Sofinnova scouts for life sciences deals

Sofinnova Ventures, the US-based venture capital firm focused on life sciences, is actively scouting for Indian companies they can invest in. The three-decade old firm has been closely associated with drug discovery firms such as Genentech and Biogen, and is understood to have zeroed in on a couple of firms in India for investing.

The process of drug-discovery is a long-drawn out one involving high costs and high risks. Biotechnology firms backed by venture capitalists often shorten this timeline with the ability to manage development risk. Sofinnova focuses on investing in companies with clinical-stage compounds.

"Optimal investment opportunities will have some proof of efficacy in humans prior to our investment. Many of these investments will be spin-offs of existing products from biopharmaceutical companies or involve products developed through grants sponsored by the government," the company states.

The company invests in clinical-stage pharmaceutical product companies, with a few high pay off platform technology companies as well. Sofinnova could not be reached for comments on the India game plan.

According to industry analysts, the drug discovery scenario in India is showing clear indications of growth and more companies are taking up such initiatives. "One of the main reason for this increased activity in drug discovery is there will be tremendous cost saving. A major cost of drug discovery is in clinical research, which is substantially lower in India. Adding to this advantage is the fact that there is a noticeable increase in healthcare spends which will make investments in drug discovery viable for Indian firms," noted an Indian analyst.

According to industry information, quite a few Indian companies such as Dr Reddy's, Ranbaxy, Cadila Pharma, Wockhardt, Torrent, Zydus Cadila, Alembic, Dabur, Nicholas Piramal, Cipla, Kopran, Orchid, Sun Pharma, Unichem, have taken up this path and is making good progress. "Upto Rs 100 crore is being invested by some of these companies," the analyst pointed out.

Sofinnova during late-2006 closed its seventh fund at $375 million intending to invest two-thirds of this in early-stage life sciences company and the rest one-third in information technology firms.

Sofinnova Ventures is looking to enter India when the VC scenario is buoyant with around $600 million being invested in Indian firms during last year.

With 65 investments worth about $377 million, the Information Technology and IT-Enabled Services (IT & ITES) industry retained its status as the favourite among VC investors during 2007, according to independent research. Within IT & ITES, Online Services companies were the favourite sector accounting for 31 per cent of the investments, followed by BPO, IT Products and Mobile VAS companies. IT & ITES industry was followed by Healthcare & Life Sciences and the Media & Entertainment industry.