I envision India becoming a magnet for the global biotech manufacturing market

Everybody is talking about the funding winter for startups. Do biotech startups have to worry about a funding winter? If yes, how do they prepare for it? How do they survive it?

A funding winter for biotech startups is a concern. It has been there since the inception of biotech startups. However, there has been constant improvement in the funding scenario for these startups. Many of them are trying to connect with foreign venture capitalists and attract capital, which was not so frequent earlier. The reason was that they were not ready for it. BIRAC has made many of them venture ready by funding them through proof of concept, Biotechnology Ignition Grant Scheme (BIG), and other grants.

However, we don’t want these companies to move to different countries, at least not at this stage. Venture funding from a foreign country may force them to set up in that country, which some startups might do to attract venture funding. These actions are not healthy for theIndian ecosystem, but I believe that over time, market forces will take over, and the indigenous capital infusion in biotech will grow. There will be many venture capitalists funding these companies.

So, there is a temporary setback, and with the maturity of biotech funding, the scenario will change. As far as the current biotech funding in India is concerned, aside from grants, BIRAC also has a venture capital arm, or what we call alternate investment funds – Biotechnology Innovation Fund – AcE (Accelerating Entrepreneurs), etc. Here, we don’t directly invest but partner with alternate investment funds and other venture capitalists who invest in biotech. We indirectly fund these venture funding companies. I think as the ecosystem grows, more such funds will emerge, so that the winter, as you mentioned, will slowly turn into springtime very soon.

Dr Kumar, you have been a biotech researcher, scientific mentor, entrepreneur, and have been part of various incubation centers before joining BIRAC. What do you feel are the pain points for biotech entrepreneurs in India? As your term as head of BIRAC has just started, what is your vision to address these pain points?

The primary challenge for startups lies in the availability of facilities and resources for proof-of-concept studies. With 75 bio incubation centers in place (across India), startups can secure Infrastructure and equipment for such studies.

However, a critical gap exists in access to pilot-scale or scale-up facilities. For instance, manufacturing clinically graded materials for trials might not be feasible in the current incubation center setup, as GMP facilities are often unavailable. This inability to scale up poses a significant pain point. Startups might initiate projects at a smaller scale but face challenges when attempting to scale up to 100 liters or 1000 liters for field-level studies or clinical trials. GMP and even non-GMP facilities are not easily accessible, adding to the hurdle.

Another major pain point is the substantial regulatory challenges. Startups may lack awareness of the existing regulatory frameworks, and the dynamic nature of innovation requires constant updates to these regulatory frameworks. BIRAC’s First Hub programme aims to bridge this gap by providing training sessions and fostering awareness. Additionally, creating an interface between regulatory bodies like CDSCO and startups is crucial to ensuring a fair chance and streamlined processes.

The third challenge revolves around early-stage venture funding. While seed funding is available, subsequent funding for clinical trials may be insufficient. Government bodies like BIRAC face limitations in catering to all funding requirements.

To address this, BIRAC is exploring equity participation and considering the establishment of a platform for startups to interact with venture funding companies. Encouraging interactions between startups and larger companies, including MNCs, can offer mentorship and potential opportunities for acquisitions and mergers.

Addressing these challenges requires a multi-faceted approach, including enhancing access to scale-up facilities, keeping regulatory frameworks updated, exploring equity-based funding strategies, and fostering collaboration between startups and larger companies to facilitate acquisitions and mergers.

You said that you would like to keep startups from India within India and not move out because then the nation can benefit from their entrepreneurship and innovation. BIRAC introduced five global startups to India during the recent Global Bio-India 2023. What is your rationale for bringing global startups to India?

If our startups aim to explore foreign markets and expand globally, it is perfectly acceptable. In fact, becoming a global player is encouraged.

My concern lies in the practice of “flipping,” where startups from India are acquired by multinational companies or venture capital mechanisms, leading to a shift in offices to another country. This results in the loss of innovation for our country, and the products developed abroad may return to India at a higher cost with different branding. As we are the largest consumer market globally, it’s crucial to be cautious about our most prominent innovations being harvested, repackaged, and sold back to us at a premium.

While market forces will inevitably operate, and startups seek exits and funding, I believe that, over time, as India’s economy grows and the ecosystem matures, indigenous venture capitalists will emerge. This emergence could slow down the trend of foreign venture capitalists infusing money into our startups and subsequently relocating them.

BIRAC can play a crucial role in this scenario by helping startups grow and scale through the creation of alternate investment funds and venture creation mechanisms.

Despite the current challenges, I foresee a bright future for the Indian biotech ecosystem, with numerous startups emerging and the potential for deep tech startups from public-funded research institutions.

To enhance innovation, I propose creating mechanisms for generating spin-offs from public-funded research institutions. While industries may not invest in deep science tech due to a focus on quick returns, the translation of discoveries into new products or technologies can be facilitated through mechanisms like those BIRAC is working on.

Looking globally, we should identify startups interested in expanding into India. While acquisitions may occur due to market forces, my primary intention in bringing five startups here is to encourage them to explore the Indian market. BIRAC can provide soft landing options, helping them navigate the Indian market and eventually set up operations.

I envision India becoming a magnet for the global biotech manufacturing market. Despite the capital strength of countries like the US, the market is in India. By showcasing India’s potential at events like Global Bio-India, we can attract companies to set up manufacturing bases here, offering a vast market for their products. The key is to make companies aware of the opportunities in India. The complex landscape, which may include issues like finding free land, pollution control board clearance, etc., should not deter companies from manufacturing in India. By creating awareness and facilitating soft landing options, we can attract more companies to India, fostering a mutually beneficial global market for biotech startups.

India’s biotech industry clocked $92.3 billion in 2022, and the vision is to achieve the ambitious targets of $150 billion by 2025 and $300 billion by 2030. What is BIRAC doing to achieve these targets?

To achieve our outlined objectives, a pivotal strategy involves the establishment of bio-foundries and a robust biomanufacturing base. The government is poised to allocate funds for the creation of these bio-foundries, representing an advanced evolution of bioincubation centers. These bio-foundries are designed to cater not only to startups but also to larger companies. They offer both pilot-scale and full-scale manufacturing capabilities, complete with regulatory clearance, experts in regulation and intellectual property, as well as process engineers. This collaborative ecosystem is supported by both government initiatives and co-investments from stakeholders.

Drawing inspiration from successful models like the Catapult in the UK, efforts are underway to promote a similar framework in India through government intervention. This model aims to attract foreign investments and companies to India, while also encouraging larger Indian companies to establish their manufacturing units within these bio-foundries.

The primary goal is not solely for established companies to manufacture, but also to facilitate the development of pilot-scale facilities for startups, addressing the scaling-up challenges discussed earlier. By creating these bio-foundries, startups gain access to pilot-scale facilities within an ecosystem that includes both larger companies and startups.

This integrated environment is anticipated to foster numerous mergers and acquisitions, contributing to industry growth. The government has demonstrated a strong commitment to establishing these bio-foundries.

Additionally, a second crucial strategy involves fortifying the AcE (Accelerating Entrepreneurs) funding mechanism. AcE funding, including venture capital funding from the BIRAC side, requires reinforcement, particularly in terms of equity funding.

Recognising that sustainability cannot rely solely on grants, the third aspect centers around creating a robust regulatory landscape. This involves enhancing awareness and framing regulatory structures that accommodate the needs of startups and emerging innovations.

The fourth point emphasises the importance of interconnecting the entire Indian biotech ecosystem. Collaboration between larger companies and startups is key, mirroring successful practices observed abroad where multinational companies have established corporate venture funds.

Furthermore, the fifth strategy encourages bigger companies to actively collaborate and financially support startups. Corporate venture funding is highlighted as a potential avenue for fostering collaboration and knowledge exchange.

However, it’s acknowledged that negotiations between startups and larger companies may be challenging, potentially leading to acquisitions at lower valuations. To address this, BIRAC is positioned to play a role in safeguarding the interests of startups, particularly when equity is involved.

Its reassuring that you would like India to be the magnet for biomanufacturing. What would you say to naysayers who predict that India will miss the biotech bus?

I would like to emphasise that we have not missed the biotech bus, especially when we contribute 90 per cent of vaccines and pharmaceuticals to the world. We are the pharmacy of the world. Indeed, we won’t miss the bus.

The only area where we might lag is in early-stage innovation, but the field is exponentially growing. We are at a nascent stage, but with exponential growth. To ensure we stay on top, we need to provide significant support and emphasis on newer technologies like artificial intelligence, CRISPR, CAR T-cell therapy, and others, from the government side. We are already making strides in this direction.

I express my sincere gratitude to Dr Jitendra Singh, Minister of State (Independent Charge, Ministry of Science and Technology and Rajesh S Gokhale, Secretary, DBT, Government of India for their constant support.

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