Top Biotechnology Start-ups in India

chillibreeze writer — Uma Makhija

Plugged at 4%1 of the almost 79 USD Bn2 global biotechnology market in 2010, and outpacing global industry growth at 17%1, the Indian biotechnology industry’s potential is old news; however, for this potential to be wholly realized, a coherent ecosystem, with the key growth drivers working in tandem, is paramount. One of these is the texture of, and the support for, biotechnological entrepreneurial presence in the industry; this is in-turn buffeted by the presence of requisite infrastructure, availability of relevant and skilled manpower, and, perhaps the most important, supportive financial network.

The Importance of Funding for Biotechnology Ventures in the Indian Market

The biotechnology industry in India primarily comprises three types of business models: international companies with a local presence, companies with established traditional business such as pharmaceuticals, chemicals, enzymes, seeds etc, that invest in building a presence in biotechnology, and, finally, SMEs (Small & Medium Sized Enterprises), that are either involved in pure biotechnology research & development, or a mixture of R&D and contract services. The bulk of the industry, in terms of number of companies, falls into the last category.

Hence, it is evident that the industry is at the growth stage; funding becomes an essential prerequisite to ensure the transition of the industry from emerging market to global superpower. Furthermore, the basic requirements of a biotech company, irrespective of its size or business model, are infrastructure such as laboratories and manufacturing facilities, and specialized skills related to biotechnology R&D, and legal and regulatory knowledge; these being investment heavy factors, funding at an early stage is vital for an entity to be functional.

The Evolving Face of Private Funding for Biotech Start-ups in India

As per a study conducted by the Confederation of Indian Industries (CII), an investment of over 50 USD Mn in the Indian healthcare segment is required every year for the next 20 years. While venture capital raised in the US for biotechnology was 4.6 USD Bn in 20092, in India, it was just 18 USD Mn (2008). Just over 2 USD Bn has been invested in healthcare and life sciences in India over the last 5 years by VCs, of which a small amount was for biotech3.

Though the absolute investment amount is lower when compared to other biotech superpowers, its growth over the years indicates a shift in investor confidence. From 2004 to 2008, PE/VC investment in healthcare and life sciences went from 200 USD Mn to about 550 USD Mn, a CAGR of 22%. Biotech investments formed 4% of the total investment made during these years, and grew by a CAGR of 12%, from about USD 10 Mn in 2004 to USD 18 Mn in 2008. Thus, while funding by private institutional vendors in India is slowly gaining ground, evidently, a lot more needs to be done, not only to sustain this trend, but also to give it further momentum.

The principal reasons cited for funding challenges faced by the Indian biotech industry, especially at early stage phases, can be classified into industry and country inherent factors; the former include long gestation periods and requirement of high initial investments; the latter include India’s still developing regulatory and intellectual property climate, low investor confidence in management, little understanding on part of investors of the life science/biotech sector, complicated business models and absence of government incentives for investment. The good news is that the industry, academia and Government are aware of this, and are taking active measures in order to correct it.

The Department of Biotechnology (DBT) in particular, has taken several initiatives in this area: one of these is the Small Business Innovation Research Initiative (SBIRI) launched in 2005. The objective of this initiative is to support biotech startups in pre-proof of concept and early stage phases via grants and loans. As of May 2008, it has supported 37 projects from 32 companies, committing about 32 USD Mn. About 48% was provided by the private sector4. Another recent initiative by the DBT is the Biotechnology Industry Partnership Programme (BIPP), to support any ‘breakthrough research’.

Also, the setup of biotech parks and incubation facilities helps startups by giving them access to infrastructure at a low cost, a big boost at early stages of development. This allows entrepreneurs to focus on research rather that raising capital, and logistics. Recognizing this, the Government and industry has invested significantly in this area. Notable ones include Shapoorji Pallonji Biotech Park and ICIC Knowledge Park in Hyderabad, MITCON Biotechnology Incubation Centre, Pune, TICEL Biotech Park, Tamil Nadu, to name a few.

Furthermore, as mentioned earlier, financial institutions such as banks, as well as venture capital funds are increasingly allocating resources to the biotech sector, in particular, the biopharmaceutical sector. Recent examples include Kotak Private Equity Group, which has allocated 100 USD Mn for the sector of life sciences5; Fidelity Management fund has committed about 12.9 USD Mn. Other notable names in this area are APIDC, ICICI Ventures, Baring Private Equity and Nadathur Holdings and Investments Pvt. Ltd.

Indian Biotech Start-up Success Stories

Shantha Biotech
With expected revenues of approximately 85 USD Mn in 2009-101, Shantha Biotech, one of the first pure biopharmaceutical companies in India, was ideated by its founder and current Chairman at a conference in Geneva on immunization programs. With a strong vision, and significant R&D expertise, Dr. Varaprasad Reddy began his dream in 1993 at Osmania University, as a part of the industry academia partnership program.

Financing was tough due to lack of investor confidence, especially by banks and other financial institutions. Finally, in 1995, the venture was backed by H.E Yusuf Bin Alawi Abdullah, Foreign Minister of Sultanate of Oman, and friends of his. In 1997, Shantha developed a Hepatitis B vaccine using recombinant technology, the first of its kind in India. The rest is history.

Today, Shantha Biotech stands tall as one of the topmost biopharmaceutical companies in India, with an established presence in the vaccines market, locally and globally. It was recently acquired by global vaccine leader, Sanofi Pasteur.

Navya Biologicals
Navya Biologicals began in 2006 by Dr. Vinay Konaje and Dr. KR Rajyashri, veterans of the biotech industry. The company is into the development of a complex biological technology platform. It was incubated at the University of Agricultural Services, Dharwad incubation facility. Its project was also one of the 37 recipients of the SBIRI grant by DBT. Today, Navya has begun earning revenues and is also looking at significant expansion plans in terms of infrastructure and business.

Premas Biotech
Premas Biotech, a contract research and discovery services company, began in Nov 2005. The first labs were set up about 2 years later. Within the first year of operations, the company had 7 projects under its wings; the simultaneously developed in house proprietary products. All this was achieved after investing an immense amount of time, almost a year and a half, in pursuing several investors and trying to convince them of their business plan. Challenges faced by them included little understanding of the life science business by investors, and high expectations on returns.

Polyclone Bioservices
Polyclone is a genomics and bioinformatics services company that was set up in 2005. It was funded at different stages of development, by founders, family and friends, and a public sector bank. Polyclone was incubated at the University of Agriculture, Dharwad. It was recently awarded the Department of Scientific & Industrial Research (DSIR) certification for the microarray laboratory that it set up at the University. Its first product was launched in May 2007. The company was listed as "Hot Tech Start-up" by The Week in 2006 and as 'One of the Top 10 Bio tech start-ups' to watch out' for by Bio-Spectrum Magazine.

Catalyz Life Technologies
Catalyz began as a startup company at the Entrepreneurship Development Cell & Extension Centre of Technopark TBI, situated at the Garden City College in Bangalore. Catalyz is a molecular diagnostics and stem cell therapeutics company. Its initial funding by Technopark TBI was about 1 USD Mn. The company launched stem cell therapeutics in mid 2009. It recently signed an MoU with International Stem Cell Services (IISL) with the objective of bringing stem cell therapies to patients all over the country.

Sources
1. Biospectrum 2010
2. Ernst & Young 2010
3. Venture Intelligence 2009
4. Biospectrum 2008
5. Kotak Private Equity 2009

Editor's note: Most articles submitted to Chillibreeze go through a selection process. Only 30 percent of submitted articles are accepted for publication on the Chillibreeze.com featured article list. All accepted articles are edited and proofread for glaring errors of punctuation and grammar. Sentence structure is changed in certain cases and sometimes, entire sections are rewritten. If you notice any errors that have slipped through the cracks, do let us know! (Email us at info at chillibreeze dot com).

Chillibreeze's disclaimer: This is a contributed article and was published on Chillibreeze in July, 2010. The views and opinions expressed in this article are those of the author(s) and do not reflect the views of Chillibreeze as a company. Chillibreeze has a strict anti-plagiarism policy. Please contact us to report any copyright issues related to this article. The relevance of the facts and figures cited (if any) could change after a period of time.

More on Chillibreeze.com

Other popular articles on Chillibreeze

Cardinal Principles of Clinical Research Documentation
Biomimicry - Mother Nature to the Rescue
Expatriates and NRI’s in India – Experiences and Perceptions
Social Media – Just a Click Away?
How Moral Relativism and Individualism Will Save Mankind

Out of 5 “chilies”, our editorial team gave this article...

—About our writer:

Uma Makhija has an MBA in Strategic Marketing and a Bachelor’s degree in Biochemistry & Molecular Biology. She works as a part-time management consultant in the Health Sciences area. Her writing experiences primarily cover business writing in the health sciences field; she has also written a few creative articles during her work with a transnational pharmaceutical company.

>> Read more articles written by Chillibreeze writers:

More resources for Writers on Chillibreeze.com

Chillibreeze offers Indian writers the opportunity to work on customer projects. We are also India’s biggest writer network and a one-stop shop for Indian writers and editors. The writers’ section on Chillibreeze offers freelance writers and editors a variety of tools to advance their careers. Resources for writers include:

Assessment of your writing, editing and proofreading skills

Writing courses

Expert Feedback on your article

An opportunity to promote yourself on our website

Top websites for Indian writers

Tips and resources for Indian freelancers

Book Publishing services

And more………………..

Explore our writers’ section using the links on our left-hand side menu. IMPORTANT! Don’t forget to