Off-balance sheet (OBS) funding structures are emerging as the most visible business models in pharma sector. Large companies like Dr Reddy's, Sun Pharmaceuticals, Nicholas Piramal are spinning off innovation led initiatives into separate entities as off balance sheet R&D investments. ICICI Ventures has been most active in this space.

OBS financing is funding from sources other than debt or equity offerings, like joint ventures, R&D partnerships and operating leases. OBS is typically used by companies in order to keep their debt to equity ratio low. "Indian Biotech is moving towards innovation. The innovative funding models for bio-entrepreneurs are the New Millennium Indian Technology Leadership Initiative (NIMITLI), Small Business Innovation Research Initiative (SBIRI) venture capital fund options from the Andhra Pradesh Investment Development Corporation (APIDC) and ICICI, Private Equity and internal funding, Kiran Mazumdar-Shaw, founder-president Association of Biotechnology Led Entrepreneurs(ABLE) and chairman-managing director, Biocon Limited told Pharmabiz. Current funding scenario indicates that it is still the large companies that have favourable chances to seek funds, while small-medium enterprises continue to grapple for recognition from the investor community, she stated. Several challenges continue to seek funds and Indian investors are still risk averse and prefer services to innovation led business models. This is in contrast to the overseas venture capitalists who are willing to fund innovation-led start-ups provided they are led by US returned entrepreneurs. A classic example of an Indian company to be able to raise funds from US venture capitalists is the Bangalore-based ReaMetrix headed by Dr. Bala Manian. It is a fact that venture funding is hard to get. Most investment banks and investment institutions are into private equity.

However, the clinical research organizations and contract research companies would certainly be able to attract VC funding. Private Equity is just as good as Venture Capital. As long as there is investor interest in biotechnology, the sector will grow, stated Shaw. This is where events like the third edition of the BioInvest 2007being held in Mumbai for the third consecutive year will help create a greater awareness as well as better understanding of the opportunities in biotechnology. Moreover, the event is a forum for companies and investors to network and enable start ups to show case their companies. Presence of speakers like Karen Bernstein who is highly acclaimed for her views on investment and regulatory trends in the Biotech sector will provide the much-needed expertise for bio-entrepreneurs in India. Both Karen Bernstein and David Flores have tracked Indian Biotechnology since its nascence and have understood the nuances of the Indian scenario along with the challenges and opportunities, added Shaw