In my last post I talked about how to select the biotech sector to focus on, and how to become attractive to acquirers.
Today I want to talk about looking for government funding. Indian biotech start-ups, besides raising PE/VC capital, should start to look for government money, once they pass the proof-of-concept phase. For the high risk, IP sensitive, product companies (in the category of drug discovery, diagnostics, and clinical trials) with long thirst for funding, there’s now public money available for radical research. The Department of Biotechnology (DBT) as part of a comprehensive biotech development strategy for the life sciences, has launched the SBIRI (Small Business Innovative Research Initiative) as an early stage, and Biotech Industry Partnership Programme (BIPP), as a later-stage support scheme to concentrate on science and innovations and to rescue and fill the funding gap for early-stage investment and business support to biotech and medical device start-ups in the country. In addition, under the 11th Five-Year-Plan and the new legislation, the country’s DBT has kept aside 30% of its annual budget to fund public-private collaborations on new drug development. DBT has also sponsored Biotechnology Industry Research Assistance Programme (BIRAP) in partnership with ABLE and Biotech Consortium India Limited (BCIL) with an objective to assist and promote emerging biotech entrepreneurs and facilitate innovative research and development in existing small, medium as well as large industries. Enzene, a start-up that uses silk worms to develop therapeutic proteins and Navya Biologicals, which develops a complex biological technology platform, received early funding from the DBT.
Collaborate with global companies
Indian biotech start-up cannot leapfrog to global scale, as it has to evolve by creating value locally and then leveraging it globally. For example, biosimilars segment would offer huge potential for out-partnering with large biotech and pharma to call back molecules. Collaboration with a global company that has successfully built the biotech business would help a company enter in its markets by anticipating challenges and making strategies to overcome legislative hurdles in the emerging markets by building business development capability overseas. The recent Russia-India Biotech Network (RIBN) agreement holds immense significance for Indian SMEs in the biotech sector. Several global investors are evaluating Indian biotechnology startups’ intellectual property assets. Foreign investors are capitalizing on cross-border investment opportunities by allocating their assets in markets in India to ensure a well-balanced and diversified portfolio. Recently, Bangalore-based Cellworks Group Inc. raised about $8 million -$10 million from a California-based private equity investor. Investors would be more likely to provide capital and clinical expertise in exchange for licensing of a biotech’s pipeline under the collaborative development financing model.
Use a biotech park incubator
Government and industry have invested significantly in setting up biotech parks and incubation centers. They include Shapoorji Pallonji Biotech Park and ICIC Knowledge Park in Hyderabad, Rajiv Gandhi Biotech Park, Pune, TICEL Biotech Park, Tamil Nadu, etc. Catalyz, a stem cell therapeutics-based startup began at the Entrepreneurship Development Cell & Extension Centre of Technopark Biotech Incubator in Bangalore. Navya Biologicals was incubated at the University of Agricultural Services, Dharwad incubation facility. These biotech parks and facilities can provide the access to infrastructure at a low cost, noticeable to investors, and are regionally available.