Research paper on risks and challenges for business development of biotech sector in india 2016

IJMSS Vol.04 Issue-03 (March, 2016) ISSN: 2321-1784
International Journal in Management and Social Science (Impact Factor- 5.276)
A Monthly Double-Blind Peer Reviewed Refereed Open Access International e-Journal - Included in the International Serial Directories
International Journal in Management and Social Science
http://www.ijmr.net.in email id- irjmss@gmail.com Page 417
Risks and Challenges for Business Development of Biotech Sector in India
Dr. RenukaBakshi
Assistant Professor
Amity College of Commerce and Finance
Amity University
Address: House No. 1507, Sector 21D, Faridabad-121001
Absract
India is entering in era of Bio –economy,so country’s biotech industry play vital role . The biotech
industry of any country is called by Foundation Industry ,as it provides the solution of national
challenges of developing country like scarcity of food, deficit medical facility,excess consumption of
fuel,shortage of energy supply etc. Now India is becoming attraction center for Foreign players at 3rd
rank after Japan and Korea in Asia Biotech companies must conduct various surveys to meet the
demand of rapid changing environment which will assist in controlling various challenges in business
development.India offers a combination of cheaper labour ,ample amount of natural resources,large
pool of existing R&D industry, but these industries are facing lot of risk and challenges in India. The
department of Biotechnology has taken many initiatives to boost these industries ,which are essential
for strong economy , but situation is still pathetic.Although more traditional risks, such as credit risk,
market risk and foreign-exchange risk, remain fundamental considerations, companies are now
recognizing the need to quantify and assess risks that lurk in areas such as human capital, reputation
and funding. The objective of this report is to assess different types of risks and challenges face by
Biotech Companies in India. This paper provides qualitative as well as quantitative information about
the problems faced by Indian Biotech Industry .
KeyWords:-Biotech, Challenges, Assess, Quantitative, Qualitative
INTRODUCTION
Biotechnology has touched each and every corner of universe and its major stress on application to
environment ,drugs, vaccines including range of biopharmaceuticals, diagnostic,transgenic
crops,useful microbes, food ingredients and improve tools for upgrading quality and animal
reproduction. Our Indian Government is focusing on biotech industry to boost the economy through
providing solutions of critical problems, which has enhanced CAGR of approximately 20% over the
past decades. The estimated size of Rs. 20441 crore and is forecasted to reach 55300 crore in coming
year.The $4 billion domestic biotechnology industry is facing tough challenges in terms of foreign
competition as well as a dearth of funding. While the industry has been growing at a double digit rate
over the last five years, it has concurrently been facing diverse challenges that have prevented the
industry from transcending to the next level, says Ernst & Young's biotech report. Vaccines, insulin,
erythropoietin and monoclonal antibodies have been the mainstay of the bio pharma segment.
Within the domestic market, companies have not been able to launch new products at a pace that
they would have liked.With the lack of funding, many innovative companies will be forced to shut
shop or become service providers rather than innovators. The government, on its part, has
introduced several schemes to fund biotech start-ups. As an incentive for in house R&D, the
government also provides 200% weighted tax deduction, which has been extended till 2017 in this
year's budget. Every business potentially faces challenges, or risks. The types of risk can vary from
business to business but there are some most businesses have in common and generally can be split
into two factors- internal and external.

OBJECTIVES
The main objective of this paper to analyze various risks and challenges faced by Biotech
companies in India which may affect it positively or adversely.
RESEARCH METHODOLOGY
An Exploratory Researchhas been conducted “To define the risk associated with biotech companies “.
The data has been collected through Primary Research. For this Research Qualitative as well as
Quantitative techniques used to analyze the data. The data has been collected through questionnaire
which displays the intensity of the factors which challenges Business Development, through table and
Histograms. The data has been collected from 10-15 Biotech companies in Indiathrough
Questionnaire by conducting Primary survey
ANALYSIS AND INTERPRETATION
 Industrial Relation: Is ineffectiveness of Industrial Relation is a risk affecting Business
Development?
93% respondents are agreed to accept Industrial Relation is volatile factor which affects Business
Development
 Employee Fraud: Guiding the development of an effective fraud control plan and associated
strategies is crucial for Risk management?
55% of respondents say it’s very crucial to assess Employee Fraud
Yes 28 93%
No 1 3%
Nothing in particular 1 3%
Very Crucial 16 55%
Crucial 8 28%
Moderately crucial 4 14%
Does not affect much 1 3%
Not at all 0 0%
Table: 1
Table: 2

Change in technology: Does changing technology evaluation by risk assessment affects the business
development?
83% respondents say change in technology is one of the important factor for Risk Assessment and
thus both Qualitatively and Quantitatively plays main role
 Contingent circumstances: If risk management practice is the art of creating Plan A, then
contingency planning is the art of developing Plan B.
Contingent circumstances is important factor for backing up with
plans,The risk management process provides a format for you to develop plans, systems, and
procedures to anticipate the various outcomes from your activities
 Supplier difference: Mismatches between business needs and a supplier's offerings leads to?
Supplier difference leads to addition of costs i.e. additional costs, delayed costs and stake of
organizations reputation
Yes 25 83%
No 1 3%
May be 4 13%
Yes 13 43%
No 0 0%
They are related 13 43%
Both are same 4 13%
Add costs 6 20%
Cause delays 7 23%
Damage your organization's reputation 5 17%
All of the above 12 40%
Table: 3
Table: 4

 Change in market: Does changes in Market leads to affect Business Development?
a. If yes, what are the factors?
Economic cycles 4 14
%
Strategy changes (customer
based)
8 28
%
Competitive position 6 21
%
Product requirements 8 28
%
Environmental aspects 3 10
%
87% respondents say change in market affects growth of Business Development
 Govt. Regulations: Can Risk-based approaches to the design of regulation and compliance
strategies improve Business Development?
a. Does Government intervention aids in mitigation of ‘Risk’?
Yes 26 87%
No 1 3%
Not sure 3 10%
Yes 23 77%
No 1 3%
Nothing in particular 6 20%
Yes 26 87%
Fig: 9
Fig: 10
Table: 7
Table: 8

b. Which factors of company are affected by Government rules to change the scenario of
‘Business Development’?
77% of respondents say Government
Regulations help mitigate Risk and compliance
strategies help improve Business development
 Competition: What is enterprise's primary competitive advantage in relation to competitors?
33% of the respondents say quality is important to have competitive edge in market
No 4 13%
% of Tax 9 31%
IPR 7 24%
Limits of hiring foreign collaborations 7 24%
Good Manufacturing Practices 6 21%
Quality 10 33%
Novelty 4 13%
Price 3 10%
Service 3 10%
Other 10 33%
Table: 11

 Customer Difficulties: Which strategies do you follow to solve customer differences?
 HR Capabilities: Methods to judge performance evaluation system?
Modes to upgrade HR capabilities
55% say Employee performance has to be checked semi-annually for the growth of Business
Development
 Innovation Strategies: Indicate which of the long terms strategies is more important for
Business Development?
Direct dealing 5 17%
Feedback for customers 7 23%
Complaints/suggestions 2 7%
Monthly 10 34%
Semi-annually 16 55%
Annually 3 10%
Workshop 6 20%
Seminar 2 7%
Training 18 60%
Development 4 13%
Table: 13

Main focus on goods, services and positioning 11 37%
Main focus on low price and cost leadership 2 7%
Technology change transfer 9 30%
Other 8 27%
a. What are the aims of innovation in your company?
 Role of Audit: Which kinds of audit are followed by company?
83% of Respondents say Audit for Accounts, HR Policies and strategies, Production capacity are
equally important to access Risk
 Production and Operation: Is outsourcing used?
a. If yes, it is used due to
Process evaluation 17 57%
Product evaluation 11 37%
No innovation management involved 2 7%
Accounts 3 10%
HR policies and strategies 1 3%
Production capacity 1 3%
Other 0 0%
Yes 24 80%
No 6 20%
Table: 17

80% Respondents say in Biotech Industry Production and Operation is outsourced
 Intellectual Property Rights: Does IPR enhance the growth of Business Development of an
enterprise?
90% of Respondents say IPR plays an important role for the growth of Business Development
of a Biotech Industry
 Financial Management: Funding source for Biotech sector
31% of respondents say that the funding for Biotech Firms are from Venture Capital Funding
Lack of skills 6 23%
Lack of capacity 7 27%
Lack of equipment 4 15%
Cost effectiveness 9 35%
Yes 27 90%
No 1 3%
Does not affect 2 7%
Internal Growth 4 14%
Parent/Holding Co. 4 14%
Bank 4 14%
VC/ PE 9 31%
Public Funding 5 17%
Other 3 10%

RESULTS AND DISCUSSION
The following graph displays the result of above data:-
According to result of surveythe various factors affect the business development . Some of them are
highly volatile like Industrial relation 93%,change in technology83%,change in market
87%,Goverenment regulations 77%, Goverenment Intervention 87%,HR capabilities 77%, Role of
audit 83%,Intellectual Property right 90%. These factors are major challenges in field of biotech
companies in India,which are big hurdle in business development. The other factors influences the
growth of biotech sector in India are Contingent Circumstances 43%,Limits of hiring for Collaboration
24%etc. These challenges require considerable efforts in terms of management’s time and attention
to establish. These companies came out from the phases of financial distress of 2010 by the support
of angel investors and due to the change in policy in Government regarding outsourcing, Foreign
collaborations and Foreign Technology. Retaining the skilled as well as experienced employees is
great challenge for these companies. Companies have to amend and update their strategy to involve
ample amount of funds and people in research for the progress of Biotech Companies.
CONCLUSION
Indian Biotech companies employs about 20,000 resource people and its contribution is
about 2% of global biotech sector.Besides strong growth and future potential the Indian Biotech
industry faces lot of challenges .These companies are taking steps to resolve these challenges through
various innovative measures. The Risk factors like Industrial Relations, Employee fraud, HR
Capabilities can be resolved by hiring skilled people .High perks and emoluments must be offered to
satisfy various needs of their employees. The seminars, workshops, conferences should be organized
to enhance their capabilities to meet ever changing environment. But it needs to put more efforts in
upgrading their systemby increasing funding options , bio networking &IPR development. So our
government has to take initiative to reduce these challenges by taking various steps to turn India
from developing to developed country.
93
55
83
87
77
83
77 80
43
90
0
10
20
30
40
50
60
70
80
90
100
Risk Assessment

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