The biotechnology sector may need an estimated Rs 5,000 crore as “stimulus package” and funds in the near term to take its research and product development programmes to fruition, according to Dr Satya Dash, Chief Operating Officer of the Association of Biotechnology-Led Enterprises, an industry lobby.
The country's 370-strong biotech industry, with total revenues topping Rs 14,000 crore in 2009-10, believes it could do with a massive capital injection of this size from the Government to complete useful activities in medicine, diagnostics, agriculture and energy, Dr Dash told Business Line .
The industry had many start-ups and small and medium enterprises that were waiting to ramp up. Biotech products had long gestations of 8-10 years.
Dr Dash said, “India needs a `government venture fund' of Rs 5,000 crore that should be ring-fenced for biotechnology innovation. Some of this fund could be earmarked for directed research as well as can have components of PPP [public-private partnership] models with an eventual plan for a public issue.”
The government had been apprised of this need. The package could be put together over five years.
Access to risk capital, he said, was a major issue in this industry. Unlike in the US or Europe, “India lacks a robust angel funding community that can fund innovative ideas at a very early stage . Many innovative ideas perish because of lack of investment. The Centre should initiate `ignition grants' to support early stage ideas.”
The latest Budget apportions over Rs 1,400 crore to the Department of Biotechnology - or less than a third of the figure cited by industry.
While small sums from the DBT flow out into entrepreneurial projects under schemes such as the SBIRI (Small Business Innovation Research Initiative Scheme) and BIPP (Biotechnology Industry Partnership Programme,) “The industry feels that more such funds should be initiated for early stage technologies, proof of concept as well as near-market technologies,” he said.
Bridge funds
The need for a bridge fund was also being felt. Many firms go through several rounds of private equity fundings with an eventual plan for a public issue. A bridge fund would help firms that were between two PE infusions and for those that were mulling an initial public issue.
Pharma biotech companies focus on the highly promising and affordable biosimilar drugs, stem cell therapies, vaccines or detection tools for cancer, diabetes, HIV and other diseases. In ABLE's view, this segment alone would need Rs 1,500 crore out of the package.