To take the biotech industry to the next phase of growth in the face of paucity of funds, the National Innovation Council (NIC) and the Association of Biotechnology Led Entrepreneurs (ABLE) have proposed to the Union government to set up a second Stock Exchange which could list companies engaged in innovation. This would be on similar lines that of Nasdaq which has listed small companies, stated Kiran Mazumdar-Shaw, NIC member, head Vision Group on Biotechnology and CMD, Biocon Limited.
“We have mooted this concept and discussed with SEBI which is yet to take it forward,” Shaw said.
While the criteria for listing at the Nasdaq was based only on innovative concepts and not revenues, the US Stock Exchange has several start-ups getting listed to raise the required resources. India too needs an identical model for biotech companies to benefit, she added.
“In the current knowledge-driven economy, innovation is the prime driver of growth. But innovation requires huge financial resources and this is where we are looking at a secondary stock exchange concept to fuel. Biotechnology and information technology are the core sectors which fuel growth in a knowledge economy,” stated Shaw.
The key reason for a second stock exchange comes in the wake of lack of genuine venture capital funding and risk aversion. This is where Nasdaq embarked on the role of becoming an early stage supporter. Genetech the leading US-based biotech major is listed on Nasdaq based on its innovative concepts and turned to profit.
As part of the five-year growth plan of the sector, we have insisted the Ministry of Finance and Planning Commission to focus on investing in innovation and support the academia and the industry in this effort, stated Shaw.
In the area of biotech, the future for the country lies in bio manufacturing and research. We have the expertise and global players are not just looking at the cost advantage but the capability to outsource on high-end research and development. To grow the sector further, the concept of a secondary stock exchange will only be an answer, she informed.
Instead of being in stuck for want of finances we need to look at options where companies can exit and this is where a second stock exchange which provides the eligibility criteria for technology, research and innovation-driven companies to enter and exit as and when. Such moves by the government would be the only way to take innovation forward.
India biotech too is entrepreneurial driven and there is need to enable innovation and create an ecosystem which enables entrepreneurs to propel ideas into a sustainable business that adds value to our economy. “The only option is to set up a secondary stock exchange to allow technology-driven, revenue-less, innovative companies to access capital markets. India should quickly opt for a model like Nasdaq and London's AIM for technology companies. This will spur innovation and transform the pace of value-added growth in the Indian economy,” pointed out Shaw.