In an attempt to push research in the pharmaceutical sector, the government is planning to set up a Rs10,000 crore venture capital (VC) fund to provide much-needed financial assistance to the players.
The government will contribute 15% to the corpus and the rest would be raised from other interested investors.
The funds would be raised in three tranches —- Rs3,000 crore in 2011-12, Rs 5,000 crore by 2013 and Rs 2,000 crore by 2015.
The complete fund would be utilised by 2015.
The plan is to provide financing for new drug discovery projects and for biopharmaceutical products in the country.
The department of pharmaceuticals will invite bids from advisors to prepare a detailed project report on the proposed fund.
“We will invite bids from consultancy firms for establishing a venture capital fund in public-private partnership that would help us in discovering new medicines,” department of pharmaceuticals secretary Ashok Kumar said on the sidelines of an event organised by trade body FICCI.
The National Institute of Public Finance and Policy is advising the department in the process of selecting an agency to design the fund. The department of pharmaceuticals is looking to turn India into a major producer of affordable biopharmaceutical products by 2020. Currently, the target market is worth $137 billion globally.
“We believe that India should aim to capture 10% of the global market for biosimilars by 2020 and become one of the top five producers in the world. We estimate that government will need to invest at least $1 billion over the next five years to implement the measures we have identified. If India’s biopharma industry succeeds in realising this aspiration, it will bring in additional revenues of $4.3 billion a year,” PwC said in a report prepared for the pharma department.
Currently, there is no specific dedicated private equity or venture capital fund available in India for research activities in the pharmaceutical sector. The idea is to offer financial incentives to companies focussing on research in neglected diseases prevalent in developing countries.
Last year, the department of pharmaceuticals had prepared a white paper on promoting research and development funding in the country, and submitted the proposal to the Prime Minister’s Office for approval.
As per the proposal, the government intends to undertake proactive steps on four fronts —- building infrastructure for talent and research, encouraging public-private partnerships in infrastructure development, providing financial incentives to encourage innovation, and shaping a favourable regulatory environment.
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