The pharma industry expressed reservation on the recommendation by the task force of the Commerce Ministry to go for venture capital funding to help resist the pressure from the stock market on building specialty and large portfolio of drugs.
At a meeting of the stakeholders to discuss the recommendations of the task force to the department of pharmaceuticals on increasing exports of pharma products recently, the small scale industry especially felt that venture capital funding may not be practical.
The meeting, called by the Department of Pharma, was attended by representatives of IPA, IDMA, SPIC, CIPI and representative of NIPER. It was pointed out that the venture capital funds always looked for big loans and they would not be interested in supporting the small players who require only small amounts. The meeting also discussed the comparative studies on Indian and Chinese fermentation technology which would be submitted by the NIPER.
"Neither small companies nor public companies with huge pressure from stock market can build large or specialty portfolio in the current circumstances. This issue can be addressed with prioritized VC type funding in SPVs that contract such development work for excellent but high initial cost opportunities (such as specialty generics, steroids, hormones, biopharmaceuticals, non-infringing process based DMFs/formulation ANDAs etc)," according to the task force recommendation.
"Alliance initiatives between domestic companies funded through a VC concept by EXIM bank can help buy the access. Establishing a regularly complaint manufacturing infrastructure and developing a quick product portfolio to run these engines is quite expensive and consumes most of the borrowing power. The availability of funds for long gestation but high return projects should be considered by the government," the task force said.
The incentives mentioned in the draft pharma policy such as exemption of service tax for direct investment in the field of clinical development and data management, exemption from import duty, improved regulatory infrastructure and some form of protection for undisclosed test data must be acted upon, according to the recommendations.
"Government should promote capacity building in testing laboratories for stability studies, bioequivalence studies and third party analytical laboratories urgently through policy action, appropriate incentives and venture capital," the task force said. The industry also supported the recommendation.
"There is a case to look at the possibility of allowing companies to charge additional prices to fund their quality investment and research for DPCO products while fixing the overall marketing expenditure and trade discounts as percentage of sales for all existing products," it said.