen revenues to the tune of $1.45 billion and is expected to touch the $3 billion mark by 2010.

Presently, public institutions are fulfilling early-stage research, of producing cell lines, while the private sector is focused on process and clinical development.

"This trend began with Shantha Biotechnic's Hep-B Vaccine which came from the Centre for Cellular and Molecular Biology (CCMB), a number of clones developed by Indian Institute of Science (IISc), International Centre for Genetic Engineering and Biotechnology (ICGEB) have also found their way to industry, what Indian industry needs is for public labs to be fountainheads of innovation that can be developed and commercialised," said Kiran Mazumdar Shaw, CMD Biocon [Get Quote] and head Karnataka Task Force on Biotechnology.

"Today the industry is also outsourcing innovation from overseas labs and are successfully leveraging the India cost and skill base to deliver affordable new molecules," she added.

"Outsourcing partnerships are evolving into equity investments, as foreign companies recognise the latent potential in India's rapidly evolving industry," said Utkarsh Palnitkar, Partner & Industry Leader � Health Sciences, Ernst & Young.

For this segment, key revenue drivers are the regulatory markets backed by follow-on (variants) biologics in India and other developing markets like Latin America, Eastern Europe and West Asia.

These countries are offering good entry opportunities given the high prices being adopted by the big pharma companies. Added to this are the recent guidelines announced by the European Medicines Agency (EMEA) for a select group of biosimilars (new versions of existing biopharma drug).