Imagine a biotech entrepreneur, armed with a sound business plan but low on capital, simply walking into a designated location or a premise to start his/her new venture and in a relatively short period, is able to achieve early stage enhancement of the technology with minimum financial inputs? Sounds amazing given the long and unpredictable gestational time lines that are endemic to biotech product development.
Do not be surprised but a large number of life sciences parks/clusters?planned infrastructure developed to facilitate business of R&D intensive high technology and science companies on a sharing basis and at a relatively low cost?are fostering entrepreneurship. They are doing this by facilitating the lab to land transfer of the technologies through partnership among innovators from universities, R&D institutions and industry.
By setting up shop in locations like the ICICI Knowledge Park and SP Biotech Park in Hyderabad, Biotech Park in Lucknow or International Biotech Park in Pune, a large number of biotech companies are reaping the benefits of common facilities, such as effluent treatment, access to expensive testing equipment, industry-academia linkage and the like. That?s not all. Fiscal concessions come in the form of duty free import of equipment, instruments and consumables, and a tax holiday under Section 10A/10B of the Income Tax Act, informs Ernst & Young partner, Utkarsh Palnitkar. Perhaps, biotech companies couldn?t ask for more in a sector notorious for its extra ordinary long and unpredictable gestational time lines.
Biotech parks are an integral part of a biotech cluster. Broadly, both are focused on research, training, collaboration and manufacturing activities. Also gaining ground are special economic zones (SEZ) dedicated to the pharma and biotech sectors. Herein, the sales are predominantly for exports, says Ernst & Young?s Palnitkar. In the case of SEZ, there is a graded tax holiday for a period of 15 years, and the inputs both revenue and capital are duty free (excise and customs). Several private players have their own individual SEZs such as Biocon, Zydus Cadila, Serum Institute etc.
Till now, globally recognised biotech clusters resided in the developed world. These include USA California (San Francisco, Los Angeles, San Diego); Boston; New York/New Jersey; Philadelphia; Baltimore/Washington, DC; Research Triangle NC. While Canada has such clusters in Saskatoon, Toronto and Montreal, Europe boasts of similar facilities in Brussels, Medicon Valley, Stockholm/Uppsala, Helsinki, Paris, Biovalley, BioAlps, BioRhine, etc. In Asia Pacific, clusters exist in Beijing, Shanghai, Hong Kong, Malaysia and Singapore.
With biotech looking to emulate the IT success story, action is now shifting to India with similar clusters emerging in cities like Hyderabad, Bangalore, Chennai, Pune, Delhi and Chandigarh, says Deepanwita Chattopadhayay, CEO, ICICI Knowledge Park. Their USP: ease of access for all stakeholders, tenants, academia with connecting roads, water and power supply and also less administrative clearances from the government. These facilities host research laboratories for product development, multi-purpose pilot facility for manufacturing and process development, quality control and validation of technologies, common effluent treatment plant, a recognised human resource training centre, administrative support centre etc. To keep the momentum going, Chattopadhayay informs that another five to six such clusters could come up in the country in the next couple of years. Typically, a single biotech cluster existing in the country has attracted an investment in the range of Rs 150-200 crore each. Going forward, an investment far in excess of Rs 1,000 crore is envisaged for the upcoming facilities, inform analysts.
According to her, the primary reason for biotech to operate in clusters is to benefit from common facilities. Entry barriers for biotech companies are lower; there is shared infrastructure and administrative support thereby lowering overheads. One requires low capital investment and there is ready to use infrastructure. Besides, recruitment is relatively simple from a large human resource in molecular biology, microbiology, biochemical engineering, synthetic organic chemistry, chemical engineering and allied branches of engineering.
Globally, it has been observed that infrastructure for the biotech sector has been developed in the form of science/technology/knowledge parks, which are dedicated clusters of biotech companies sharing common world-class facilities. These parks act as a catalyst and stimulate the thought process of various stakeholders towards creating knowledge and wealth for the community, says Nitin Deshmukh, head of private equity, Kotak Mahindra Bank.
Without any doubt, the Research Triangle Park in North Carolina, USA, is seen as a prime example of a successful biotech cluster. There are 136 organisations located in the facility and approximately 82% of the 37,600 full-time employees in the park work for MNCs. Capital investment exceed $2 billion and total payroll is estimated at $2.7 billion.
The Genome Valley, spread over 600 sq. km in three blocks around Hyderabad, hosts life sciences R&D institutions like CCMB, IICT, CDFD, ICRISAT, University of Hyderabad etc. Biopharma companies present include Shantha Biotechnics, Indian Immunologicals, Bharat Biotech, Biological Evans, Krebs Biochedmicals, Ocimum Biosolutions, and Dr. Reddy?s Laboratories etc. It also has a dedicated biotech fund ? APIDC Venture Capital. Similarly, ICICI Knowledge Park nestles in a 200-acre zone in Genome Valley, Hyderabad.
On its part, the department of biotechnology (DBT) intends to promote and support at least 10 biotech parks by 2010. It will support creation of incubators in biotech parks promoted by a private industry or through public-private partnership in the form of grant up to 30% of the total cost or up to 49% in the form of equity. The proposed central body Biotechnology Parks Society of India (BPSI) is intended for the promotion of biotechnology parks in the country on the same lines of the Software technology Parks of India (STPI), informs a government official. He adds that the BPSI should be run by professionals having experience in the areas of biotechnology, knowledge in Acts and Rules relevant to biotechnology and management skills.
The BPSI would be responsible for evaluating the project proposals and advising DBT on the funding pattern; facilitating industries in obtaining industrial, environmental and other relevant approvals from the central government; making recommendation regarding fiscal incentives to be granted to the biotechnology parks and providing guidance to the venture capital institutions on investment in biotech parks.