The Hindu : IT majors eyeing bioinformatics

Online edition of India's National Newspaper
Sunday, Sep 21, 2003

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Business

IT majors eyeing bioinformatics

By Harichandan A. A.

BANGALORE SEPT. 20. In February this year, a bioinformatics centre in the University at Buffalo (UaB), New York, signed a memorandum of understanding with the India-based IT major, Tata Consultancy Services. TCS also announced the opening of a regional office in downtown Buffalo at that time.

Back home, other IT majors were also eying the bioinformatics pie, about $2 billion a year, growing at 25-30 per cent according to some estimates. That interest however is part of a much larger `life sciences practice' in which Wipro, Satyam, Infosys Technologies and TCS itself, have groups of various sizes.

Most at this time won't share plans about investments and revenues, but TCS's MoU with UaB, is a pointer. The company, whose IT clients include Eli Lily and Johnson and Johnson, may fund research at UaB in exchange for commercial rights to the results, a drug development tool, for example.

M. Vidyasagar, a scientist and Executive Vice President, Advanced Technology, TCS, said "if they have specific proposals, we may fund them, but as of now, common ground is still being established".

The company was drawn to Buffalo for three reasons: First, The Centre for Bioinformatics, headed by a noted scientist, G. Skolnick, rumoured to have accepted the position only after a phone call from New York Senator Hillary Rodham Clinton.

Second, one of the largest experimental structural genomics centre in the world, the Hauptman Woodward Institute, is in Buffalo. Nobel laureate Hauptman was present at the announcement of TCS's tie-up with UaB.

Third, the university's growing concentration of bioinformatics talent is complemented by a powerful supercomputer, which "We would like to use for any number crunching," Dr. Vidyasagar said.

TCS also has a 40-man development team in Hyderabad, developing BioSuite, a set of software tools for protein mapping and other computational tools for drug development, funded by the Council of Scientific and Industrial Research. "TCS has the commercial rights to this package," Dr. Vidyasagar said.

Infosys set up its Life Sciences practice in August 2002. The team includes former analysts from ICICI Ventures and IL & FS and PhDs in biology.

A spokesperson said clients include "a global leader in contract research, a European biotechnology leader, and an emerging India based global pharmaceutical company. Further, Infosys is also working with the U.S. division of a global pharmaceutical leader on a performance management dashboard for their senior executives".

While similar information may be found on the web about the other IT majors, TCS, looks like the most focused, today. But it is "early days to share revenue figures," Dr. Vidyasagar said. Show me the money: Part of the reason is that unlike Y2K or BPO, bioinformatics is "not an area where the labour cost arbitrage works out for them (the IT companies)," says Rishikesha T. Krishnan, Associate Professor of Corporate Strategy, Indian Institute of Management, Bangalore. In a recent research paper, Dr. Krishnan and Anshu Gupta and Varun Matta, from IIT Delhi, say it is unlikely that Indian companies will emulate the IT success, in biotechnology and bioinformatics.

During 2000-01, riding on the human genome project euphoria, bioinformatics was seen as very investible, by many analysts in the U.S. At the time there were over 50 U.S. companies with bioinformatics products and services — (1) Tools that support lab experiments, (2) databases of proteins, DNA sequences, gene expression, and medical genetics and (3) analytical software tools for (inSilico) `rational drug design'.

Of the $2 billion, products would amount for up to a fourth while services make up the rest. Given this limited market, Indian companies would have to compete with U.S. companies, and in this case, `offshoring doesn't work' as bioinformatics must quickly feed into biotech research, Dr. Krishnan says.

TCS's deal with UaB is also a pointer to the fact that a strong eco-system is absent in India, to do hardcore biotech research. Unlike in BPO, global pharma firms see no compulsion to set up shop in India, and can in fact directly hire talented Indians from say IISc, or NCBS, to work in the U.S.

Lastly, Indian drug majors such as Ranbaxy and Dr. Reddy's are still making money by selling cheap generics and not by developing original products. While they have now started committing money for product R&D, how much of that will go into bioinformatics is unclear.

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