The Telegraph
Since 1st March, 1999
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Global financiers bet on biotech

New Delhi, Feb. 5: Biotech is creating a big buzz among overseas financiers and business facilitators like Rabo India Finance Pvt Ltd and Ernst & Young India who are ready to place their bets on fledgling BT firms in India.

The consumption of bio-tech products is projected to grow ten-fold from $ 150 million (Rs 750 crore) at present to about $ 1.5 billion in five years. No wonder then that BT has fired the imagination of funding agencies and business developers.

Rana Kapoor, chief executive officer and MD of the corporate finance and investment banking at Rabo India Finance, said: “At present, 40 per cent of the BT products market is for exports. But the real potential will be unleashed if the market is well-developed internally.”

Rabo India is actively working with about eight bio-tech companies, mostly arranging collaboration of fledgling Indian bio-tech companies with big-time international players.

Alok Gupta, head of life sciences and biotechnology division of Rabobank India, said while the Dutch parent company has a fund of 130 million Euros (Rs 650 crore), the Indian subsidiary too is gung-ho about investing in the BT sector.

“However, direct funding is unlikely here as Indian bio-tech firms do not have the cash-flow to sustain debt and Rabo India has debt capability and not equity capability,” he added.

Mumbai-based Bharat Serums is one of the BT outfits for which Rabo is developing overseas linkages. “We work mostly with European companies to bring in technology to India and we take the Indian resources abroad,” said Gupta.

Utkarsh Palnitkar, director Ernst & Young, said the company is drafting a strategic route for making a mark in this sector and also searching for partners for the bio-tech firms. “We also leverage our relationship with investment bankers, venture capitalists et al, to let the BT project grow.”

Gupta says the key markets for Indian biotechnology sector includes industrial bio-tech which deals with enzymes, vaccines, diagnostic kits, veterinary and agri-biotech products.

The Indian BT industry essentially comprises pure bio-tech start-ups and big pharmaceutical companies having their bio-tech divisions/ventures. Some of the market leaders in BT include Shanta Biotech, Bangalore-based Biocon headed by Kiran Mazumdar Shaw, Bharat Biotech, Wockhardt, Dr Reddy’s Laboratories, Serum Institute of India, Zydus Cadila, Aventis Pharma and Reliance Lifesciences.

While both Rabo India and Ernst & Young did not disclose the specific investment figures for the bio-tech sector, both maintained that Indian companies enjoy some edge in this sphere such as low operational costs, low-cost technology and skilled human resources, large network of research labs and human genetic diversity. And, of course, the possibility of conducting cheap clinical research.

The Ernst & Young initiatives in India include establishment of ‘Opportunia enterprises’ in association with Nasdaq and CSIR (Council for Scientific and Industrial Research) to help bio-entrepreneurs. E&Y is also assisting Andhra Pradesh in promoting BT in the state.

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