 "Dow Corning research laboratory")
"Some 2,000 to 2,500 startups have been planned in the sector in the next five years," said Deepanwita Chattopadhyay, chairman & CEO, IKP Knowledge Park, Hyderabad. She said around 800 startups began operation in the past three years, and they had seen "a lot of action" on the fund front, too.
However, most other speakers at the panel discussion on 'building a strategy for India and beyond' as part of BioAsia 2016 here, today, said drug discovery was still not on the radar of private equity firms, though "things have been changing for the better".
The panelists said long gestation periods, lack of private (PE and VC) funding and regulatory "hurdles" were the challenges faced by the startups. They suggested a Nasscom-like body for lifesciences, which can devise a sector strategy and roadmap.
Nitin Deshmukh, CEO of Kotak PE, said embargo on clinical trial and regulatory "hurdles" were especially keeping PEs away from the sector. "Against this backdrop, how can one feel confident to invest?" he said. There were not many investors with appetite for drug discovery. Two to three funds come forward but that do not make much difference to smaller companies, he said.
For a PE, the typical holding period is five to six years in a company. In large pharmaceutical companies, exits have been largely on successful IPOs, as well as secondary sales. But for early stage companies, it takes around 10 years before some meaningful action takes place for a PE to exit with handsome gains.
"Unfortunately, given the scarcity of funds in the country, PE investors or institutional funding do not come in the private sector and these smaller companies have to be content with grants and government funding," said Annaswamy Vaidheesh, vice president, south Asia, and managing director, GSK.
The panelists felt there was a need for a change in the mindset of the government for PEs to feel confident to invest. "Clinical research should be on the lines of 'Make in India' and stretched to 'Create in India'," said Krishna Ella, chairman and managing director of Bharat Biotech International Ltd.
Also, there was a need to encourage innovation and facilitate entrepreneurship. India needed to leapfrog from a treatment-driven economy to wellness and prevention-driven economy, they said.
Another hurdle facing the sector is with data integrity. Ella said the labour laws should be amended to allow the introduction a non-competence clause where if an employee was fired, a rival company should not be able to hire him.
The speakers were also of the view that the FDA observations should not be made a big deal. "Tone down beating oneself down. FDA rules are tough and it will become tougher. We need to look at them positively," said M K Bhan, former secretary, department of biotechnology, government of India.
According to Ella, more angel investors should be brought in before a PE comes into picture. He, however, is positive on the sector and said, "It's like driving on the Indian roads. There are phenomenal risk but the next generation will change that."
