Just another lab@Hyderabad: India's life-sciences hub

Ever since he took over as Chief Minister of Andhra Pradesh (Hyderabad, say his critics) in 1995, Nara Chandrababu Naidu has sought to sell, laptop and powerpoint presentation in tow, his capital city as an alternative to Bangalore as a destination for it companies, Indian and multinational. He has had some success: Microsoft put down its only development centre in India at Hyderabad's Hitec City and Oracle has a large development centre in the city. Still, the race to be a destination of choice for it companies is competitive, Bangalore has a start that's difficult to combat, and Hyderabad isn't even the only alternative; Chennai and Delhi-satellites Gurgaon and Noida could well enjoy an edge over Naidu's seat of power. The cm would have had better luck selling Hyderabad as the pharmaceutical, even life sciences capital of India-as he has increasingly been doing. The facts are in his favour: Hyderabad is really the centre of gravity of the life sciences business in the country.

Dr. Reddy's Laboratories (DRL), Aurobindo Pharma, and Shantha Biotechnics are all based in the city. As are mid-sized players like Neuland Labs and hot start-ups like Matrix Labs and Divi's Labs. Then, there are bleeding-edge research facilities such as Centre for Cellular and Molecular Biology, Indian Institute of Chemical Technology, and Centre for DNA Fingerprinting and Diagnostics. "Hyderabad has excellent manpower in chemistry," says Jyoti Jaipuria, Head of Research (India), DSP Merrill Lynch. "The availability of manpower has spurred entrepreneurial instincts (and catalysed the creation) of several pharma companies."

Much of the city's life-sciences industry owes its existence to the state-run, now dormant (that definitely sounds better than sick) Indian Drugs and Pharmaceuticals Limited (IDPL). Many of Hyderabad's pharma entrepreneurs, including the best known of them all, Dr Kallam Anji Reddy of DRL started their careers at IDPL. "IDPL spawned many start-ups and helped the (pharma) industry grow in Hyderabad," says Venkat Jasti, President, Bulk Drugs Manufacturers Association. The numbers bear that out. Today, companies based in Hyderabad account for a third of the Rs 9,200-crore ($2 billion) revenues of the Indian pharma sector. By 2010, says Jasti, the corresponding numbers will be $8-9 billion (Rs 36,800 crore-Rs 41,400 crore) and $25 billion (Rs 1,15,000 crore).

Andhra Pradesh's state Industries Secretary B.P. Acharya insists there are good reasons why this should happen. The first is a proposed Institute of Life Sciences, a John Hopkins Institute-style centre that is to be built in association with companies such as DRL and Novartis. The second is the Rs 150-crore initiative to build a 100-acre National Primate Breeding & Research Centre that is being developed by Indian Council of Medical Research (ICMR) with assistance from US' National Institute of Health. This will help companies conduct clinical trials and toxicology tests on primates.

All this, explains Sarath Naru, the Founder of Ventureast, a venture capital firm, and the Managing Director of Andhra Pradesh Industrial Development Corporation Venture Capital Limited, adds up to a happening life-sciences ecology. "Hyderabad offers both a basic eco-system for pharma manufacturing and the ability to move up the value chain and build IP, and has, therefore, moved beyond just an ideal choice for start-ups." And you thought it was only about it.

-E. Kumar Sharma

STREET WISE
Has India Tipped?
If the economy has become fashionable overseas, it has little to do with governance.

A year ago around this time, the sensex, was below 3,000 levels, the general elections were a speck on a fogged up horizon, and "India Shining" was not yet a gleam in a spin doctor's eye. From May onwards, things suddenly started to happen: Foreign investors took to Indian equity like ducks to water, international economists and analysts began touting the Indian economy as the most happening after China-and yes, as election D-day drew closer, India Shining, and Dr Feelgood were born.

If India has suddenly crossed that crucial threshold and put up its flag on the elite island of economic pre-eminence, it would be too simplistic to heap the credit on good governance and prudent policy-as is being made out to be. Let's now bring into play The Tipping Point (2000), Malcolm Gladwell's bestseller on "How Little Things Can Make a Big Difference". The premise of this tome is that an emerging trend is a bit like an epidemic, and it spreads just like viruses do. Such a trend is characterised by its contagiousness, the fact that little causes can have big effects, and that change happens not gradually but at one dramatic moment. When all that happens, that trend reaches "The Tipping Point", or has "tipped", according to Gladwell.

Considering the rather sensational turnaround in global perceptions of the Indian economy over the past year, it is difficult not to find similar characteristics in the India Shining trend. The India interest is certainly contagious; there was no big bang hope or hype preceding it-no huge "cause" to result in such a "big effect". Crucially, the "change" didn't happen gradually but at that one "dramatic moment" when, for instance, the Sensex began the spurt all the way towards 6,000.

A small example provided by Gladwell will probably help illustrate this better. Between 1994 and early 1995, Hush Puppies, the all-American suede shoes, were all but dead, and Wolverine, the company making them, was thinking of phasing them out. Until two executives were told that the classic shoes had become hip in the clubs and bars of downtown Manhattan. By the fall of 1995, Hush Puppies were back in demand, leaving the company, which had dismissed them as "out of fashion", baffled. What happened? As Gladwell describes: "Those first few kids weren't deliberately trying to promote Hush Puppies. They were wearing them precisely because no one else would wear them... No one was trying to make Hush Puppies a trend. Yet, somehow that's exactly what happened. The shoes passed a certain point in popularity and they tipped."

Just as in the case of Hush Puppies, where the company had little to do with the smart turnaround, those in charge of the Indian economy aren't necessarily the wise men worthy of the acclaim for its resplendent glory. Gladwell credits three types of people for making an embryonic trend an uncontrolled epidemic: The "Connectors, the Mavens, and the Salesmen". The connectors are the guys in the loop, in the Indian context perhaps the bankers with the international network spreading the good word. The Mavens (the economists and analysts) are those soaking in the knowledge and data provided by the Connectors. And then there are the salesmen, the persuaders (the foreign brokers perhaps) who coax their clients to put their money where the Maven's mouth is. If all three come together you have an epidemic of raging proportions that's difficult to control.

India has crossed the Tipping Point. And as long as the connectors, mavens and salesmen are on the job, there will be little sign of immunity to this epidemic.

-Brian Carvalho

D Is For D-Link
A chance visit to Goa unveils another in-India electronics manufacturing story.

D-Link's Naik: Hardware manufacturing has a future in Goa

This is the other side of Goa. All thoughts of Sorpotel, Feni, and sunny beaches recede to the background. Before me is the Verna Electronic City, as blue-blooded a manufacturing cluster as you are likely to find anywhere in the country. Siemens, Titan, Hoechst, and IFB are already present here and Dr. Reddy's is to join this august club soon. My destination is to one of the three factories of D-Link India in Goa. Here, the Indian subsidiary of multinational D-Link Corporation manufactures networking and communication equipment and, through a joint venture with Taiwan's Gigabyte Technology, motherboards. I am here at the factory to understand, up-close-and-personal, all about SMT assembly. Minus the jargon, Surface Mount Technology is an automated system to mount miniature components on to circuit boards that you are likely to encounter inside your computers and modems.

The showpiece of the factory has to be the chip shooter. This spews chips on to the motherboard at a tremendous rate. A typical motherboard has 900 components and once they have been placed, they are soldered. The output of the 3.6-minute process is a fresh, warm, and fulfilled motherboard. D-Link boasts seven such lines that roll out motherboards and internal and external modems, and Local Area Network and network interface cards. At an adjoining factory (also belonging to D-Link), optic fibre cable, essentially used in long-distance communication, is being modified for use in a Local Office Environment. This variation was designed in-house and as the company's Chairman and Managing Director K.R. Naik puts it, "When we design products, our gross margins are almost double (over 40 per cent) what they usually are." Could Goa rival Pondicherry as a destination for hardware manufacturers? Naik's experience would seem to suggest so. "It is an accessible government," he says. "You can knock on the door and walk in if you have an issue." Right now, he has none.

-Vandana Gombar

FLAT
Curves Are Out

When it comes to tellys, flat is in. not flat as in flat panel, a term that encompasses three kinds of televisions: plasma, LCD, and LCD projection-after all, of the 7.3 million TV sets sold in India in 2003, a mere 1,500 were flat panel ones-but flat as in flat screen; almost 10 per cent of the televisions sold in 2003 had flat screens. Marketers, however, remain sanguine: "Indian consumers are increasingly showing a preference for new technologies," says R. Zutshi, Director (Sales), Samsung India, "and the market for flat panel TVs will grow significantly in the next couple of years." Put otherwise, it won't be flat.

-Alokesh Bhattacharyya

Businessmen In Khadi
Most plutocrats continue to avoid the Lok Sabha.

Naveen Jindal (L) and Ramesh Gelli: Nursing political ambitions

Naveen Jindal, the vice chairman of Jindal Steel and power, and the man who famously fought for the right of ordinary Indians to hoist the tricolour in their homes and offices, and Ramesh Gelli, the founder of Global Trust Bank trying to make a comeback to public life after being tainted in l'affaire Ketan Parekh, have one thing in common. Both are reported to be interested in contesting the Lok Sabha elections, although the protagonists themselves are rather reticent about their plans. "Things are not yet decided," says Jindal. "There is pressure on me from friends to join politics, but I need to make it clear to myself what difference that will make," says Gelli. Still, if the two decide to take the Lok Sabha route to India's Parliament, it'll be a change from the existing position of India Inc.'s denizens. Jamnalal Bajaj won the parliamentary election from Wardha thrice, but descendant Rahul Bajaj's response sums this up best: he says he isn't out of his mind "to enter politics at the age of 65". However, the Armani or khadi clad industrialist is a common sight in the Rajya Sabha, India's upper house, to enter which fat wallets and political support are all that is needed. Vijay Mallya, Jay Panda, Lalit Suri, and Rajkumar Dhoot are all Rajya Sabha mps. Not too many businessmen have tried the Lok Sabha for size, and those that have-think O.P. Jindal, Parvez Damania, Naval Tata, K.K. Birla-didn't enjoy the electoral experience. The nation, as one businessman-turned-Rajya Sabha mp puts it, "is best served" by the presence of his ilk in the upper house.

-Supriya Shrinate & E. Kumar Sharma

GOOD NEWS
The 8.9 Per Cent Solution

» India records a whooping 8.9 per cent growth in gross domestic product in the third quarter.

» In what is perceived to be a slap in the face of the do-not-offshore-to-India brigade, PeopleSoft announces that it will hire 1,000 more software pros in India by the end of the year.

» Global economic confidence is at a 10-year high, according to a survey by the Paris-based International Chamber of Commerce and the Munich-based economic research institute, IFO.

-Ashish Gupta

CURIOSITY
Rs 20,000 Shoes

What is it?

A shoe that is part of Reebok's Classic Diamond Footwear Collection.

Does it have a name?

Yes. Italia Lug Hi.

What is its selling point?

"It is an all black leather lace-up with high-cut silhouette that embraces the Formula 1 appeal," says Subhinder Singh Prem, Managing Director, Reebok.

Is it hand-crafted?

Negative.

How much does it cost?

As mentioned in the headline, Rs 20,000

Are all shoes in the collection similarly priced?

No. Prices range from Rs 10,000 to Rs 20,000.

What justifies this price?

India Shining, or as Prem puts it, "Indians are getting younger and celebrating their choice."

-Amanpreet Singh