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Pharma R&D fund may be modelled on TDB lines

P.T. Jyothi Datta

NEW DELHI, July 25

EVEN as discussions on the structure and implementation of the Rs 150-crore research and development (R&D) fund for the pharma sector runs into the final lap, the expectation is that it may be modelled on the fund administered by the Technology Developme nt Board (TDB).

The Rs 150-crore R&D fund for the pharma sector or the Drug Development and Promotion Fund, was mooted by the Union Finance Minister, Mr Yashwant Sinha, in his Budget 2000-01. While it has been approved by the Expenditure Finance Commission, it currently is being deliberated upon by the task force on pharmaceutical and knowledge-based industries, headed by Union HRD Minister, Dr Murli Manohar Joshi.

Highly-placed sources in the Government told Business Line that even as deliberations on the structuring and implementation of the fund was yet to be wrapped up, there are suggestions that it be similar to the fund administered by the TDB.

The TDB is under the aegis of the Ministry of Science and Technology and the fund for Technology Development and Application was set up in 1996. Proceeds of an existent cess on the import of technology went towards the setting up of this fund, which was essentially for the development and application of indigenous technology.

According to sources, while there was a move to model the pharma R&D fund on the lines of the TDB-run fund, there have also been suggestions from the industry to hand over its implementation to a third-party fund manager or a venture capital company.

If the pharma R&D fund is modelled on the TDB-run fund, the latter's salient features could be indicative of how the Chemicals and Fertilisers Ministry proposes to run the Drug Development and Promotion Fund.

The TDB invests in equity capital in the entrepreneurial venture or extends soft loans to the industrial concern. Equity participation was allowed up to 25 per cent of the project cost, with a right to nominate a representative to the Board. Project dura tion was not to cross three years and the loans were at an interest of 6 per cent, besides a collateral.

While the TDB extends financial support to enterprises and co-operatives, including start-ups, it does not fund basic research. The project had to outline benefits and target groups and start repaying the loan in one year, to be fully paid in five years after the project was completed.