The Hindu Business Line : Venture funds `don't get enough attractive biotech projects'

IN the last decade since the upward trend in biotechnology begun in the country, about $100-million funds have been parked by venture capital firms in various start-ups and biotech companies.

There are at least 70 different funds operating in India. Three sources of support - offshore funds, Indian venture funds and the Technology Development Board (TDB), have been active. A majority of the venture funds are located in four major clusters — Bangalore, Hyderabad, Pune and Mumbai and Chennai — where the biotech industry is growing.

While the biotechnology industry needs substantial venture monies to blossom, the funds feel that they are not getting attractive projects with high growth potential in the Indian context, according to a study done here by the Centre for Technology Management, Administrative Staff College of India (ASCI).

While the Andhra Pradesh Industrial Development Corporation (APIDC)-promoted venture capital funds for biotechnology with a target of having Rs 150 crore have taken off with several banks committing substantial contributions, the ABLE (Association of Biotechnology Industries) is proposing to a create a still bigger fund to promote the biotech industry.

The study pointed out that for Indian biotech companies to be globally competitive, they have to get over the present weakness in the areas of drug discovery and creation of new molecular entities as well as in expertise to do clinical trials, which are needed to get new molecules into the market.

Another big weakness of the Indian biotech companies is in product development and patents. For venture funds, firms have to strengthen their product pipelines, the study on `Mapping of biotechnology skills and research infrastructure', sponsored by the Department of Science and Technology (DST) said.

Stating that clustering of biotech industry is a positive development, the study said liberalisation of the economy would increase the role of clusters as centres of entrepreneurship creation. The growth of hi-tech clusters is very perceptible and their share in intellectual property creation in India is going up.

Listing the weaknesses confronting the Indian biotechnology industry, the study said universities were not generating and transferring commercially exploitable knowledge; R&D expenditure by biotech firms was very low, not being cash rich, companies not able to invest in product development; no experience in taking new molecules through clinical trials and Indian biotech firms have no major branded products for the global market.

Unless these issues are addressed, the inherent strengths such as the low operating cost, presence of good network, strong knowledge in basic sciences and rich biodiversity cannot be fully leveraged.

The study made a thorough assessment of 15 leading biotech firms, five universities and 5 research laboratories for the purpose of finding out the skills and research infrastructure.

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