The Hindu Business Line : Right prescription

Are PE (private equity) investors interested enough in ‘discovery research’? This is one of the questions that KPMG takes up in Pharma Summit 2008: India Pharma Inc – an Emerging Global Pharma Hub ( www.kpmg.com).

As pharma companies continue to explore private equity finance as an innovative funding model for their demerged entity rather than typically relying on revenues from the generics business, the unique risk-return profile of investments in NCE (new chemical entity) research is still being figured out by PE investors, the report notes. “Besides the huge risk involved and the timeline of 8-10 years to generate returns, PE investors may also have apprehensions about the experience of Indian players in this relatively new space and their ability to scale up their resources as their NCE portfolio gains scale.”

As a result, the willingness of the PE players to invest is a very company-specific decision. Which is why, says the report, a number of company-specific parameters (such as the company’s historic experience in new drug discovery, its current NCE pipelines and the development status along the value chain, target therapeutic indications and the market opportunity) become crucial.

“However, PE investors should take cues from the growing interest of multinationals in partnering with the Indian counterparts to take molecules through the discovery pipeline until the stage of commercialisation,” the publication suggests.

For the avid industry-watcher.

D. MURALI

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