Government plans Rs10,000-crore VC fund for drug research

In order to give pharmaceutical research a much-needed boost, the union government plans to set up a Rs10,000-crore venture capital (VC) fund for supporting drug discovery and research infrastructure development projects in the country.

The fund, to be managed by an independent asset management company, will come up under a public-private-partnership model, with the government contributing 15 per cent of the total fund size, and the rest coming from other interested investors. The funds will be available to companies that are into drug discovery and research.

The funds would be raised in three tranches - Rs3,000 crore in 2011-12, Rs5,000 crore by 2013 and Rs2,000 crore by 2015. The complete fund would be utilised by 2015.

The department of pharmaceuticals will invite bids from advisors to prepare a detailed project report on the proposed fund. The National Institute of Public Finance and Policy (NIPFP) is advising the department on selecting an agency for this.

''The bid documents will be ready by the end of the month. We will soon invite consultancy firms for preparing a detailed project report on the proposed VC fund,'' Ashok Kumar, secretary, department of pharmaceuticals, told reporters on the sidelines of a FICCI event on biotechnology in New Delhi on Monday.

According to a senior department official, the need for the fund was felt after it was found that early-stage discovery funding was almost nil. The participation of the fund will augment the efforts of the department of science and technology and the department of biotechnology to provide financial support - though on a small scale - to encourage basic drug research.