In a bid to incentivise research and development activities in the pharma sector, the central government has decided to set up a dedicated venture capital fund. The government is in discussions with export finance institution, Exim Bank, to set up the R2,000-crore VC fund for facilitating pharmaceutical R&D.
With Asia emerging as the hub of the global pharmaceutical industry, the government is actively working to attract more funds into the pharmaceutical sector, Nirav Kothary, head – industrial services, Jones Lang LaSalle India, said. ?There are indications that the country will again welcome outside investments in the domestic pharma sector with the finance ministry approving roughly R180 crore of investments by foreign companies,? Kothary said in a report. This came on the heels of the government?s decision to permit foreign investors to own up to 49% of established Indian firms. Significant foreign deals include Abbott Laboratories? acquisition of Piramal Healthcare?s Indian business for $3.7 billion in 2010 and Daiichi Sankyo?s gaining of controlling interest in giant generics manufacturer Ranbaxy for $4.2 billion in 2008.
The current rules allow foreign investors to start a company in India once they have obtained approval to get a share of a domestic drug company on the condition that they won?t stop making the cheap drugs they currently produce, and that they will keep investing in R&D with Indian partners for five years.
Incidentally, pharmaceutical multinationals are reinforcing their presence in Asia, according to the report. Widening patient pools and increasing consumer demand in emerging markets is driving the growth of sales offices, manufacturing operations as well as R&D facilities around Asia.
Beyond the cost of developing new drugs and treatments, facility and real estate costs are among the highest expenses for life sciences companies and such firms are optimising their real estate and location strategies to capture market opportunity in Asia. It is also apparent that the industry is becoming more strategic with regards to site selection, choosing locations with rich industry resources, capital and a higher propensity for discovery and innovation, the report added.