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Archive for the ‘Research and Development’ Category

Incredibly shallow VC scene for Pharma R&D in India

Posted by fairval on May 17, 2015

India pharma is touted as a big success, but what it does is not much better than Indian IT – low cost work with negligible innovation. There is no simply appetite for pharma R&D in India – not amongst companies, and perhaps as a corollary, not amongst VCs either.

At Wisdomsmith we took on fund raising mandates for 2 R&D firms in the last one year (Wisdomsmith Advisors’ main sector of focus is pharma/healthcare). One was looking for seed funding, and the other for Series A. While we could find and investor for the seed one (strategic), the Series A one has been a struggle. None of the pharma focussed VC funds we talked to, are currently investing in pure play R&D companies.

This despite our firm belief that our client could emerge as the most exciting pharma R&D company in India. This company is doing some globally cutting edge work, has a brilliant business model, and is close to a major breakthrough. It has raised seed funding, has got several government R&D grants, has shown incredible progress from meagre funding, but when it comes to Series A, no takers.

We then talked to several US based biotech funds we know. They said – “great company, but we can’t invest in India. No focus on India”. In other words, if you are a US based biotech VC, India is not on your horizon. And mind you, there are maybe 30 such funds in the US, focussed ONLY on pharma/biotech deals, quite willing to back early stage companies. But not one of them is looking at India.

The purpose of this post is not to rant. I wanted to present some data to show how bad the situation is – the vast chasm in funding ability of a pure play R&D biotech in India (basically zero), versus the US.

Check the chart below. The 10 year data below shows that atleast 60 pharma/biotech startups get Series A funding EVERY YEAR in the US. In India, how many got last year – NONE. Over 700 (747 to be precise) starts-ups got Series A funding in the US over the last 10 years. How many in India? Maybe 10.

(And this is just Series A. Total deal count in this period is ~2000, some of which would be follow-on. In India, all rounds put together may not cross even 20)

Source: Venture Funding of Therapeutic Innovation, by David Thomas and Chad Wessel

Source: Venture Funding of Therapeutic Innovation, by David Thomas and Chad Wessel

And where does the Series A money go? As can be seen from the chart on the left, mostly for new drug discovery (~82%), not for ‘Drug Improvement R&D’. Annually, over USD 1B. In contrast, in India, VC funds have invested maybe around USD50m in 10 years in backing R&D firms.

Source: Venture Funding of Therapeutic Innovation, by David Thomas and Chad Wessel

Source: Venture Funding of Therapeutic Innovation, by David Thomas and Chad Wessel

The chart on the right further shows the risk taking ability in the US. More than half the money goes into pre-clinical stage companies. In India?…well, let’s not talk about it.

Will this change? Quite unlikely, in the foreseeable future. Unless we have something like-

  • The Government allocates say USD 250m per annum for VC investments in pure-play pharma/biotech R&D firms, gives it to say 5 funds like ICICI, Kotak etc; they invest on a purely commercial basis
  • Pharma promoters like say those of Sun/Lupin/Zydus etc set up funds to back third party pure-play R&D companies. While they may have burnt money inside their companies, that does not mean they will lose in a VC like set up. Perhaps doing R&D internally was a wrong idea in the first place.
  • It could also be a combination of the 2. Government can match $ for $ money deployed by privately set up VC funds.

Posted in PE/VC, Pharma and Lifesciences, Research and Development | 2 Comments »

Is Western medicine packaged, branded quackery?

Posted by fairval on September 23, 2012

An eye-popping article in The Guardian today, which pretty much implies that much of the carefully built edifice of modern allopathic medicine is, in simple words, quackery. The article itself doesnt go so far, but it pretty much means that.

The main charge the article makes against pharma innovators is this – they publish results selectively. If they find a trial is likely to give negative results, either they will stop it midway, or simply hush the results. Check this like from the article:

Seven trials had been conducted comparing reboxetine against a placebo. Only one, conducted in 254 patients, had a neat, positive result, and that one was published in an academic journal.

But six more trials were conducted, in almost 10 times as many patients. All of them showed that reboxetine was no better than a dummy sugar pill. None of these trials was published.

This practice is quite widespread it seems. Read the full article here..

The drugs don’t work: a modern medical scandal

Posted in Pharma and Lifesciences, Research and Development | Tagged: , | 1 Comment »

25% of global R&D money coming to India?

Posted by fairval on November 2, 2006

This is some astounding bit of data. A story in ET says – India is drawing 25% of fresh global investments in R&D centres. And, many of these centres set up by multinationals are among their largest R&D units outside the US or Europe.

This number of 25% may be a little exaggerated. For example, a top pharma company these days spends $3-5 bn in R&D. Surely not even 10% of that will come to India. Even for IBM one would imagine 25% of R&D cant be coming to India. But, if it is great!

Posted in Research and Development, Technology | Leave a Comment »