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For a capital-intensive sector like
biotech , the risks are many. Building a biotech company is a slow process with
a long gestation period before it achieves its potential. There’s also a
regulatory environment that the industry sees as rigid and monitors every stage
of research and trials.
Says Dr Villoo Morawala-Patell, founder and CEO of Avesthagen: “The risks are
there from the very stage of setting up a biotech company which would need about
$2 million at the start just to take an idea and set up the facilities required.
Another $10 million would be required at the early stage to get the research
going. After that there is a chance that the product might fail.” That could be
fatal for the entrepreneur, industry experts admit, as no venture capital or
financial institution would back an entrepreneur who has failed before. “We’re
unforgiving, unlike in the US where you could find someone to fund your project
on the belief that you won’t commit the same mistakes again,” Morawala-Patell
adds.
While there is no mechanism in place to hedge the risks involved and insurance
in this sector is still a very long way, the industry has found its own way
of working around the problems. Says Nitin Deshmukh, director,
Association of Biotech-led Enterprises (ABLE): “A full product has to go
through a number of trials and a number of biotech regulatory
authorities.
All these activities control risks within the country. Also, although there is
research going on in very innovative products, most of the industry is actually
working on proven products that do not involve risks. There is innovation in the
technologies that they have developed to produce these products.”
However, in the case of marketing products abroad and with the Ranbaxy case in
point, the industry agrees that Indian companies must have a system in place for
the critical examination of products, and to be doubly sure that it is in
keeping with international standards.
Dr Krishna Ella, CMD, Bharat Biotech, and
chairman of Ficci’s biotech committee, adds a word of caution too. With regard
to the withdrawal of Ranbaxy's anti-retroviral AIDS drug, he feels that it will
have an effect on the biotech sector in a significant manner.
Although there hasn’t been any such withdrawal in the biotech sector, Dr Ella
predicts that “such problems will no longer surprise us as we get into the year
2005 in the light of impending GATT”. He sees such issues could recur in the
future.
“The MNCs score over us in every aspect and will continue to take decisions that
suit their focus. In the light of this, we must intensify our efforts to create
a potent biotechnology sector,” Dr Ella adds.
But there’s a silver lining too. India is all set to be a biotech hub for
South-East Asia, Dr Ella insists. “The Indian biotech industry is expected to
grow to $1.45 billion in 2005-06, $4 billion in 2006-07 and more than double
that figure to $9 billion in 2007-08 from $500 million currently, according to a
CII survey.”
That could also strengthen the biotech industry’s position globally.
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