Attractive incentives and tax sops offered by the Malaysian government for the biotech and research based companies is luring some major Indian pharmaceutical players to set up units in Malaysia.

Eight large and medium scale Indian companies have already initiated steps to set up operations in that country. Malaysian Biotechnology Corporation (BiotechCorp), a body set up by the Malaysian government for attracting foreign entrepreneurs, has been offering the incentives for the last one year.

Another six companies including two Indian pharma majors are discussing the feasibility of establishing their operations in Malaysia, revealed Selvam Ramaraj, senior vice president, Industry Development - Healthcare, BiotechCorp.

"We are in the final stages of discussion with two Indian pharma companies to set up their facilities in Malaysia. Talks with three small and medium level pharma companies and a medical devices major are also progressing and we expect to finalise these projects soon," said Ramaraj. However, he refused to reveal the names of the companies which the Corporation is in talks with.

During 2007-2008, companies including Aurigen Discovery Technologies, the bio services firm of the Hyderabad-based Dr Reddy's Lab, Hyderabad-based Bharat Biotech, Saamya Biotech and Vivo Biotech, Mumbai-based Actis Biologics, Bangalore-based Avesthagen and the Chennai-based Malladi Drugs have initiated efforts to set up their operations in Malaysia. Stemputics, the stem cell research outfit of the Bangalore-based Manipal Accunova has already started its full fledged operations in the country.

Among this, Stemputics, Malladi Drugs, Aurigen and Actis Biologics have 100 per cent stake in their Malaysian facilities whereas Bharat Biotech and Vivo Biotech have tied up with the Malaysian government to start operations. The facilities of Malladi Drugs and Aurigen, which are in the nature of Clinical Research Organisation (CRO) labs, are in advanced stage of readiness and will be ready for operation in next two months, he added.

The Malaysian government, which issued a new biotech policy and constituted BiotechCorp in 2005 is currently offering various incentives including 10 year's complete tax break for companies approved as 'BioNexus'.

BioNexus status is a designation awarded to qualifying biotechnology companies, making them eligible for privileges contained within the BioNexus Bill of Guarantees including freedom to source funds globally and to bring in knowledge workers, access to shared laboratories and other related facilities, eligibility for competitive incentives and other assistance and eligibility to receive assistance for international accreditations and standards. The BiotechCorp has issued BioNexus status to 36 healthcare firms in which 16 are operating under Foreign Direct Investment (FDI).

"According to the Indian companies which we are in contact with, the cost of hiring manpower is indicated to be only 10 per cent higher than whatever the companies spend in India and it is lesser in the cost spend in senior management levels. We have free trade relation with the Association of South East Asian Nations (ASEAN) which offers around 500 million populations in the market and the accessibility to Middle East are also major advantages offered by Malaysia for these companies," said Ramaraj.

Malaysia is also one of the two South East Asian members of the Pharmaceutical Inspection Convention and Pharmaceutical Inspection Co-operation Scheme (jointly referred to as PIC/S), constituted to lead the international development, implementation and maintenance of harmonised Good Manufacturing Practice (GMP) standards and quality systems of inspectorates in the field of medicinal products. By registering the approvals under the scheme in Malaysia, the companies can easily market their products in 36 countries actively participating in the PIC/S Scheme.

The government has approved 100 per cent foreign direct investment in the industry and the country is open to any Biotech companies to establish their operations in Malaysia, he added.

The Malaysian biotechnology sector, including the healthcare, industry and agriculture segments has recorded Ringgit (RM) 2.5 billion with a 3 per cent growth in 2007. Through a three-phase programme for capacity building, transferring research to application and commercialisation, the Corporation is planning to develop the Biotech sector to contribute 10 per cent of the Gross Domestic Product (GDP) in 2011. By the time, the size of the industry is expected to be RM270 billion and will provide job to 28000 employees.