Purnendu Chatterjee-controlled The Chatterjee Group is planning to set up a private equity fund with an initial corpus of $250 million (nearly Rs 1,100 crore) to invest in drug discovery and development projects in India.
The fund will be floated by TCG Life Sciences, a part of the US-based TCG and an integrated drug discovery and developmental services company.
The activities of TCG Life Sciences under different strategic arms include facilitating the Indian scientific talent pool to collaborate and service multi-disciplinary research efforts of global pharmaceutical and biotechnology companies.
TCG director and head of TCG Life Sciences Swapan Bhattacharya told Business Standard that though the group had been into private equity business for many years in the US, it was for the first time that the company was planning a foray into drug discovery projects as an investment partner in India.
"Since TCG Life Sciences is already an integrated pharma research and development service company, it gives us an added advantage to partner with our existing clients as well as outside inventor companies for financing potential projects," he added.
TCG Life Sciences is leveraging the advantage of its integrated platform across the discovery and development space.
In addition to four strategic business units under its banner (Chembiotek Research International, SilicoGene informatics, Clininvent Research and the Centre for Genomic Applications), the company has also set up several public-private partnerships with leading research institutions.
Venture capital funding in drug discovery is gaining momentum as many domestic pharmaceutical companies face difficulties in going ahead with their discovery projects and development projects due to a lack of financial resources.
Recently, Dr Reddy's Laboratories has joined hands with ICICI Venture Capital Fund Management (ICICI Venture) for its ANDA (abbreviated new drug applications) filings in the US.
In another research and development "de-risking" effort, the company has also formed a separate drug discovery company in participation with ICICI Venture and Citigroup Venture with a capital commitment of $52 million.
Experts said venture funding would now grow exponentially in India. The R&D cost of drug companies now account for 20 per cent of their revenues.Analysts expect the R&D outsourcing business to grow at more than 20 per cent annually. However, the in-house drug discovery investment of pharma companies is growing at 6 per cent. The size of the drug discovery and development outsourcing market is expected to be $27 billion by 2007.