Life Sciences

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BIO-CLUSTERS The Next Success Story March
29, 2006
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Biotechnology Park - A Concept

• Conceptually a life sciences park / cluster is
  Planned infrastructure developed to facilitate
  business of RD 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
• Growth of new ventures
• Transfer of technology and business skills
  between the university, colleges and businesses
  in the Research Park and
• Promotion of technology-led economic development
  for the community at large.

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A Coherent Network
Life Sciences Park / Cluster
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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

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Global Biotech Clusters

• USA
• California (San Francisco, Los Angeles, San
  Diego)
• Boston
• New York/New Jersey
• Philadelphia
• Baltimore/Washington, DC
• Research Triangle NC
• Canada - Saskatoon, Toronto, Montreal
• South America - Rio de Janeiro, Sao Paulo
• Europe - Brussels, Medicon Valley,
  Stockholm/Uppsala, Helsinki, Paris, Biovalley,
  BioAlps, BioRhine, BioTech
• Munich, BioCon Valley
• United Kingdom/Ireland - Glasgow-Edinburgh,
  Manchester-Liverpool, Cambridge, Dublin
• Israel

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Life Sciences Cluster Bay Area

• More biotechs located here than anywhere else, gt
  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 CapNorthern California holds
  24 of the 200 Billion Biotech Market Cap
• Ranked 1 in Venture Capital Investmentrecipient
  of 34 of total U.S. VC funding
• Ranked 1 in Entrepreneurial Climatemost
  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
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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 RD 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

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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
• Agricultural Biotechnology
• Biological Devices
• Bioinformatics Services
• Contract Manufacturing / Research
• Genomics / Proteomics
• Human Diagnostics / Therapeutics
• Other

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Indias Biotech Clusters

• IBPL Biotech Park Hikal, Shreya, Emcure,
  Advinus, others
• RD NCL, NIV, Agharkar

• SP Biotech, ICICI Knowledge Park
• Biological manufacturing - DRL, Shantha, Bharat
  Biotech, BE, Zenotech
• Bioagri Emergent, Nuzeeveedu, JK
• RD CCMB, CDFDRI, IICT

• MNC RD Centres Monsanto, AstraZeneca, GE,
  Sigma-Aldrich
• Startups Strand, X-Cyton, Metahelix,
  Avesthagen, Gangagen
• Services ReaMetrix, MWG, CROs, Jubilant
• Other Apotex, Aurigene
• RD NCBS, IISc

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Biotech Clusters
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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 / Entrepreneurs
Research institutes / RD programs
Contract outsourcing
Analytical / Instrumentation Requirement
High Average Capital Investment
High Cost of equipment
Utilization low for small / start-up players
Characteristic of Biological / Chemical
Instrumentation Facility
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Capital requirement stifling growth
High Average Capital Investment
High Entry Barriers
High Entry
Barriers
Gestation High
Fewer Players
Fewer Players
can enter
High Failure Rate
More failures
than success
Slow down of
Stifled Industry growth
Industry growth
Companies burn
Equity Burnout
out the Equity
Reduced Pvt.
Low Private Equity Flow
Inadequate
Inadequate
Equity capital
Capitalisation
Capitalisation
Lack of strong
Lack of strong
Promoter equity
Promoter
The IT success can only be replicated by creating
enabling environment for technopreneurs / small
players to enter the field
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Capacity Building
Shared Instrumentation and Analytical
Infrastructure
Incubation Infrastructure
Pure Commercial Rental / services
QA / QC services
Entrepreneurs I2I, AR2I
Academic Research (AR)
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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

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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 RD sector of the Biotechnology Industry
  where companies can come and perform their
  desired RD activities

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Some thoughts

• Public Private Partnership model
• Government support addresses issue of high cost
  of incubation and SIAS facilities and land /
  space
• Private sector partner can work towards
  identifying and accessing industry linkages for
  park tenants
• Clarity on park focus and hence business model
  for park development sub sectors of
  biotechnology, risk profiling, geographical
  advantages (bio-diversity, research linkages
  etc.)
• Create a infrastructure for unique service value
  proposition

Higher risk model

• Tenants
• Need to identify robust anchor companies to set
  up business in the Park and help in developing
  the eco-system
• New entrants to Indian Market (Research based
  firms, contract research organisations and
  manufacturing outfits)
• Small start-up companies and Incubation centre
  for nurturing ideas to inception
• Regulatory Funding agencies
• To facilitate the operations in the Life Sciences
  clusters

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YES BANKs involvement in bio-clusters

• Advisory services starting for conceptualization
  to implementation of the park
• Develop a services and infrastructure
  value-proposition for the park to provide a
  unique positioning to the park, including
  financial and business models
• Work in identifying and structuring various
  agency agreements
• Deal Flow for the parks
• Leveraging industry linkages to rope in tenants
  for the park including assistance in getting
  anchor companies who would set up business in the
  Life Sciences
• Advisory services to New entrants to Indian
  Market (Research based firms, contract research
  organisations and manufacturing outfits)
• Incubation deal flow of Small start-up companies
• Specialized services like
• Designing Incubation centres for nurturing
  ideas to inception creating value propositions
  to minimize the typical burn-rate associated with
  such facilities and enable faster access
• University linkages and other partnership to
  enhance human resource capital for the parks

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Case Study IBPL Pune

• Incubation Services Model
• incubation and shared resources business to be
  run on self-sustaining fashion out of a Biotech
  Park.
• Financial and Business modeling identifying the
  specific services and attached revenue streams
• Detailed market analysis (including client
  interviews) of specific park tenants for the
  interest in specific shared services
• Coupling of commercial venture with capacity
  building initiatives to enable long-term
  sustainability
• Revenue models
• Sale of Plots and Office Space (Long Term Lease)
• Rentals from BioResource Centre, Build-to-suite
  premises
• A charge on the IPR generated from the park

• The Proposed Concept
• Specialised biotech facilities (BioResource
  Centre)
• Common Utilities
• Specialised office space for customised labs
• Business Facilitation Centre
• Common Amenities Block
• Developed land area for GMP facilities

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Bio Services Consortium
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Incubation Services
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Business Model Web of Growth

Entrepreneurs
Incubation Services

CVP



IP Generation
MNC/Existing Players


Low Upfront Capital Requirement




Outsourced Services Volume (OS)

CRADS
Shared Instrumentation and Analytical Services
Overall Client Value Proposition (CVP)





Revenue for BSC (R)

Low Cost of Services

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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

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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.

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YES BANK

• Provide a comprehensive package of advisory and
  financial solutions
• Financial solutions
• Funding working capital, term funding
• Performance / Financial guarantees
• Trade Export Finance
• Transaction Banking services
• Treasury services
• Advisory services
• Business growth and development
• Capital raising structuring
• Technology transfers, licensing
• Alliances Collaborations
• Mergers Acquisitions

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MERGERS ACQUISITIONS
PRIVATE EQUITY/CAPITAL MARKETS
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STRUCTURED FINANCE
BUSINESS ADVISORY
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Thank you