With markets playing ping-pong with business worldwide, the
risk attached to the business of biotech has still not lost its heaviness. Aashruti
Kak writes about the prospects of bio-entrepreneurship in India in the current
last decade saw an incredible boom in the biopharma sector and witnessed the
rise of several bioentrepreneurs. However, considering that there is always
a demand for something new in the market, the existing number of biopharma companies
is also not enough. "The Indian biotech industry has more than 300 companies,
including leaders such as Biocon, Serum Institute of India and Panacea Biotec,
contributing to nearly a third of biopharma revenues. However, the industry
is still in its early stages when compared with the mainstream and well-developed
pharma industry. In all likelihood, this is likely to grow at 25-30 per cent
over the next few years with the introduction of new products," says Dr
M S Azimi, business head-life sciences practice, APAC, GlobalData.
Keeping in mind
view is that there is no actual absence of capital. The truth is that most
agencies are not able to disperse funds because there are not many convincingly
good, well defined proposals coming their way."
Atharva Lifescience Consulting
Every industry, world over, has been riding the tumultuous
economic wave world in the past few years, and the biopharma industry is no
exception. Despite prevailing doubts, off and on, regarding the success of this
sector in India, amidst applaudable achievements, the industry has managed to
survive in the absence of some things as basic as absolute regulations. "This
is an excellent time, especially for bio-entrepreneurs in India. There is a
demand at every level, in every field, and so the scope of any service is tremendous
in our country in terms of a market. There is no dearth of exposure or communication
in India as well. The only aspect that I repeatedly feel that we lack in terms
of identifying a problem or serving the market is creativity and the will to
conceptualise; we are not looking at new business models," opines Karnvir
Mundrey, director, Atharva Lifesciences Consulting.
than just encouraging bio-entrepreneurs, the government needs to create
an environment where academia, clinicians and industry work together to
create intellectual property. Funding alone will not do, a bio-entrepreneur
will not be able to survive without the supporting ecosystem."
Partner-Life Sciences Practice
Ernst & Young
According to Ajit Mahadevan, partner-life sciences practice,
Ernst & Young, the fundamental point in starting a venture is 'the idea',
followed by a good core team. "An entrepreneur's biggest challenge is funding,
particularly in biotech. Most of the funding, even for small ventures is chasing
assets or companies that have something commercialisable in the short term,"
biopharma industry in India today has a sound knowledge base and trained
manpower, excellent network of research laboratories, widespread research
and clinical trials, and a very well developed pharmaceutical industry.
However, it falls behind due to comparatively low R&D spend by the pharmaceutical
industry, and inadequate funding through venture capital."
Dr M S Azimi
Business Head- Life Sciences Practice
While every bioentrepreneur thinks of funding as a primary
concern, experts believe that there are more important things they should be
worried about, for instance, concept. "Every bioentrepreneur in India must
understand the need to find a market for his research dream. They must develop
products that could address some of the key unmet needs of the consumer. Most
of the recent efforts are targeted on the diagnosis and treatment of chronic
diseases," says Azimi. Key research areas include oncology, CNS disorders,
cardiovascular diseases, AIDS and diabetes among others. Several new diagnostic
and therapeutic approaches are also emerging through recent advances in genome
mapping, he adds.
"All entrepreneurs in this segment should understand the basics of the
biotechnology sector such as clinical and preclinical research, industry collaboration,
technology, infrastructure and commercialisation, and look for appropriate business
models to succeed," he avers.
Then and now
The biopharma space world over has never been an easy place to survive; however,
10 years ago, it was relatively easier to to create a business as there was
less competition and unmoulded regulations. As a keynote speaker at BIO India
2011, held in September at Hyderabad this year, Glenn Saldanha, chairman and
managing director, Glenmark Pharmaceutical, spoke about the issues that the
industry faced, but also introduced an optimistic side. "In the face of
increasing regulatory requirements, strict approval processes, low R&D productivity,
the cost of an approved drug has increased by 50 per cent in the last 10 years.
However, on the bright side, the international and domestic talent pool in the
industry has broadened considerably, the infrastructure and specialised expertise
has managed to achieve world class levels, cost control measures have led to
alliances with Indian companies in research, there has been an influx of Indian
expats to India in drug discovery research, there is more access to funding
as venture capitalists gain more confidence over Indian companies, and there
is a heightened spirit of entrepreneurship leading to many start-ups. You can
accomplish a lot in India today despite not having deep pockets," he said.
Every industry, in the beginning stumbles, falls, but is resilient. The biotech
industry in India too went through the same phase, as it did not have success
early on. "The extended phases of clinical research needed for the development
of these products caused difficulty for the industry to continue due to poor
funding. The initial investment required is very high and the uncertain outcomes
of research caused investors to be wary of funding these ventures.
Conventional drugs provide symptomatic relief for various diseases," recalls
Azimi. However, he adds, most biotech drugs target underlying cause or
the molecular pathways of the disease, and hence, offer a permanent cure. For
example, gene therapy, a contribution of biotechnology, cures genetically transmitted
Mahadevan treats the current issues faced by the industry as two sides of a
coin. "On the plus side, I think the capability of biotechnology in India
has improved in the last five to 10 years, and so has achieved the ability to
access quality. The flip side is that it also has come at a time when cash is
definitely a crunch. You would find that globally, 80 per cent of the funds
are following 20 per cent of biotech companies," he opines. The tough part
in this, he says, is that the larger chunk of the funding is going to established
players, creating a struggle for the smaller or new players; in other words,
it is very selective.
Funding woes-real or an imagination
Currently, the Department of Biotechnology (DBT) has a few programmes in place
for the Indian biopharma industry that have been taken well advantage of. One
such programme is Biotechnology Industry Research Assistance Programme (BIRAP),
which the DBT initiated in partnership with Association of Biotechnology Led
Enterprises (ABLE) and Biotech Consortium India Limited (BCIL). It is a pilot
activity launched under the umbrella of the Biotechnology Industry Research
Assistance Council (BIRAC) and plays the role of a promoter and nurturer that
assists in incubating innovation and excellence in the biotechnology industry,
especially facilitating start-ups and SME's. BIRAC manages public private partnership
schemes and participates in activities like capacity building programmes to
build human resources, infrastructure, etc. Through this programme, the Government
partners with the industry to initiate public support on a cost sharing basis,
however, it is only available for high risk, transformational technology/process
development, 'breakthrough research' which enables IP generation, with the IP
ownership rights resting with the industry. There are various models of grants
and/or loans available under the programme. It recently closed its call for
proposals for 2011 in November this year.
DBT had also started the Small Business Innovation Research Initiative (SBIRI)
which supported high-risk pre-proof-of-concept research and late stage development
in small and medium companies lead by innovators. The Biotechnology Industry
Partnership Programme (BIPP) was another programme launched by DBT in November
2008. SBIRI has a loan limit from Rs 50 lakh to Rs 10 crore, whereas BIPP aims
at much larger projects of higher costs with a mission of IP generation in India.
Another programme that seems to be making a headway is the Biotechnology Entrepreneur
Student Teams (BEST) Programme, which is an innovative talent search programme
jointly promoted by the Department of Biotechnology (DBT) and ABLE. Mundrey,
as a part of the BEST programme jury shares the concept behind it, "The
intention behind BEST programme is to create real companies that take products
into the market as soon as possible. The fact is that entrepreneurs do not have
to always start big; just take something simple and apply innovation to it and
you would be surprised that you can bring out a product to the market sooner
than the usual 10-15 years spent in clinical trials. Everything in life sciences
is not a drug; there are devices, assists, and a hundred other things that one
can apply with science," he avers. The programme aims to encourage entrepreneurship
in the field of life sciences by identifying student teams and encouraging them
to come up with scientific ideas that have commercialisation potential. It has
lectures/interactions that add various aspects whicht help budding entrepreneurs
gather a different perspective to what they want to do and how they would want
to do it, be it about making a business plan, funding and finance, IT, and so
on. After the proposals are received, the concepts are screened and 20 teams
are shortlisted and invited to a four day residential fully paid for Entrepreneurship
Workshop at Bangalore that would impart skills required to start a commercial
venture. From the 20 teams, top three teams are identified and awarded attractive
cash prizes of Rs 5 lakh, Rs 3 lakh and Rs 2 lakh, respectively.
According to Mundrey, the previous year, the programme received between 150-200
projects, a lot of them being studies done in laboratories about the potential
of their products, but the roadblock was the fact that those products did not
seem to be viable future offerings which would find their way into the market
anytime soon. "There are so many projects on the table but they lack in
something as simple as commitment. And this is not the attitude in just academic
entrepreneurs, it is prevalent in experienced industry professionals as well,"
he points out.
In a very recent development this year, a new grant was launched by the name
of IKP Knowledge Park--Grand Challenges Explorations (IKP--GCE), which is an
IKP initiative in partnership with the Bill and Melinda Gates Foundation to
identify, fund and nurture revolutionary ideas that address global health challenges.
The goal of the program is to empower ideas that will create new drugs, diagnostics,
devices, vaccines, delivery systems and service models that can be made available
to all socio-economic layers of the human population. Winners of the programme
will be recognised as GCE Phase I grantees by the Bill and Melinda Gates Foundation.
The winning ideas will be empowered with a grant of $ 100,000 from the Foundation,
in addition to mentoring from IKP Knowledge Park for a period of 18 months,
where IKP Knowledge Park will provide access to technical consulting, networking
opportunities, and lab facilities to help the winners take their ideas to the
next stage of realisation. Upon successful progress in the first two years,
candidates will be eligible for Phase II funding of up to $ 1 million.
The last date to submit the applications for this year is December 1, 2011.
The fact is that there are many funding avenues that entrepreneurs are not aware
of, which is why there is an unrest, mostly when it come to funding projects.
Which is one of the reasons why Atharva Life Sciences Consulting published a
book called 'Funding Your Science Idea', which maps out all funding options
that are open to Indian scientists/entrepreneurs in lifesciences.
Turning challenges into opportunities
The truth is that the biopharma industry in India today has a sound knowledge
base and trained manpower, excellent network of research laboratories, widespread
research and clinical trials, and a very well developed pharma industry. However,
it falls behind due to comparatively low R&D spend by the pharma industry,
and inadequate funding through venture capital," says Azimi. He goes on
to say that India still has good scope in the field of contract research as
the costs involved internationally are prohibitive, large domestic pharma market
too has great export potential, and its needless to say that the country has
a large patient pool with a wide range of diseases. The biopharma segment in
India is growing fast, but it is impeded by mainly price controls and patent
"There are two ways to look at where the industry stands. On one side we
have half baked regulations, on the other hand, we have seen that whenever there
is an industry where new products are coming out, there are always issues of
underdeveloped regulations. It is not that the government has not done much
to regulate the industry better, it is just that this science is still in its
developing stage and building regulations for biopharma from scratch will take
time as and when the proof is more exact. Moreover, entering an industry that
is still developing is more of an opportunity as there is lots to achieve, there
are grey areas that can still be defined," asserts Mundrey.
Azimi, like Mundrey, also believes that the Indian government's support for
the biotech industry has been seen in several ways. For instance, at the central
level, the government provides funds to the DBT, which in turn funds various
institutes. DBT was set up by the Government of India under the Ministry of
Science and Technology in 1986, whose initiatives have resulted in creating
a pool of scientists and entrepreneurs. As a result, India has emerged as a
centre of biotechnology activity over the last decade. "It is conducive
to set up biotech companies by both domestic and international players and is
an ideal location to set up research laboratories and manufacturing units. India
presents an ideal opportunity as it possesses a sound knowledge base combined
with skilled manpower," he states.
Mundrey feels that the government is already doing quite a lot. "It is
really cuddling the life sciences sector much more than any other sector, and
that is visible as crores of rupees are being poured into the system as grants,
and we also have so many research laboratories working on numerous studies,"
he emphasises. Even at the State level, the governments provide financial incentives
to promote the industry in several states, eg Andhra Pradesh, Karnataka, Kerala,
Madhya Pradesh, Orissa and Tamil Nadu, since projects funded privately in India
are rare, with banks being the major source of financing. However, considering
that there is always scope for improvement. "More than just encouraging
bio-entrepreneurs, the government needs to create an environment where academia,
clinicians and industry work together to create intellectual property. Funding
alone will not do, a bio-entrepreneur will not be able to survive without the
supporting ecosystem," Mahadevan rightly suggests.
"My view is that there is no actual absence of capital. Whether it is DBT
or any other funding agency, private equity or venture capital, they cannot
disperse the entire amount required by entrepreneurs to start a project. The
truth is that most agencies are not able to disperse funds because there are
not many convincingly good, well defined proposals coming their way," he
mentions. "Whenever I have spoken to prospective bio-entrepreneurs, a majority
of them have not even tried to get out of their labs and do field studies, which
only reflects that they do not make sufficient efforts to push their projects
enough to get adequate funding. Why do you think there are only certain companies
that keep getting projects out year after year and keep getting funding? It
is because the rest are not applying with proper proposals. Instead of using
the phrase half-baked for regulations, I would rather use it for projects,"
What Mundrey suggests is that all stakeholders should ask themselves whether
the funding that is already being doled out to the industry is being fully utilised?
Not just this, but bio-entrepreneurs, according to him, also need to round up
on a suitable business model, as starting a company is not child's play. And
if they are very sure about their product then there are other models that can
be looked at, though there may not be many. For instance, one can approach big
companies, present their work and offer to share IP with them and other benefits
in case it succeeds, and so on.
"Whenever we write venture capital in our reports and in the media, we
give wrong hope to the emerging entrepreneurs, because the truth is that there
is no venture capitalist in India. If you have great research and can get valuable
IP for it, that is something that is still very valued in the industry,"
Mundrey signs off.