Biotech titans Bengaluru and Hyderabad fortify India’s dominance

Life science research and development in India is increasing substantially, driven by a combination of government initiatives, a skilled workforce, and continued investments. The COVID-19 pandemic has further elevated the significance of this industry, spotlighting India’s role as a major global player in vaccine production and pharmaceutical R&D. Together, this has led to a surge in real estate demand that is likely to reach approximately 96 million sq ft by 2030 (1). A sizeable part of this will be required in Bengaluru and Hyderabad that are among India’s top cities oiling the wheels of life science with a swift growth in biotechnology, pharmaceuticals, and medical technology. Between 2019 and 2022, life science companies in India occupied 8.06 million sq ft of office space, with Bengaluru and Hyderabad ranking first and third, respectively (2). The cities play a pivotal role in India’s bioeconomy but come with their unique strengths that make companies and investors prefer them over any other.

Bengaluru: The Pioneer in Innovation

Also known as India’s Silicon Valley, Bengaluru has long been synonymous with innovation and technological prowess. The city’s stronghold in information technology and startup ecosystem (3) has created a fertile ground for the biotech industry’s growth as it allows budding or newly established lifesciences companies to easily leverage the existing technological infrastructure. Consequently, major biotech players have chosen Bengaluru as their centre of operations. The large number of life science startups in the city is a testament to its conducive environment for groundbreaking research and entrepreneurial ventures. Bengaluru’s social infrastructure, characterised by top-tier educational institutions like the Indian Institute of Science, facilitates access to a highly skilled talent pool and an organically growing innovation system (4).  Its advanced healthcare facilities and lively cultural and recreational scene make the city an attractive location for high-calibre professionals. Over the time, the city has improved its infrastructure to accommodate them. The real estate market in Bengaluru has adapted to support this spurt, with a notable shift towards high-end, amenity-rich projects that cater to the demands of a growing elite professional class (5). Besides, Bengaluru’s extensive metro network and strategic location also provide seamless connectivity that supports the operations of life sciences firms.

However, the city’s success brings its own set of challenges. The cost of living and real estate in Bengaluru is steep, making it increasingly difficult for smaller startups to find affordable spaces. Traffic congestion and infrastructural strain are growing concerns that could impede the city’s ability to sustain its biotech boom (6).

Hyderabad: The Vaccine &CDMO Hub

With its unique calibre as a hub for vaccine and contract research, development and manufacturing, Hyderabad is fast emerging as a formidable challenger to Bengaluru’s dominance in the life sciences sector. By developing ‘Covaxin’, India’s first indigenous COVID-19 vaccine, it is sprinting towards a tag for innovation too. Genome Valley, the city’s life sciences cluster, is a shining example of Hyderabad’s evolution, housing over 200 companies, including global giants (7). Hyderabad’s strategic focus on biotechnology and pharmaceutical manufacturing has attracted substantial investments, exceeding $700 million in recent years, and this figure may reach a whopping $250 billion by 2030 (8). The ambitious goal is supported by the development of specialised infrastructure to strengthen Hyderabad’s position on the global stage (9). This is likely to fortify further with the proposed elevated corridor that is expected to not only improve connectivity but create a holistic ecosystem for the talent base required for multinational companies. 

Making the right choice

Bengaluru’s established market offers immediate access to a rich talent pool and a mature biotech ecosystem. This makes it an attractive option for investors looking for stability and immediate returns despite the high-cost structure and infrastructural challenges (10). In contrast, Hyderabad offers a more cost-effective alternative with massive growth potential, bolstered by strong governmental support and strategic infrastructural developments. Despite initial hiccups related to urban development, the potential for high returns on investment in Hyderabad is considerable. Each city offers unique opportunities and challenges, making them attractive and competitive in their own right. For investors, the decision must involve strategically assessing market conditions, growth possibilities, risk appetite, and individual business objectives. Bengaluru is ideal for those seeking an established market with a robust infrastructure and a fast-paced environment. Hyderabad, on the other hand, is suitable for those willing to invest in an ascent-bound market with the potential for substantial scale and returns in the long term. Whether choosing Bengaluru’s long-standing competence or Hyderabad’s rapid expansion, the key is to align investment strategies with comprehensive market understanding to capitalise on India’s life sciences real estate boom (11).

The biotech competition between Bengaluru and Hyderabad encapsulates the dynamic nature of India’s life sciences sector. However, the key to sustained success for India lies in collaboration rather than competition. By leveraging each other’s strengths and fostering synergies, both cities can collectively propel India’s life sciences sector to greater heights. Initiatives such as cross-city knowledge exchange programs, joint research ventures, and industry-academia partnerships can pave the way for growth and innovation. Both cities must continue to invest in infrastructure, talent development, and regulatory reforms to address existing challenges and capitalise on emerging opportunities. By fostering a conducive ecosystem that nurtures innovation, entrepreneurship, and collaboration, Bengaluru and Hyderabad can solidify their positions as leading players in the global life sciences landscape.

References:

1. Savills India | Unlocking Opportunities: Life Sciences and Real Estate in India
2. Fortune India: Business News, Strategy, Finance and Corporate Insight
3.  Bangalore has the largest number of life science start-ups: Kiran Mazumdar-Shaw – BusinessToday
4.  Universities as Knowledge Integrators and Cross-Industry Ecosystems: Self-Organizational Perspective – Tatyana Tolstykh, Leyla Gamidullaeva, Nadezhda Shmeleva, 2021 (sagepub.com)
5.  Where is Bangalore ranked in global luxury home market – The Hindu
6. The Ultimate Guide to Real Estate in Bangalore vs Hyderabad (nobroker.in)
7.  Valley of Growth – The Hindu
8.  Hyderabad Life Sciences Hub: Hyderabad emerging as life sciences hub, with global and domestic pharmaceutical firms – The Economic Times (indiatimes.com)
9. lifesciences.telangana.gov.in/wp-content/uploads/2020/12/Life-Sciences-Real-Estate-Report-Edition-1-2019-Cerestra.pdf
10.  Is living cost in Hyderabad more than Bangalore, Mumbai? (siasat.com)
11.  What’s Shaking Up India’s Life Sciences Real Estate Sector? (biospectrumindia.com)