Biotech Startups Ride the Wave Of Success And Innovation The sector is expected to grow and reach the $150 bn mark by 2025

Recently, the Minister of State for Science and Technology Jitendra Singh said that the number of biotech startups in the country has increased from around 50 in 2014 to nearly 6,000 currently. He also said that the biotech industry has the potential to become an instrument of global trade and that the country's bio-economy has seen significant growth in the past few years, increasing from $8 Bn in 2014 to $100 Bn currently.

The sector is expected to continue to grow and reach the $150 bn mark by 2025. Homegrown biotech startups could emerge as instruments of manufacturing in the country, said the minister.

Biotech startups have also been raising funding despite the funding winter. According to the government, investments in the homegrown bio-economy sector have surged to INR 4,200 Cr in 2022 from INR 10 Cr in 2014. In addition to that, homegrown biotech startups have created more than 25,000 high-skilled jobs so far.

Here are some of the government initiatives to boost the biotech startups

• Launched a single-window national portal for startups and researchers seeking regulatory clearance for biological research in 2022
• Announced 75 'Amrit' grants for collaborative biotech initiatives involving startups and academia in 2022
• BIRAC offers grants of up to INR 50 Lakhs under the BIG Scheme.
• The scheme also encourages biotech startups to share their ideas, develop prototypes and establish proof of concept

What has led to this growth?

The growth of biotech startups can be attributed to several factors. "First, advancements in technology and scientific research have opened up new possibilities in biotechnology. Breakthroughs in areas such as genomics, gene editing, and personalized medicine have created exciting opportunities for startups to develop innovative solutions," said Somdutta Singh, founder and CEO, Assiduus Global and an angel investor LP in marquee funds.

This rapid growth was primarily fueled by COVID's impact on multiple industries. "Many countries have suffered due to their dependencies on global pharma. While India held out its capabilities through schemes like Make In India and Atmanirbhar Bharat. Also to align with global demands in sectors like renewables, agriculture, medical devices, etc, biotech interventions have gained momentum," said Milan Sharma, founder and CEO, 35North Ventures, a VC Firm based out of Mumbai.

Additionally, experts feel that increased public awareness about the need to create a stable health infrastructure and demand for healthcare advancements, coupled with supportive government policies and funding initiatives, have created a conducive environment for biotech startups to thrive.

While biotech startups have made significant progress, they may not have received as much limelight compared to other sectors due to several reasons. "I think this is because of the uncertainties around their environmental impacts, unethical usage, and difficulty in monitoring regulatory changes. Maybe slow but it is getting attention," said Singh.

Additionally, the biotech industry often operates on longer timelines compared to other sectors. "This is because developing and commercializing biotech products requires rigorous research, clinical trials, and regulatory approvals. This longer time horizon may result in slower visibility and delayed market penetration," said Singh.

Funding Scenario

For a long time, the complexity of biotech innovations and the specialized knowledge required to evaluate these startups kept investors away from the sector. Today, the tables have turned. Even though some investors are still skeptical about investing in the space, the pandemic-induced increased awareness has led to many investors looking at the potential of the sector. And, that is why, a lot of biotech startups have been raising funding in this funding winter as well.

"VCs are keen on being early entrants to merging technologies. Especially if we look at agritech, diagnostics, precision medicine, therapeutics, pharmaceutical and allied products, they already have a standalone demand," said Sharma.

Here are the prominent funding rounds announced in the media:

• In April this year, Zero Cow Factory raised $4 Mn in a seed funding round led by GVFL, Green Frontier Capital and Pi Ventures
• In April this year, Nkure Therapeutics raised an undisclosed amount of funding as part of its pre–Series A round from Endiya Partners, Kotak Investment Advisors and a few others
• In January this year, Bioheaven360 Genotec also bagged INR 1 Cr funding from Digital Futurists Angel Network
• Last year, Loopworm raised $3.4 Mn in its seed round led by Omnivore and WaterBridge Ventures
• Last year, Bengaluru-based biotech startup Eyestem bagged $6.4 Mn in Series A funding
• Last year, Zaara raised an undisclosed amount from US-based Transcend International

"The potential for breakthrough discoveries and transformative solutions in healthcare is attracting investors who recognize the long-term value of biotech investments. Moreover, the commitment of governments and venture capital firms to support biotech innovation has provided a lifeline for startups during the funding winter," said Singh.

High cost, skepticism and risks

Just like any other sector, biotech startups also face various challenges in their journey. One significant challenge is the high cost and risk associated with research and development. "Developing new drugs or therapies requires substantial investment, and success is not guaranteed. Regulatory hurdles, lengthy clinical trial processes, and intellectual property protection are other challenges they encounter," said Singh.

Additionally, market competition and the need to demonstrate clinical efficacy further add to the hurdles. "There is still skepticism around biotech adoption due to its uncertain environmental impacts and regulatory compliances. Biotech startups will have to do a lot of convincing to prove product credibility as well as work on more patent-backed technologies," said Sharma.

However, even though there are challenges, the sector surely holds a lot of potential and as predicted by various studies, it is poised to grow.

Wrapping up, Assiduus Global's Somdutta Singh shares the following positive factors that will drive the sector:

• Increasing collaborations between startups, academic institutions, and established biotech companies will drive innovation and accelerate the development of groundbreaking therapies.
• Advances in areas such as gene and cell therapies, precision medicine, and artificial intelligence will revolutionize the industry.
• The integration of technology, such as digital health platforms and bioinformatics, will enhance healthcare delivery and patient outcomes.
• Overall, the biotech sector is expected to flourish, offering exciting investment opportunities and transformative solutions to global health challenges.