The biotechnology sector in the country is reeling from a funds crunch, affecting its business growth despite the industry attaining an average growth in the range of 15-20 per cent in the past decade.
While financial institutions like banks not showing interest in investing in basic biotechnology research as they have long gestation periods, PE and VC funds too are not comfortable betting their money on research projects as they do not give an opportunity for a quick exit facility.
"India needs one-tenth of the investment that countries like the US and other European economies are funding for basic biotechnology research in their countries," Vijay Chandru, president of Association of Biotechnology-led Enterprises, said.
As per estimates, the biotechnology industry has seen an investment of around $400 billion-$500 billion in the United States and European countries in the last two decades.
Chandru, who also heads Bangalore-based Strand Life Sciences, said though PE and VC players were investing in biotechnology research, funding would only happen in the late stages of research.
"Initial funding for biotechnological research is an issue for entrepreneurs and the role of public investment is crucial during the early stage to fuel innovation," he told Business Standard.
He, however, said that earmarking around Rs 300 crore (Rs 3 billion) by the Planning Commission to fund research projects was a good initiative in this direction.
Executives from biotechnology companies also echoed similar sentiments.
"Barring big pharma companies, private investors like PE and VCs are not ready to invest in basic biotechnology research projects," C S N Murthy, CEO of Aurigene, said. Aurigene Discovery Technologies is an independent subsidiary of Dr Reddy's Laboratory which is betting big on the biopharma space.
According to industry estimates, pharma industry comprises of 80 per cent synthetic drugs and 20 per cent of drugs developed by biotechnology. It will see a complete overhaul by 2035.
"By 2030-35, biotech drugs will comprise of 75 per cent of the total drug industry with the rest coming from synthetic space. So, if investment into the industry is not hiked, India will miss this opportunity," Murali Nair, partner, E&Y, said.
Other Asian economies like China and South Korea are way ahead of India in biotechnology space due to such funding disparities, he added.
Indian biotechnology industry was pegged at $4 billion by March, 2010, and it is expected to clock a 20 per cent growth to reach $5 billion by the end of this fiscal.
"Indian investments should match the present growth rate with facilitation of drug discoveries and manufacturing processes," Nair added.
He also said that India should have a National Biotechnology Fund of around $1 billion with more emphasis on industry and academia interface.
