The copious smear of vibhuthi on his forehead proclaims M.S. Sekhar's religious bearings. He is deeply interested in spirituality, and is an accomplished mridangam player. The Sanmar Group, where he manages the speciality chemicals business, is traditional, too. It has sizeable businesses in centuries-old shipping and cement industries. The company management is media-shy, and thinks long and hard before taking risks. So, do you expect Sanmar to venture into biotechnology, an area where many 'modern' companies have burnt their fingers?

Sanmar must have thought long enough before taking the plunge, yet it did not begin the way many other biotechnology companies did. It first started chemical services, in some ways an extension of its work in the speciality chemicals. Then it extended this business by acquiring Bangalore Genei, a life sciences company in Bangalore. In a month or two Sanmar will diversify further into clinical research, which will complete the portfolio in biotechnology. It has not invested too much, and is already making operational profits.

Only one Indian biotechnology company, Biocon, then will have Sanmar's breadth. Incidentally, Biocon, too, had grown at a leisurely pace before taking off steeply. The story of other biotech ventures in India is one of large investments and heavy losses, roadblocks and closures, with even the technological successes struggling to make profits. Such suffering is common in the global biotech arena, and has no bearing on the long-term future of the industry in India, but let us stick to our story for the moment.

Sanmar started chemistry contract research about a year and a half ago. Sanmar's speciality chemicals division that started in 1991, had matured by then. This was a good way to enter an R&D-driven knowledge industry. India had a reputation for good chemistry, and the world market was growing. In 18 months, Sanmar built up a good chemistry lab near Chennai, a Rs 6 crore business that now makes profits.

The biology business was tougher to crack. Biologists with industrial experience are harder to find in India. The global biology services market is also small. Products are the mainstay of this business, and biotechnology product development in India (or anywhere) is fraught with dangers and pitfalls a new company in a fledgling industry cannot afford easily. You could ask Shantha Biotech or Bharath Biotech. So Sanmar decided to enter this field through an acquisition. In December 2003, it acquired the first modern biotechnology company in India.

Bangalore Genei was set up in 1989 by P. Babu, a physicist-turned-biologist. It had grown agonisingly slowly till the acquisition, but had been making profits for some time. For a small company (Rs 12 crore in 2003-04), Bangalore Genei had a good portfolio of products. It made tools for biology research, immunochemicals, DNA diagnostic chemicals and so on. But the company was concentrating almost exclusively on the Indian market because it lacked the resources to sell in the overseas markets. It could not invest too much on research either.

Just before the acquisition, Sanmar hired Swaminathan Subramaniam to head the research business. Subramaniam, who was the chief operating officer of Aurigene, a drug discovery company in Bangalore, was also closely involved in the setting up of Dr. Reddy's drug discovery research.

After the acquisition, Bangalore Genei has stepped up research and started attacking foreign markets. It launched a DNA-based kit for diagnosing Human Papilloma Virus (HPV) infection, which causes cervical cancer. This is the first HPV kit in India that amplifies DNA in the sample; hence it is more sensitive. A DNA-based TB diagnostic kit is about to be launched as well.

Sanmar will launch clinical research services in a few months' time. By then it will have a broad repertoire: chemistry and biology skills, clinical research services, good labs - and profitable businesses. Yet it may wait for a while before launching its own programme of drug discovery, the ultimate goal of any biotechnology company. Sanmar's key strength in services is that it does not compete with the pharma companies; it does not want to lose this advantage.