The biotech-pharma sectors are expected to witness a positive response from venture capital funds with the Ministry of Environment & Forests (MoEF) approval for streamlining regulatory mechanisms and process for the use of Living Modified Organisms (LMOs) for developing recombinant pharma drugs like vaccines, recombinant proteins and antibodies.

The consent for Mashelkar proposals on r-Pharma drugs could possibly see a renewed interest by venture capitalists, according to Nitin Deshmukh, member executive council Association for Biotechnology Led Entrepreneurs (ABLE) and Head, Private Equity, Kotak Mahindra Bank.

VC funds for the biotechnology sector have received a lukewarm response all these years. This is because of two factors. One is the apprehension about the viability of the projects and the other is the delay in approval processes of the Regulatory Reforms for the Recombinant Pharma Products.

"With the landmark approval granted by MoFE, we should be able to see increased VC funding in the sector," Deshmukh stated.

The execution of the new arrangement for r-Pharma drugs that will come into force from April 1, 2006 will augment the international know-how of Indian bio-pharma companies to develop and commercialize recombinant pharma products in a way that eliminates arduous procedures that stalled the approvals for companies.

The current trend indicates that biotech-pharma companies are not moving so much for VC funds. This is because capital markets are on a positive note and private equity funds are getting preferential allotments in listed company stocks. Therefore companies for their expansion plans are investing across sectors like infrastructure, banking financial services and sugar which are traditional domains showing promising returns, informed Deshmukh.

Earlier, companies seeking environmental clearances associated with genetically modified food/crops/pharmaceuticals, faced long drawn and cumbersome procedures because of 'Rules for the Manufacture, Use, Import, And Export And Storage Of Hazardous Micro Organisms Genetically Engineered Organisms or Cells, 1989', framed under the provisions of the Environment (Protection) Act, 1986.

To streamline the regulatory process in respect of the r-Pharma Sector, the MoEF had constituted a Task Force on Recombinant Pharma Sector under the Chairmanship of Dr R A Mashelkar, DG, CSIR with a vide OM No 12/7/2004-CS dated 20.4.2004. The mandate of the Task Force was to review the current framework and recommend a transparent and streamlined regulatory mechanism and process for the use of living Modified Organisms (LMOs) in the pharmaceutical industry during the various stages of R & D, testing, manufacture and import of LMOs as drugs.