Indian biotech firms should to replicate successful global models for attracting investment. To achieve this, companies in the country must focus on building critical mass by geographical expansion, acquisition of specific portfolio and leverage Indian intellectual capital and infrastructure. The biotech players can look at acquisitions as a route to be globally competitive.
The Indian companies would be able to imitate global units going by its phenomenal growth rate of 37 per cent in 2005. The sector is also showing the potential to generate one million jobs by 2010 and achieve revenue to the tune of $5 billion, pointed out Aditya Sapru, managing director, Frost & Sullivan South Asia & Middle East in his presentation on Investment opportunities for Indian Biotech industry at the second day of the Bangalore Bio 2006
"To sustain growth rate, the biotech sector must look at attracting investments by developing world class infrastructural facilities like biotech parks with incubation facilities and leveraging the huge talent pool readily available in India," stated Sapru.
A total of 6 biotech parks are functioning in various states and under the public-private partnership and 10 parks are in different stages of development in different parts of the country.
India's strength lies in availability of trained manpower, low cost and government support through policies on foreign direct investments and tax incentives can help to attract foreign companies to Invest in India.
The private sector and venture capital investments have been low in the Indian biotech sector for the past few years, the invest community must take active part.
India witnessed 10-fold increase in foreign direct investment to from $10.7 million in 1999 to $101.64 million in 2005.
Pharmaceutical companies should take the lead. They should invest small percentage of their revenues into innovation, new initiatives among others.
Nitin Deshmukh, of Kotak Mahindra Bank and Honorary Director, ABLE said, "Indian biotech industry is trying hard to get on the fast track. When compared with previous years, more number of companies received venture capital funding during 2005 lead by Kotak, ICICI Ventures, APIDC, ICICI Ventures. And Agri bio, biopharma, drug discovery, bio-informatics companies were the beneficiaries of VC funding."
Deshmukh said, "In 2005, biotechnology is a mature industry going by its products, revenues and market cap. The key driver of the sectors are a combination of initiatives which include biopharmaceuticals, drug discovery ,contract research, agri biotechnology and bio-supplies".
Biopharmaceuticals alone has generated 75 per cent of the revenues to the total of $1billion turnover. In the area of contract research, there has been a 55 per cent growth and a nine per cent contribution to the total industry turnover. The diagnostic sector will become a Rs. 700 million industry by 2010 going by the tremendous development in the areas of kits and chip for early disease detection.
Biotechnology has also witnessed 25 partnerships in the last two years. In the small and medium segment the companies are in a phase of looking out for alliances going by the efforts.
The Union government has been supportive with its funding through the NMITLI and Special Drug Development Research Initiatives which are early seed financial aids before companies can actually approach venture capitalists with a potentially viable business model, added Deshmukh.