With an increasingly short supply of capital, the environment for bioscience venture finance continues to remain challenging. Despite factors such as aging population and rising living standards in India that support long-term demand for life science innovation, the funding is way far lesser. If we look at the sources of funding in Indian bioscience sector from the very beginning, it has been mainly from the government agencies and less from private investors. However, over the period of time, there has been a rise in the private participation.
While the companies at middle and higher levels are getting support, the start-ups at proof-of-concept find it very hard to sustain up to the product development stage. Experts confirm that the early-stage funding is far too less, while the mid stage is 35-40 percent and advanced stage is 45-50 percent respectively. The fact remains that only few Venture Capitalists (VCs) exist in this country. The successful conversion ratio is very slow and there is scarcity of resources with lifesciences background.
The first time lifesciences investors are more likely to back companies with less technological or development risk, such as those involving smaller clinical trials or an accelerated regulatory pathway, or that requires less capital to reach commercial markets.
Ms Deepanwita Chattopadhyay, managing director and chief executive officer, IKP Knowledge Park, which provides `50 lakh worth grant to companies who have a solid idea with clear roadmap on it added, "So far there has been $5-7 million worth of transactions and 11 companies in lifesciences area and one hospital have benefited."
The VCs such as VentureEast are more focused on biotechnology market and over 80 percent of their funding goes into the sector. Says Mr Jagannath Samavedam, partner, VentureEast, "We have $ 100 million fund for the companies who present an innovative idea and plan. We have a scalable and service model. Among the firms that got funded by us include Metahelix, which was the first in India, Intas Bipharma, Advanced Enzymes, Indus Biotech, Rubicon, Natco and many others. The differentiated models are key to higher conversion ratios."
"The alternative medicine firms because of short incubation time frame are now evoking good attention from VCs," felt Mr Sujay Shetty, senior consultant and leader for pharma and lifesciences, Pricewater houseCoopers. "In Indian context, it is very important to have emphasis on scale of innovation," he added further. Mr Shetty seems to have a valid point here. Earlier in 2013, Marck Biosciences, an Ahmedabad-based manufacturer and marketer of sterile liquids pharmaceutical dosages using the Blow-Fill-Seal (BFS) technology, sold a minority stake to Tata Capital Healthcare Fund. Tata Capital will invest `45 crore in the company and has picked up a 22 percent stake as well. LifeCell International, one of India's largest and most accredited stem cell banks, announced it is securing an investment from Helion Venture Partners, an India focused venture fund. With investment of `35 crore, Helion Venture Partners becomes the first venture capital firm to invest in a stem cell banking company in India.
Emphasizing that they are into impactful funding, Mr Pinaki Bhattacharyya, chief investment and incubation officer, Villgro Innovation Foundation, emphasized on turning ideas into enterprises. He said, "Our areas of operation include agriculture, health, energy, and education. We currently have $1 million and are running a 12-month program for potential clients in Chennai."
Sharing his perspective on international funding agencies, Dr Shirshendu Mukherjee, senior strategic advisor, Welcome Trust, mentioned, "These agencies play a pivotal role in promoting scientific research in India and beyond, in the challenging areas of bioscience research in human health, agriculture, green technologies, and related sciences. Though it is well argued and rightly so, that India, since the last decade has increased its funding in bioscience research considerably, and funding for a scientifically strong research problem is not at all an is sue in India now." Talking about his organization, Dr Shirshendu mentioned further that they have 30 million pound fund to support projects in the area of affordable healthcare. At the same time he is quick to point out that it applies only to late stage and specific projects that focus on certain disease areas.