As India Restructures Pharma Sector to Rev Up Drug Discovery, Private Equity Remains Scarce

Despite reservations private equity players might have about a sector with longer gestation periods and stringent regulations, India's biopharmaceutical industry appears to be in an upbeat mood with new investments on the way and at least one state government announcing a land bonanza to set up biotech parks.

At the BioAsia 2016 conference in February, Jupally Krishna Rao, minister for industry in the southern Indian state of Telangana, announced that the state has acquired almost 4,000 acres at Mucherla Village on the outskirts of Hyderabad to build a "pharmacity" with the goal that it will serve as a hub for pharma companies.

Telangana's capital of Hyderabad, where the conference took place, is already home to India's Genome Valley, which spans 200 acres, clusters 72 biotech companies and is expanding. Discussions are under way between Telangana and Swedish firm Ferring Pharmaceuticals Pvt. Ltd., which makes protein pieces called peptides, for 10 in Genome Valley on which to build a manufacturing and commercialization unit. Ferring on Feb. 10 also announced an initial tranche of $25 million to initiate activities, out of the total first-phase investment of around $250 million over the next five years.

Deepanwita Chattopadhyay, chairman and CEO of IKP Knowledge Park, Hyderabad, which facilitates business-driven drug research, said during the conference that around 800 Indian biotech start-ups have started operating in the past three years and 2,000 to 2,500 start-ups could be launched in the next five years.

Chattopadhyay said that plans are afoot by the Indian government to initiate an early stage equity fund for biotechnology and that she expects that at least a third of a national fund for innovation, the Bharat Innovation Fund, which was launched by Prime Minister Narendra Modi in 2014, would go to the health sector and its crucial biotech subsector.

"With a new national biotechnology strategy released by the Department of Biotechnology in December, which plans some 50 new biotechnology incubators, 50 technology development and translation centers and 150 tech transfer organizations, I am excited," she said.

Nitin Deshmukh, CEO of Mumbai's Kotak Private Equity Group, said there has been "good momentum" in investments in the life sciences sector. These investments have been around $4 billion in the last three years, mainly through early stage investments.

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