Tuesday, February 12, 2013

Investment Research and BIotechnology

Currently, I am reading a lot about 'Investment Banking' and growth of Biotechnology sector in India. Believe me or not, I do actually love the financial aspects of the Biotechnology as much as I love the scientific aspect of it. You will be amazed to know that the investment research is far more dynamic than the microorganisms I study. I agree to its exaggeration, as living system is far more complex but it is comparatively dynamic. The patterns in this field are so dynamic that sometime you feel they are alive. 

I will try to write this article on Investment Banking and Biotechnology sector in India in a questionnaire format. Feel free to ask me if you have any questions.

1) What is Investment Banking and how it is different from Banking?

Answer: Investment Banking and Banking both works in a similar format. The banks ask for mortgages while the investment banks ask for your credibility. It means that when you need capital for a project or a start-up company, you can ask the Bank to invest if you have sufficient assets to mortgage or you can ask an Investment banking company to invest on your project with some terms and conditions. There are many companies that look for good projects such as Goldman Sachs, Merrill Lynch and other companies. These companies will bring investors to you for your project. However, the prime condition is the credibility of yourself and your project. The process is similar as an investment and it will follow the same principles involved in normal investments.

2) Why to Invest in Biotechnology in India?

Answer: Few years back, people have asked the same question about Information technology and services Industry in India. Now people search for the investment opportunities there. Biotechnology is one such emerging field that has a big potential in coming years. If it was prior to 2005, I would not have said much about it as the Indian Pharma companies were not obligated by Patents rule. However, after India signed the MoU in TRIPS (Trade related Intellectual Property rights) and toughened its stand on patent protection of product. Indian pharma sector is in need of quality research and product development in this field. As you must be know for a life saving drug, the estimated time is 10 years and 1 Billion dollars of investment. Therefore, all this companies are in need of investment. Previously, they were more or less relying on their own capital. However, things have changed now. There is a lot of competition in this sector with lots of companies registering themselves in this field. Therefore, a proper investment in a good project is going to be a wonderful opportunity. The Biotechnology sectors has grown from 4 billion dollar in 2010 to nearly 11 billion dollars 2012. ABLE (Association of Biotech led enterprises) is estimating it to reach 100 Billion dollars by 2025. Therefore, it is the right time to invest in this growing field.

3) What is Investment Research in Biotechnology?

Answer: It is comparatively newer form of research but it is far more important than any other research form. In normal chemical or mechanical process, a reaction or a process gives a definite outcome. As I mentioned you the complexity of microorganisms, the biotechnology research is not going to give a definite outcome. There are lots of ambitious projects that may not give you a proper return (may not give at all). Therefore, one should research the company well before investing in it. The investment research does exactly the same. They research on these companies and outline a probably outcome for the investors. Therefore, it becomes easier for the investors to look beyond the jargons and noise of companies to see the security and risk associated with their investment. 

4) Can we talk about Careers in Investment Banking in Biotechnology sector?

Answer: Yes, there is a career scope, if you are into financial aspects of Biotechnology and Research. As said by one of the experts in the field, these jobs do not give you any scope of widening research like what we academicians are accustomed to but it is serious research and serious salary. However, for that you have to be ready. As suggested by a senior analyst, keeping yourself updated is the first task that you can do. 

In my opinion, it will be wonderful to have real biotechnologist in the financial advisory field. If you are studying any technical course in this field, then try for an internship in Finance field in any of your summer vacations. If you like this field, then you should start updating yourself about the finance and increase the virtues that you feel may lead you to success in this field.  However, you need to be master in your field too. Think about it, are you genuinely going to take your own advice if it comes to investing your hard earned money in Biotechnology? If yes, then only you should think about others opting for your advice. 

Therefore, investment research and biotechnology both have good future. I am trying my best to be part of it. You should too...

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