• 8 October 2012
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PE Investments in Biosciences

IndoUS Venture Partners invests in Vyome Biosciences
IndoUS Venture Partners (IUVP), a venture capital firm which provides early and mid- stage funding to new or growing businesses in India, has invested $3.5 million (18.5 crore) along with Aarin Capital and Navam Capital as coinvestors in Vyome Biosciences, an innovation-driven dermatology company focused on developing novel and innovative treatments for common skin conditions such as dandruff, acne, pigmentation disorders and wound healing. Dr Kumar Shiralagi, managing director, IUVP, said, “We are backing a top notch scientific team assembled in India that is leveraging leading edge platform technology to develop promising products to address the $20 billion global dermatology market.”

Vyome, a privately-held biopharmaceutical company founded in August 2010 and based in Delhi, had raised seed funding from Navam Capital. Vyome has assembled a world-class management and scientific team that collectively have a significant track record of conducting acclaimed scientific research, developing breakthrough products and building sustainable businesses. Vyome will deploy the new financing to advance the clinical development of its lead antidandruff products, and to accelerate the pre-clinical development of its anti-acne products.

ChrysCapital invests in Intas Pharmaceutical and Eris Lifesciences
ChrysCapital that manages $2.5 billion across six funds and aspires to be the leading investment firm in India has invested in two life sciences companies in India. While Eris Lifesciences is an Ahmedabad based pharmaceutical player with very strong focus on chronic therapy , IntasPharma is a formulations company with a diversified product portfolio focused on chronic segments such as gastro, cardiovascular and psychiatry.

Sanjiv Kaul, managing director, ChrysCapital Advisors said, “The promoter of Eris Lifesciences, Amit Bakshi, is a pharma veteran who has very inspiring. The company is light on manufacturing assets but very heavy on brand creation and promotion. ChrysCapital invested $43 million for a significant minority stake.”

Intas Pharmaceuticals, Kaul said is one of the Top 10 pharmaceutical players in India growing at a CAGR of 30 percent over the last seven years since ChrysCapital made its first investment in late 2005.

Fidelity Growth Partners India invests in Laurus Labs and XCyton
Fidelity Growth Partners India (FGPI), the India-focused private equity arm of Fidelity Worldwide Investment, has invested in two bioscience firms in India recently. Laurus Labs is a company that develops and manufactures active pharmaceutical ingredients (APIs) and XCyton is a diagnostics product company, which developed a syndrome evaluation system (SES) that allows for the identification of multiple organisms like bacteria, viruses, fungi and parasites through a single test. Hyderabad based Laurus, with a focus on anti-retroviral (HIV-AIDS), oncology and nutraceutical products, received $40 million (200 crore).

Raj Dugar, senior managing director at FIL Capital Advisors (India), the private equity advisory arm for FGPI, said, “We are very excited to partner with Dr Satyanarayana and his superb management team. In a short span of time, Laurus has established global leadership positions in its key product offerings and continues to drive innovation in its strong product pipeline of difficult-to-make molecules, which we believe will help it build a long-term defensible business.”

XCyton Diagnostics received $4.5 million (20 crore) from FGPI. “XCyton's SES technology platform has the potential to be truly disruptive to the current standard of care. We believe that the company's test service offerings can drive a paradigm shift in the diagnosis and treatment of critical care infections, not only in India but also overseas. We are excited to partner with Dr Ravi Kumar and his team in building one of the few innovation-driven life sciences companies in the country,” added Dugar.

IIF invests in Shantani Proteome
India Innovation Fund (IIF), formerly known as NASSCOM-ICICI Knowledge Park Innovation Fund, is a $25.3 million venture capital fund managed by IKP Investment Management. It invests between $0.12 million and $1.2 million in its portfolio companies from different sectors including bio sciences.

During this year, it has invested an undisclosed amount in Pune-based Shantani Proteome Analytics, along with Blume Ventures. Besides it has invested in Consure Medical, a firm incubated at AIIMS Delhi and has a medical device that addresses Fecal incontinence. In all it has invested in three life sciences portfolios (the third one-Mitra Biotech) in the last two years.

Sharing his thoughts on investing in Shantani, Ashwin Raguraman, vice president, India Innovation Funds said, “Shantani is a drug discovery technology company, offering a proprietary chemical proteomics technology platform for the identification of the targets of drugs and drug like bioactive molecules. This target information is essential for the understanding of action mechanisms of compounds identified through phenotypic screening. It is also valuable for drug repositioning purposes and for identifying off-target interactions of a drug to understand its toxicity profile. Shantani was incubated at National Chemical Laboratories' Venture Center, Pune and is founded by a scientist Dr Chaitanya Saxena who achieved his PhD in the US and worked in global corporates such as Eli Lily.”

Healthcare continues to dominate life sciences investments
Says Utkarsh Palnitkar, MD, Pluripotent Capital and ED, Centrum Capital

The life sciences sector has been to a large extent insulated from the recession that cast a long shadow on the industry. Having said that, the industry has its own set of challenges.

The situation across the sector in India is rapidly evolving, with a growing emphasis on early stage development. The number of enterprises in the early stage development has certainly seen an increase. Funding start up enterprises continues to be an area of concern. Enterprises focused purely on discovery research still find funding extremely hard to come by, though there has been significant improvement in the number of transactions in this space. Since 2005, $100 million has been invested in early stage companies.

The challenges of scale and feasible exit routes continue to haunt such enterprises. The Government of India has significantly increased funding discovery research through a number of schemes launched by it. However, Government funding is spread across the life cycle of enterprises. Development or late stage capital is easier to come by in India. It would be immensely beneficial if the Government could predominantly focus on high-risk enterprises in early stage development. What we need in India is baton exchange program, with the enterprise moving from one set of investors to the next dependent on the level of maturity attained. There is a significant number of HNIs in India who selectively invest in early stage enterprises. However, there is no fiscal incentive for them to do so. If the Government were to incentivize early stage investment as it is expected to do in the case of first time investors in mutual funds, a lot of risk capital can be made available to start ups. Moreover, if a mechanism could be evolved for creation of high-risk investment vehicles with commensurate incentives, this would go a long way in unlocking resources.

Across the spectrum of life sciences, healthcare continues to attract a large share of private equity, primarily due to the large demand supply mismatch. Between January 2010 to April 2012, Private equity of $700 million was invested in the life sciences sector, of which healthcare accounted for the majority share (60 percent), followed by Pharma.

Going forward one may see some level of consolidation, which will also provide an exit route to early investors.

In summary, the life sciences space continues to be an attractive proposition to the investing community. Individual segments offer varied promise, with some such as healthcare related appearing more attractive as opposed to those in discovery.

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