1. Capital Investment:
The first key difference between IT and BT is the level of capital investment for a start-up. The stories about "single-computer-garage-start-ups" are legendary in the IT realm; unfortunately, the same are not easily transposed into the world of BT.
Biotechnology is a capital intensive industry. The more cutting edge the R&D, the greater the capital requirement. In fact, funding for start-ups is one of the key challenges being faced by the Indian industry. While certain state governments (e.g., Andhra Pradesh and Karnataka) are addressing this critical need by setting up seed funds and establishing ‘Biotechnology Parks’ for new ventures, this void still exists at the national level.
Thus, capital intensity is a significant entry barrier faced by BT entrepreneurs, unlike their IT counterparts.
2. Product Development Cost:
In IT, the primary cost of product development is the cost of acquiring, developing, exploiting (to be taken in the right sense!) and retaining high-tech knowledge workers.
In addition to the above, R&D investments in BT include the costs of high-tech laboratories, equipment, chemical and biological consumables, uninterrupted water supply and electricity. If one were to compare these costs to those abroad, the ratio would be 1/7th to 1/10th (what but India’s cost competitiveness!). But in an absolute sense, these are very significant costs, which flow against the BT entrepreneur’s endeavor.
So, product development costs are very high in the BT sphere, unlike in IT (speaking relatively).
