Small BT firms aim big via alliances

Small biotech companies in India, constrained by financial resources, are becoming more flexible by entering into alliances at the early stage of drug discovery to keep the pot boiling.

"This is a healthy development," said Nithin Deshmukh, head - private equity, Kotak Mahindra Bank and director Association of Biotech-Led Enterprises (ABLE).

India stands to gain from the trend of early stage deals becoming more common compared to middle and late stage deals.

With limited financial resources but high on intellectual resources, India can utilise the opportunity to provide drug discovery services to its foreign collaborators better.

Clear examples of smaller biotech companies, constrained by capital, entering into alliances to generate revenues are Avesthagen with Sequenom (genetic markers) and Nordic Biosciences (biomarker-based diagnostic kits), and Biological E with Intercell (encephalitis vaccine).

The 'licensing of manufacturing' approach has also provided small companies an opportunity to generate cash to further their research. A few companies have jointly collaborated with foreign partners for developing new molecules of therapeutic interest, said Alok Gupta, country head, lifesciences and technology at Yes Bank.

This has given an opportunity for research and development (R&D)-focussed Indian biotech companies to enter early stage alliances.

There is a business case for creating a corridor to enable companies to undertake commercially-relevant research projects while simultaneously providing an easier access to talented research teams for global corporations, he added.

With strategic alliances taking place in the biotech sector, the average price paid for early and mid-stage alliances have increased over the years, as compared to a fall in the average price paid for late-stage alliances.

The pharma companies have also recognised the potential of biotech as tool and there is an increased level of interaction between pharmaceutical and biotech companies as compared to the biotech-biotech interactions prevalent earlier, said Alok Gupta.