Biology has always been exciting. For every new development here has taken humans a small step closer to making some sense out of the mystery surrounding life forms. IT, on the other hand, has jumped from one fancy segment to another. After the fancy over the dotcoms and Y2K had faded, bioinformatics has become the replacement.

Industry experts believe that bioinformatics represents the next big opportunity for the IT industry since Y2K. After the September 11 incidents, the Indian IT sector has zeroed in on life sciences and healthcare as the new opportunity areas. Not just IT. The pharmaceutical industry too has increased its involvement in the bioinformatics sector. Pharma companies too are increasingly relying on the power of computers to speed up the new drug discovery process and develop new molecules.

Bulk of the bioinformatics companies are based in Bangalore, Pune, Hyderabad, Chennai and Delhi. These companies have come up in the clusters where there are a large number of IT, biotechnology, pharmaceutical and bulk drug manufacturing firms. The major pharma and biotech companies like Dr Reddy's Lab, Shantha Biotech, Bharat Biotech, Biogenus, Indigene etc., are based in Hyderabad. Similarly in Bangalore there are major biotech firms like Biocon, Avesthagen, Metahelix, Astra Zeneca, etc., which rely on computing power to some extent.

Bioinformatics companies are not fully dependent on Indian customers. They are actively looking for market opportunities in the US, Europe and Australia. Most of the bioinformatics companies in India are in the small and medium enterprises(SME) segment with 20-50 employees. The bioinformatics divisions of IT companies too are small in size. A parallel private training industry to rival the formal education stream is also coming up in biotechnology, as was the case in computer software.

Some of the companies have come out with products too. Companies like Strand Genomics, Ocimum Biosolutions, Mascon have developed some products and services.

Products require intensive efforts to market and an efficient distribution channel.

A typical bioinformatics product would take a year to develop and another year or more to reach the market. Most of the Indian companies in this domain are small players and do not have deep pockets to sustain the products over a long time.

"Initially there were only few bioinformatics companies and they either decided to do contract research or never got about releasing their products. Many of the companies said they were bioinformatics companies and they were either training companies or services oriented companies," explained Anuradha Acharaya, CEO, Ocimum Biosolutions, Hyderabad

In the long run India has several advantages which this sector could take advantage of.

The vast genetic resources, diverse ethnic population, highly evolved indigenous systems of medicine could provide valuable clues to discover new drug molecules.

Success stories

Strand Genomics is the first and one of the most successful firms in bioinformatics. Its success is based on a service delivery model relying on data management and development of customized data mining software for customers. Strand has also developed several propriety mining software products which have been licensed to some of the US biotech companies. Other major companies providing services in bioinformatics include CDC Linex, Bigtec, Institute of Bioinformatics, Jubilant Biosys, Ocimum Biosoultions, Mascon Life Sciences, Bilcare, Scinova, SysArris and Molecular Connections.

Software companies like Infosys Technologies, Wipro Health Sciences, Tata Consultancy Services, Kshema Technologies are also exploring the opportunities in data management sector. Even the US companies like Affymax, Monsanto and others have also established informtatics division in India to take advantage of low cost software development skills.

Genomics

With the genomics research making rapid strides, the volume of life sciences related data is expected to double in the near future. This makes biology a major topic for increased use of computer applications to study the data. The large skill base of software specialists in India is making it a key player in this emerging market segment

Indian companies could play a significant role in areas such as data handling, data mining genotying, fingerprinting and DNA sequencing. This sector has a significant growth potential and is expected to grow to a global market size of $3.2 billion by 2005. It is estimated that up to 10 percent of the investment today in R&D is IT related. There is a huge potential for Indian biotech and IT companies to enter into collaborative bioinformatics research with global pharma majors in the near future.

This sector in India, at the moment, is in the early stages of development. Every one is eagerly watching which business models would become successful. Now genomic databases are mostly with specialist biotech companies and a successful business model may emerge with the bioinformatics business built around these databases.

A player to watch in this segment is the Bangalore-based Institute of Bioinformatics (IOB) which is engaged in cutting edge research in genomics and proteomics. It had recently completed its first international project on the creation of Human Protein Reference Database. The company is in the final stages of completing another resource - a cancer microarray database called Oncomine in collaboration with scientists at the University of Michigan, Ann Arbor in the US. "We are not looking at any particular market but because of the nature of our work we are looking at the entire human population so that we can try to ameliorate their sufferings," said Akhilesh Pandey, chief scientific advisor of IOB.

Opportunities in biopharma

Apart from genomics, the field that is driving bioinformatics is the drug discovery process that includes techniques of data mining, scientific visualization, information storage, retrieval of special structure, data and simulation of very long DNA sequences. Pharma and food industries are making significant investments in this sector. Companies like Biocon, Dr Reddy's Lab, Ranbaxy are looking at this sector to reap the advantage of being early movers. Major pharma and biotech companies like Amgen, Boots Healthcare International, GlaxoSmithKline, AstraZeneca, Pfizer International and others are already the clients of Bangalore based SysArris Software Pvt Ltd that caters to the needs of the drug discovery and development process.

"We have a good number of clients.. Our product design capabilities are not restricted to a one-time make-and-implement approach. We undertake the development of commercial, off the shelf software for clients that span several versions, upgrades and updates over the product life cycle," said Ajay Simha, a director of SysArris.

In 2000, the worldwide pharmaceutical market, according to IMS Health, totaled $317 billion and it could reach $3 trillion by 2020. However the industry could achieve such growth only if it brings many new drugs in to the market. This challenge could be met only if the industry finds an effective solution to speed up the process of identifying novel drug targets and taking them to the markets fast.

Bioinformatics offers pharma companies the chance to participate in the front-end drug discovery process. Experts estimate that genome research could identify 3,000-10,000 new targets for small molecules. Currently, the industry is working with a potential target of just over 500 proteins. To take advantage of the new opportunities pharma companies are developing a variety of strategies to access and exploit the research findings with the help of bioinformatics companies.

There are words of caution too. "Indian biopharma is still in the infancy stage as far as data driven drug discovery and developments are concerned. About 80 percent of the action in biopharma at present is taking place in the US,"noted Strand Genomics chairman Prof Vijay Chandru." We are, however, focusing on the markets in Europe and Asia Pacific too for marketing our tools."

The global bioinformatics industry clocked revenues of $ 2 billion in 2000. It is expected to grow to $6 billion by 2005. India has the potential to grab a big part of this pie if the industry and government work in tandem.It is a promising sector for Indian entrepreneurs. However, bioinformatics may never scale the magnitudes reached by the software segment as the whole pie may continue to be small relative to the IT segment for many more years.

Narayan Kulkarni