The Karnataka government has proposed to set up a venture capital (VC) fund with a corpus of Rs 50 crore to support budding entrepreneurs in the pharmaceutical sector.
The move to set up an exclusive VC fund for the pharma sector has been spelt out in the Karnataka Pharma Policy 2012, which was unveiled recently. Through the new policy framework, the state government aims to build a leadership position in the pharmaceutical sector.
The proposed Pharma VC Fund will have 26 per cent contribution from the state government, while the balance will come from private investors and financial institutions, the new pharma policy said.
"The aim is to make Karnataka a most-preferred investment destination for the pharmaceutical sector. By leveraging academic, industry and R&D institutions, the state will be developed as a research and innovation hub for pharmaceutical sector. Additional employment opportunities will be created for the people of the state," the policy document said.
Budding entrepreneurs in the pharmaceutical sector may require monetary support at the initial stage to venture into industry. Such entrepreneurs will be provided need based equity support from the proposed Venture Capital Fund.
The state government has also announced plans to constitute Karnataka Pharmaceutical Development Council (KPDC) which would serve as a single point contact for the pharmaceutical sector.
"This council will extend all facilitation services for investors and act as a link between the government and investors. Investors will be provided handholding support and escort services from the council," the policy said.
The government has already set up similar venture capital funds for the information technology and animation technology sectors separately.
Karnataka is one of the fastest-growing states in the pharmaceutical sector and presently ranks fifth in pharmaceutical exports. The state contributes around 10 per cent to the Indian pharmaceutical export revenues. Presently, over 230 pharma and bio-tech companies are housed in the state and achieved a total turnover of about Rs 6,500 crore in 2010-11, registering a growth of 10 per cent over the previous year.
The pharma industry is expected to grow at a CAGR of 15-20 per cent and achieve a turnover of $50 billion by 2020. Karnataka intends to maintain its leadership position in biopharmaceutical manufacturing, which accounts for 60 per cent share of the total biotech sector in India, valued at over Rs 17,000 crore in 2010-11.
At present, Karnataka has only a few dedicated bio-pharmaceutical firms manufacturing monoclonal antibodies, which include anti-cancer drugs, as well as insulin and vaccines that are produced using cell culture. A strong strategy is necessary for Karnataka to maintain its leadership position in this highly specialised area. With biopharma products set to capture a quarter of the global pharmaceutical market by 2016, the state needs to strengthen its position by taking proactive steps, the policy said.