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S. N. Jogdand

Biotechnology and Nanotechnology will be the next

thrust areas for education and entrepreneurship
Entrepreneurship in Biotechnology
ë. What is Entrepreneur? What is Bio-entrepreneur?
2. Attributes of Entrepreneur
3. Characteristics of Biotech Industry
4. Growth Stages of Biotech Company
5. Opportunities and Challenges in India
6. Entrepreneurship Supportive Environment
7. Entrepreneur¶s Standard Path ± Other Paths
8. Business Models
9. Business Plan Preparation
ë . Funding Alternatives
ëë. Licensing, Technology Transfer etc.
ë2. Entrepreneurial Training
 One in ten adults in the United States today is an entrepreneur.

While there are many definitions of the term entrepreneurship,

Entrepreneur Mark J. Dollinger defines
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ðn relation to the biotechnology and pharmaceutical industry, entrepreneurship

can be classified in four categories:

ë. Traditional View of Entrepreneurship: ßirms that provide support for the

underlying activities of the region (i.e. janitorial services, restaurants, dress
shops, hair salons, grocery stores, etc)
2. High-growth Start up Ventures: These are the ventures that commercialize
intellectual property (i.e. patents and licenses)
3. The Growth Enterprise Sector: These are the ventures that have survived
the startup phase and are now poised for growth and expansion
4. The Entrepreneurial Mindset of Managers in Established Businesses:
These are the major pharmaceutical firms and the established biotechnology
companies.
 Economics considers 4 main resources for production:
(ë
Land, (2
Labour, (3
Capital, (4
Entrepreneurial Abilities.

Entrepreneurial abilities are the abilities to recognize business

opportunities and to combine the three other factors of production
in a way that will make money.

Entrepreneurs can be defined as ±

Individuals who find scientific niche for new opportunities and
create new business relationships for / from them.

Entrepreneur is important input for economic development.

Entrepreneur is a visionary.
Entrepreneur brings about overall change through innovation for
maximum social good.
 8  of the value and
success comes from having (assion
good ideas... and the other
Curiosity
2  is knowing how to
manage yourself²your Sponges
success and failures. Optimism
³ð can Do ðt´ Attitude
ßorward-looking
Careful about money
Attributes in Start at young age
Competitive
Modern
Time-conscious
Entrepreneur
Risk-takers
Usually Loners
(rofessional
High Energy
ðnitiative ßlexible
Decision Making Nurture entrepreneurial spirit
ðnnovative Confident Goal-setters
Risk Takers (ersistent
Learn from failures
Attributes ðn Self Responsibility
Resource Utilization
Traditional
Multidimensional
Entrepreneur Open To embracing changes
 The key to being a really good entrepreneur is to
hire people that are smarter than you.

CHECKLðST ± ENTRE(RENEURðAL A(TðTUDE

ë. Are you a leader?

2. Are you a high-energy person?
3. Are you self-confident?
4. Are you organized?
5. Are you competitive?
6. Are you prepared to work long hours, every day for an indefinite period?
7. Do you have adequate resources?
8. Are you in good health?
9. o you have a unique service or product?
ë . ðs your spouse on board with your ideas?
ëë. Are you willing to make short-term sacrifices in return for long term
success?
ë2. Are you a risk taker?
ë3. Are you a good communicator?
ë4. Do you have adequate experience?
 Nature of Biotechnology Industry
ðrrespective of the country,
Special features of Life Science Industry are

(i
Strong research base,

(ii
igid government controls on standards for the products,
(iii
Heavy investments on research,
(iv
Long period of wait before returns on investments,
(v
Financial resources with readiness to take risks are typical.

Most biotech firms do not have substantial revenues, and the

industry as a whole reports a net loss.

ðt typically takes over seven years and $5 -$8 million to bring a new biotech drug to
market. Therefore, the encouragement of risky and long-term capital inflows from investors is
important to the continued health of the industry.

Structural (illars Emotional (illars

(i
uality management team, i. Patience,

(ii
Adequate financing and ii. Optimism,
(iii
Access to new technology that leads to products. iii. Perseverance

Managing a biotechnology start-up is a demanding task. According to one of the UK¶s

leading biotech entrepreneurs, a good manager must be able to do science in the morning,
raise money in the afternoon and finish the paper-work at night.
 Segment-wise istribution of Biotech Companies

Sr. No. Segment Number of Companies

ë Antibiotics ë3
2 Aquaculture ë3
3 Biofertilizers 37
4 Bioinformatics 4
5 Biopesticides ë6
6 Clinical Trials 9
7 Contract Manufacturing 3
8 Contract Research 25
9 Diagnostics 6ë
ë Drug Discovery 24
ëë Enzymes 36
ë2 Genomics 26
ë3 (lant Biotechnology 54
ë4 (robiotics ëë
ë5 Therapeutic (roteins ë
ë6 Vaccines 49
For Promoting Bio-entrepreneurship efforts / inputs / participation
in form of -

ole of Government ± Tracing and attacking bottlenecks in material and non-

material facilities, To develop common platform for interaction, ðnitiative in
technology transfer, (romotional concessions, To identify areas for
entrepreneurship promotion

ole of Industry ± To understand the trends, Willingness to diversify

ole of scientific community ± To develop dialogue with industry, To sell the

technology in market, Stimulation for commercial development of semi
academic know how, awareness about regulatory affairs, patents etc.

ole of academics ± Nurture entrepreneurship through various programmes,

Entrepreneurial training, ðnformation on bioscience careers, (resentations
by successful biotechnology entrepreneurs, Case studies, (roject-plan
preparation training, Self assessment activities,

ole of Public Support ± conducive atmosphere

 Innovation, Imagination and
Inspiration
are the ideals of American
Entrepreneurship

Low Tech projects Different dimension to

Life Science Industry entrepreneurial
High Tech Projects efforts

Biotechnology companies and changing technology stress

ë Recombinant DNA technology ± Human proteins (ðnsulin, HGH)

ë Therapeutic proteins such as ðnterferons, ðnterleukins
ë Monoclonal antibodies for therapy and other applications
ë Gene Therapy
ë Antisense DNA technology
ë Human Genome (roject
ë Genomics based
ë (roteomics based

Business may be based on products, tools, service, information or hybrid

 Genetic Factors
evelopmental Factors Entrepreneurship
Environmental Factors

Number of companies, revenues, employment,

product pipeline, patent position

Indicators of Entrepreneurship

USA India Japan

Necessity-based Entrepreneurship ë 5

Opportunity-based Entrepreneurship ë2 9 ë

Total Entrepreneurial Activity (TEA
Index by Global Entrepreneurship Monitor (GEM

In 2 2 -------- Thailand (ë8.9
, India (ë7.9
US ë .5, ussia (2.5
, Japan (ë.8

Idea To IPO and Beyond

Business Plan

Seed Finance

Startup

Operations

Growth & Expansion

Harvest
 Idea To IPO and Beyond

STAGE ACTIVITY

To convince investors that the proposal will earn a high return on

BUSðNESS
ë investment based on a solid financial plan, management
(LAN
approach and implementation and growth strategy.
ðnitial contribution of financing. (rovides the basis for additional
2 SEED ßðNANCE capitalization to accommodate growth. Obtained through
venture capitalists, development funds and angel financing
hiring people, procurement of working space and initial
3 START-U(
development of a prototype
The firm¶s value chain is clearly defined in the operations phase.
ßrom research and development to suppliers, sales and
4 O(ERATðONS distribution partnerships are solidified during the stage.
Characterized by a broadening of customer base and clear
determination of market positioning.
An entrepreneur will leverage the company¶s equity and success
GROWTH AND to raise additional working capital. build additional
5
EX(ANSðON manufacturing plants, strengthen the sales force and
increase research and development
After successfully establishing as a sustainable and credible
6 HARVEST entity, an entrepreneur will look to the capital markets for
future funding. ð(O for less expensive funding.
 Founder = Inventor of Technology Founder = Market Perceiver

Opportunity ecognition

Intellectual Property ights (IP

Fund Generation
Build up Team and Company

evelop Technology toward Product

Survive by additional funding, selling assets, IP licensing or spinning out applications

Market Product

Venture Creation Process (Technopreneur¶s Path

Standard Path for Starting New Venture in Biopharmaceuticals in US

ë. Scientist, through initial government or foundation grants, discovers

mechanism in biology that is particularly interesting and appealing for disease
intervention or treatment. Opportunity recognition depends on the perception of
the scientist to correlate between invention and possible commercial product /
process there-from. This will be reflected in the correctness of business model
developed.

2. The scientist then files a disclosure through the university office and begins
discussions with the technology transfer or licensing officer at the university
about commercializing the discovery.

3. She or he then writes a small business innovation research grant to fund the
startup activities, rounds up some collaborators (other scientists or business
associates) and licenses the discovery from the university.

4. The scientist-entrepreneur then has two choices: either continue in the

university position while developing the company on the side, or leave the
academic position (permanently or temporarily on a leave of absence
to
actively pursue the commercialization of his or her discovery. ðn the latter
case, funding comes from personal funds, second mortgages on residences,
loans, friends, families and other angel investors and venture capitalists.

5. The venture is launched, typically focused on products, with a business model

of forming a fully integrated company. See Venture creation process in the next
slide.
Other than standard path followed by some bio-entrepreneurs

ë. Coming in contact with scientist and carrying his science to business

2. Sales executive identifying unmet market needs, reading literature and

establishing diagnostic company.

3. Management consultant meeting a scientist associates to form biotech

venture.

4. Student undergoing training course in diagnostics realized the

opportunity for a business in providing R&D diagnostic testing for drug
development and incorporated a company with technology licensed from
the medical research center.

5. Investment banker first started with distribution and then entered into
main product line and developed a new technology for a diagnostic process
service.

6. Businessperson perceives an opportunity from reading on genetic

studies in magazine. He slowly made it a niche high-tech service.

7. Physician who was not satisfied with therapies of chronic diseases

partnered with business minded persons and created a business plan,
raised angel investment and licensed in some key technologies from
universities that could address these diseases.
 Basic Components of Biotech Company

ë Scientific creativity
ë Market Need
ë Strategy
ë (eople
ë Management
ë Attitude & Culture
ë Competitive Advantage ± Knowing how good you are compared to
how good you have to be
ë Competitive ðntelligence ± Knowing your competitors, knowing
their capacities, knowing market need ± today and after years
ë Business (lan
ë Success
Entrepreneurial Activity

Corporate Ventures Independent Ventures Self Help Groups (SHG

(Societies)
Large firm invests in small ðndividual (scientist / others) Outreach programmes
Startup initiates small startup, gets (Govt. initiated)
venture capital women empowerment
Opportunity riven Companies in Genomics and Proteomics
emand riven, Supported by Industrial Group

Name of Company Affiliation

Auregene Dr. Reddy¶s ((harmaceutical)
Genenquest Nicholus (iramal ((harmaceutical)
Chembiotec The Chaterjee Group (Oil, High Tech)
GVKbio GVK Group ((ower, Hotel, ðnfrastructure)
Questar Gland (harma ((harmaceuticals)
Reliance Life Sciences Reliance Group (ßabric, Chemicals, Oil)
Syngene Biocon (ðndustrial Enzymes)

Technology riven Companies in Genomics and Proteomics

Initiative by Scientists, Funding from Outside

Name of Company Core Technology

Avesthagen (lant genomics
Metahelix (lant Genomics
Genotypic Microarrays
Entrepreneurship elated characteristics for ifferent Sectors in Biotechnology
(ë
Bio-industrial Sector ± Small Gestation (eriod, Not Capital ðntensive
Biofuels (Energy crops, bioethanol, biodiesel), Enzymes, Biotransformations for chemicals
(2
Bio-service Segment ± Market development fast, Alliances / foreign collaborations possible
Clinical Trials, Contract Research, Contract Manufacturing, Bioinformatics, Genomics
(3
Environmental Sector ± Small entrepreneurial activity, No capital required
Environmental Consultancy, (ackaged Microorganisms, Biotreatability Studies, Bioremediation
assignments
(4
Biomedical Sector ± Capital intensive, Technology development is time consuming,
regulatory hurdles more
Vaccines, Diagnostic Kits, Therapeutic (roteins, enzymes, hormones, blood products
(5
Agro-bio Sector ± Genetically engineered crops (seeds), Biofertilizers, biopesticides, (lant
Tissue Culture, Micronutrients
(6
Natural Products Industry ± Medicinal plants with potential anti-cancer and
immunomodulating compounds, herbal extracts for cardiovascular disease etc., Spirulina
(6
Bio-support Segment
Research Biologicals , Molecular Biology Reagents, ðmmunological Reagents, Laboratory
Equipments, ðnfrastructure support institutions, Documentation services
(7
Nutraceutical and functional food businesses segment unregulated industry with an
annual turnover of $ë.2 billion. dietary supplements not treated as natural products, but as drugs,
it is very difficult to compete with manufacturers in regulated markets
dietary supplement, nutraceutical and functional food businesses, as well as businesses that
produce foods for special dietary use
(8
Food related business - (robiotics, SC(, Mushroom, aquaculture etc.
(9
Animal Sciences - DNA consulting and testing business that helps ranchers select beef cattle
which grow faster and are of higher quality, animal feed
Commercial Opportunities in Life Sciences ± High Tech Areas

rug iscovery and evelopment

Cutting edge structural biology, rational drug design, protein engineering and chemistry to
accelerate lead generation and optimization.

Biomaterials and Tissue Engineering

Collagen technologies, polymer and surface design

iagnostics
New approaches to infectious agent identification, disease investigation and prevention using
molecular biology, novel (CR technology, monoclonal and recombinant DNA technology.

Gene Silencing and elated Technologies

(owerful new RNAi methods to develop gene based therapies and drive advances in plant and
animal breeding.

Bioprocessing and Functional Foods

Biological processes for food, pharmaceutical and industrial applications

Bioinformatics
Sophisticated statistical analysis of array-based data sets with applications in diagnostics,
toxinogenomics and pharmacogenomics.

Therapeutic elivery Systems

Site-specific and/or controlled release of drug molecules and delivery of genetic material via novel
viral vectors
 Low Technology Entrepreneurial Opportunities (ST Promoted

For Women For SC/ST For ural

ßood (rocessing / ßruit (rocessing Vanilla issue Culture (TC on Home Scale
Sericulture Sericulture
Mushroom Cultivation Mushroom Cultivation
Micro-propagation of orchids & other Biofuels - Jatropha Cultivation on
ornamental plants Arid land
Biofertilizers Neem based Biopesticides & other
Goat & (oultry Rearing biocontrol Agents
ßish farming, Ornamental fish Organic ßarming using mulch
Rabbit rearing for quality wool prodn. ßish farming, Ornamental fish
Nurseries for medicinal & aromatic (oultry ßarming
plants Nurseries for medicinal & aromatic
ßormulation of herbal products plants
ßloriculture ßormulation of herbal products
Vermicomposting ßloriculture
(isciculture Vermiculture / Vermicomposting
Spirulina production (isciculture
Spirulina production
 Genomics
Vast genomic pool, 6 ethnic groups. Makes use suitable for study of pharmacogenomics.
ðndia's vast number of inbred communities both tribal and others offer unique human gene pools
as powerful as those of ðceland, for exclusive genomic studies.
(arasi ± more prone to breast cancer
Thalasemia ± prevalent in many ðndian inbred societies.

High value IP possible through:

Hunt for Disease linked genes
Development of diagnostics
Development of therapeutic products
Pharmacogenomics ± Different medicines for different individuals

Rs.ë crores allotted by central government in ë th plan for genomics research.

ICM has as many as ë ë projects undergoing in the area of genomics and molecular genetics.
The BT is negotiating with leading ðndian pharmaceutical and biotech companies for
collaborative ventures in secondary genomic research.
Opportunities in Genomics
ßive Types of Companies are possible ±
ë. Tool Makers ± Equipment for gene discovery
2. Gene Cataloguers ± Companies using above-said tools to build database and sell them
eventually.
3. Target Screening ± Companies that use the tools to perform target screening.
4. Companies using databases to develop potential drug compounds (ßunctional
Genomics Companies)
5. Companies involved in datamining, data sequencing, data curation, annotation of
available genome data, genotyping using bioinformatics
Vaccine Genomics, Vector Genomics, Nutritional Genomics, eproductive Genomics,
Pharmacogenomics, Plant Genomics etc.
 Bioinformatics Services Companies with Bioinformatics as sole activity
Suitable field for entrepreneurs
ë. Data mining - Huge amount of unorganized biological data to be sorted.
2. Relational Databases ± Database design - Gene Banks, (rotein Data Banks etc.
Database management
3. Diagnostic Kits - Develop kits for predicting diseases or predisposition of an
individual for particular disease.
4. Bioinformatics Software - Custom made software for various scientific needs.
5. (roteomics - Structure and function of (roteins.
6. Genomics - Expression and function of genes.
Computational Analysis

ë Will provide drug targets, lead molecules

ë Better clinical data and generic data management service
ë ðn silico testing ± shortening clinical trials period
ë Molecular Modeling for drug ± ðmproving drug stability ± Structure
ë Mining new biomarkers for disease diagnosis
Activity Relation ± Comparative evaluation of anticancer drug (e.g.
alkaloid)
Challenges
Most of the units work on lower side of value chain
ðn ðndia datamining done and making programmes for database management less
ð(R protection not enough therefore fear of data exchange expressed by foreigners
Manpower cost of a bioinformatics unit ranges in the region of 5 per cent, while licensing third party
databases may account for roughly 25-3 per cent of total operating costs.
Bioinformatics (Contd«.

evenue by 2 5 US$ 6 billion

Some of the major players in the south are:

Jalaja Technologies, ðnfosys, Kshema Technologies,
ðBM ðndia, Strand Genomics, TCS, GVK Biosciences,
etc.

ðn the north, companies active

in this area are Mascon, Labvantage Solutions, SAS
ðndia, V Life Sciences Technologies, etc.

The two successful products in this area are

TCS, Biosuite and
Strand Genomics, Avadis, which was successfully
licensed to Abgenix,
 Opportunities in Contract Manufacturing

Majority of biotech companies in US are research-based startups and do not have manufacturing
capacity. Many products in pipeline (>3 biomolecules). Manufacturing facility available only for
25% of it. Biotech-based pharma market - $5 billion by 2 7.

Therefore Contract Manufacturing. Scope in India

Our Strengths ± Manufacturing expertise, cheap labour, cGM( approved facilities, good at
downstream processing

Internationally approved manufacturing facilities developed by Indian companies.

Ranbaxy, Lupin, Nicholas (iramal, Wochardt, Kopran, Bharat Biotech etc. have entered in this
field. 2 ðndian companies have US ßDA accreditation.

For this regulatory reforms are required and as per the International Conference on
Harmonization (ICH
guidelines, uality, Safety and Efficacy.
Opportunities in Contract esearch

ðn molecular biology, clinical trials, bioinformatics, stem cell research, genomics, proteomics etc.
fields

Global market $3 billion (Rs.ë5, crores) - 2 8

Global outsourced R & D $7 billion (3 % annual growth)
Outsourcing of 4 % of research by global pharma majors ($4 billion R & D expense / y)
-Want to cut on R & D spending.
ðndian regulations do not have an open door for contract research.
Our strengths ± we have talent in protein chemistry, medicinal chemistry, classic synthetic and
organic chemistry.
Competitors - China, Russia, Thailand, Malaysia, South Korea
 Clinical Trials Opportunities

7 % new Chemical Entities are rDNA products

75% of expenses on any new drug are on clinical trials
8 , clinical trials in world every year (cost $ë3 billion or Rs.6 , crores)
$4 billion on Doctors and $9 billion on organizations conducting trials.

Why India suitable? (China, Japan are the competitors)

ë. Variety of gene pool ± for better study

2. Large patient diversity
3. Qualified physicians, nurses, investigators, monitors
4. Well equipped hospitals
5. Speed, English language, quality, responsiveness
6. Motivated and committed clinicians

Problems ± (hase ð trials not allowed, (rotection to research data difficult

Objections ± Are we guinea pigs?

New developments ± insurance compulsory for subjects under clinical trials.

Pharmaceuticals  & 

Growing of mammalian cell line ± maintenance of cell line ± Growth ±

Drug testing ± effects on growth ± cell differentiation, morphology etc observations

Genetic modifications of cell line ± then use for drug testing

Screening of anticancer drugs against a spectrum of various human tumor derived

cell lines belonging to leukemias, carcinomas etc. using Sulforhodamine-B assay -
% of cell growth inhibition calculated.

Construction of clones expressing recombinant proteins

Infrastructure Support Institution (Unit

ðndustrial parks / ðncubators with shared facilities for R & D, High end
computers for bioinformatics, protein modeling studies, administrative
help in custom clearing, patent facilitation, business plan preparation,
arranging finance etc.

ocumentation system evelopment

Maintaining computerized files to support all documentation
systems.
Audits of all documentation manuals
Review and Revision of procedures, specifications, and forms
Compiling regulatory filing documents
Scientist who has idea and discovery after years of work
expects that after commercialization the company will be his.
When venture capitalist expects 8  ownership of the
company, it causes heartaches and headaches to scientists
and entrepreneurs.
 Innovation, Imagination and Inspiration
are the ideals of American Entrepreneurship

US Europe Japan

Capital Markets well developed Less developed

Business  &  ë.5 ë 2
eturn on Equity ë6.5 8
Business Investment Highest ëë.3 ë8
Taxation on sale of ë  ë8
Business
Equity Investment 36 25
Number of Patents Higher
egulatory Problems Less
Non-wage Labour Cost Low 7  Higher
Total Labour Cost ë  Higher
Labour Productivity More Less
Incentives for skills More Less
 How To Write Business Proposal?
Introductory Page
Name and Address of business
Name(s) and address(es) of principals
Nature of business
Statement of financing needed
Statement of confidentiality of report
Executive Summary ± 3-4 pages summarizing the
complete business plan.
Industry Analysis
Should answer the customer's
ßuture outlook and trends
questions and persauade them Analysis of competitors
to take the action you desire. Market segmentation
ðndustry forcasts
escription of Venture
(roduct(s)
Service(s)
Size of business
Office equipment and personnel
Background of entrepreneurs
Production Plan
Manufacturing process (amount subcontracted)
(hysical plant
Machinery and equipment
Names of suppliers of raw material
Marketing Plan
(ricing
Distribution
(romotion
(roduct forecasts
Controls
Organizational Plan
ßorm of ownership
ðdentification of partners or shareholders
Authority of principals
Management-team background
Roles and responsibilities of members of
organization
Assessment of isk
Evaluate weakness of business
New technologies
Contingency plans
Financial Plan
(ro forma income statement
Cash flow projections
(ro forma balance sheet
Break-even analysis
Sources and application of funds
Appendix (contains backup material

Letters
Market research data
Leases or contracts
(rice lists from suppliers
Some key questions to understand strategy of a startup are: Product Idea
(ë) What is company's ›
aim?
(2) What is your first product going to be?
(3) How do you deal with success?
(4) What will you do next?
Manufacturable Product

Selection of Product for New Biotech Venture

ë Demand for various products today and in future
ë Technology whether available
ë Margin in sale of that product (profitability)
ë Rate of return on investment
ë Market whether local or international (export market)
ë Competitors and their capacity, price
ë Regulatory Hurdles if any
ë (ublic perceptions, product safety
ë ßixed Capital ðnvestment required
ë Current capital (cash flow) requirements
ë Availability of skilled and non-skilled manpower
ë Ability to penetrate market
ë Loans and funding availability
ë Raw material required and its cost and availability
ë Dependence on imports if any
ë Life cycle for the product
ë (ossibility of alternate better technology development by others
ë (roduct whether import substitute
 Funding Options for Biotech Startups
(Financing Alternatives

ë. ßund from operations

2. ðnterested partners
3. ßund it yourself
4. Debt financing
5. ßriends, family and angels
6. ðncubators
7. Government Grants
8. Venture Capital
9. (ublic ðnvestment
ë . Mergers and Acquisitions

Financing, happens in waves and

cycles and can be very unpredictable

Exit Strategy ± Exit Strategy is mutually agreed upon plan to provide investors with a return
on their investments (ROð). Bio-entrepreneurs find it hard to let go of their "baby,"
jeopardizing its growth and development. The sooner you can visualize how and when you
will leave the company or step into a different role, the fewer problems will occur.
 Building a successful biotech or life sciences
company from scratch is a frightening task.

ë partnership with either the government, an

investor or a corporate partner

ë ðnvolves time-consuming applications or

negotiations,

ë demands emotional toll on management,

ë and still no guarantees.

ë negotiate terms minimizing restrictions on

founder, (the amount of equity sold, securing
favorable pay-to-play provisions and obtaining
clear and achievable funding).

ë should obtain sound advice from an attorney,

accountant and financial advisor before entering
into a definitive agreement.
 If all you have is a hammer, then everything looks like a nail.
Better choose appropriate funding alternative

Funding Agencies
Entrepreneurial Business needs fuel (cash
continuously

Maintaining the balance of commitment, communication, criticism,

conjecture, and competition is the basis for Bio-entrepreneurial success.

Financial Institutes

Banks Funding Agencies Equity

esire
e-risked model Indian VCs Support matured
Strong Management or well-run Companies and
Venture Capital Funds
Strong Product Pipeline not early stage companies
 Funding Agencies ± Contd.
Business model: A large number of early stage biotechnology companies in
India have little uniqueness and novelty (of product, of business model etc.

consequently, this makes it difficult to justify funding such me-too companies.
APIC-VCL (Andhra Pradesh Industrial evelopment Corporation Venture
Capital Ltd
± s. ë5 crores Bank of Baroda and Punjab National Bank have committed
s ë crore and s 5 crore respectively in the 'Biotechnology Venture Fund', a public-
private partnership between Ventureast Group and Andhra Pradesh Industrial evelopment
Corporation (APIC
.

Govt. Schemes - The Technology Development Board (TDB), Technology and

ðnformation ßorecasting and Assessment Council (TðßAC), and New Millennium
ðndian Technology Leadership ðnitiative (NMðTLð) programme ± s. ë crores
available

Karnataka State ðndustrial ðnvestment and Development Corporation

Karnataka State ßinancial Corporation
Banks - ðCðCð, HDßC Bank, Vijaya Bank, HSBC Bank, Exim Bank, Canara Bank,
Andhra Bank, Deutsche Bank, State Bank of ðndia, UTð Bank, Citi Bank, Rabobank
(ðndia) (rivate Limited
CANBANK Venture Capital Fund¶s third fund CVC-ß3 jointly launched in association
with the Small ðndustries Development Bank of ðndia. CVC-ß3 which has a corpus of
Rs 3 crore is expected to invest about Rs 3 to 3.5 crore in each of the firms which
have been identified.
ASSOCHAM ± To encourage entrepreneurship freedom to be given to scientists to
acquire Sweat Equity in the company / ðndustry with which they are associated.
 ASSOCHAM recommends the creation of a National Biotechnology
evelopment Fund with a sum of Rs.45 crores (ë billion dollars),
managed by an autonomous and knowledge ± centered council.

Funding Agencies ± Contd.

Small Industries evelopment Bank of India (Sidbi
has $5 million venture

fund.

Gujarat Government is all set to launch a Rs. 25-crore 'hybrid venture capital
fund' for small and medium-sized projects in biotechnology.

The Technology evelopment Board (TB
will partner with the Unit Trust of India (UTI

to float an information technology venture fund aimed at promoting entrepreneurship, in
biotechnology and other technology-related areas. - Rs 2 crore

KPMG Corporate Finance (Banglore
interested in providing financial assistance to some

small start-up biotech companies (with sound management capabilities) who may be in
bioinformatics, contract research

Gujarat Venture Capital, ðDBð Venture Capital, ðßB Venture Capital, ðßCð Venture Capital,
ðndustrial Venture Capital, SðCOB Venture ßund, Asia ßund, Kotak Mahindra, Morgan
Stanley, Walden Shroeders, Warburg (incus, Chrysalis Capital, Barings (vt. Equity, Global
Tech Ventures, HSBC (rivate Equity, ðCß Ventures, ðndus Venture Management, AðG
Capital, Alchemy Ventures, Bank of America
 Small Business Innovation esearch Initiative (SBII

Launched by BT (Started in 2 5

Given in Two Phases

Phase I ± Early stage, Pre-proof-of-concept research proposals
which add to important national needs.

Phase II ± Funding in form of soft loan upto s. ë crores for

late development and commercialization of innovative research
leads when proof-of-concept is already established.

In year 2 5- 6, ë applications out of 7ë received support.

Call for application announced in Newspaper.

As on 2 8 ± 37 projects running (worth s. ë55 crores

396 proposals from 25 companies Of these ±
75 for early stage (Phase I
research
2  for scale-up5 for combination
ë55 proposals ± collaborations with institutions and Universities
ë6 projects in healthcare sector
9 projects in industrial product & process development
8 projects in agriculture & other areas
Gujarat Venture ßinance has launched a Rs. 5 -crore venture
capital fund to promote start-up companies in bio-pharma,
agricultural, industrial, marine and environmental
biotechnology, and also contract research and bioinformatics in
Gujarat. (2 5)
Which are the five main hindrances?

Alok Gupta, country head, life sciences and biotechnology,

Yes Bank Ltd.

Business model: little uniqueness and novelty (of product, of business model etc.); consequently, it is
difficult to justify funding such me-too companies.

Early stage investing: Most early stage biotech companies need angel/seed funding in order to attain a
critical mass and attract investor interest. This channel of funding needs development in ðndia. ßurther,
early stage companies need to have a clear road map of product development/business plan, with capital
infusion, timing and exit routes.

Technology: Most funds do not have a deep understanding of the technology or applications of this
technology and hence are looking to validate the product/business model through US-based VCs, which
have the necessary expertise in evaluating such companies

Cash flows and valuations: Most biotech companies (particularly product companies) have fairly long
gestation periods before they commence significant cash flow generation-this is an area of concern for
investors and consequently valuations and dilution becomes an area of concern

isk factor: Biotechnology companies are typically in a high risk-reward situation whereby success of
failure of a product can imply survival or collapse of the company. So investors are selective about biotech
investments.

Exit strategy: The ðndian markets do not offer the depth or flexibility of exit options to investors. ßor
example, the capital markets and strategic investor interest in the US markets leads to a lot of different exit
options for financial investors.
Business Model is all about
How You get the resources?
How You create the value?
How You get the returns?

There are 5 broad business models for biotechnology:

Business Based On Examples

ë (roducts Amgen, Gilead

Affymetrix, (E
2 Tools
Biosystems
3 Services Abgenix, ChiRex
4 ðnformation ðncyte, Celera Genomics
5 Hybrids Millennium, CuraGen
Time Line for Product evelopment
Value creation in biotechnology
rive All Elements of Value Chain
 ßactors such as
technical challenges,
barriers to entry, and the
level of competition in a sector
may dictate the best model for a new entrant or incumbent firm.

ë. ðf barriers to entry are relatively low - dedicated product

development may be a good strategy
2. As markets mature, the control of markets through patents and
ownership of key infrastructure or sales and distribution
channels limits the ability of start-ups to reach customers,
making tool or platform approaches preferable
3. Overabundance of viable drug leads, favors the use of 'no
research, development only' (NRDO) models.
Vertical Model ± potential for value generation throughout the entire value chain.
operates in a high risk environment, offers the potential for high returns on research
investment and strong profit margins, similar to that of the pharmaceutical sector.
Product Model ± aims to generate value by progressing products along the drug
development chain process and either licensing them out or taking them through to
commercialization.
This is a relatively high risk model and typically requires quite substantial investment.
Companies adopting this model may resort to partnerships and strategic alliances for
risk sharing, or to outsourcing production.
Technology Platform Model ± ðt aims to generate value through licensing, subscription
and service fees for the technology platform. lower risk environment with lower profit
margins
Hybrid Model ± hybrid of the product and platform business models that may be
capable of generating a pipeline of products. ðt gives investors the benefits of reduced
risk and near-term revenue generation, without compromising the potential for greater
value creation.
Open Source Model ± companies that release, sell and/or support biotechnology
research tools commercially (ð(-rent approach) or use a particular research tool as a
core component of their business process or research program
esearch-based Model ± Biotech romantic like Avesthagen Technologies, committed
to basic research, can not explain revenue model
iversifying Model ± Chemical company to generic company to biological
manufacturing (effect of changing competitive environment)
Partnering Model ± bring cost effective basic science, clinical research and
manufacturing capabilities to the table.
Public Financing Model ± China, ðndia, Singapore, Germany (govts.exploit huge
market)
Virtual Model ± Companies started with express purpose of being sold, lot of
outsourcing, remain lean and nimble while keeping cash to move further
Table ë4.ë Biotechnology business models

General models Characterstics

(roduct
High risk, high reward. Requires supporting financing environment.
development
No research, Reduced risk, high reward. Dependent upon ability to acquire drug
development only leads; lack of internal R&D challenges decision making and long-
(NRDO) term growth.
Low risk, low reward. Subject to commoditization and
Reagents and tools obsolescence; success is predicated on dominating markets and
niches.
Special cases Characteristics
Reduces risk of product development, allows a company to prove
Hybrid product / technologies and generate revenues. (otentially distracting to
platform management and R&D efforts. May be used to distract investors to
failing core activities.
Effective for bootstrapping start-ups, difficult and expensive to
Virtual company
manage at later stages.
Requires charitable donations and ability to license viable
Non-profit
abandoned leads from incumbents.
Similar to NRDO. Requires ability to license and patent existing
Repositioning
drugs for new uses.
 Indian companies have taken four distinct routes to the
biotech space:

ë. Diversifying from large scale industrial activities such as

chemical manufacturing;
2. Creating startups focused on indigenous production of
first generation recombinant proteins;
3. ðnvesting profits and expertise from generic pharmaceutical
manufacturing to move into discovery;
4. Grafting biology branches onto strong ðT stems to create
bioinformatics and genomics companies.
 V. EY, AJESH JAIN,
55 FOUNE, 4 IECTO, PANACEA BIOTECH
SHANTHA
BIOTECHNIUES

VALUE: Rs 26 crore Exporting genetically engineered

products like insulin and anthrax vaccines, the Delhi-
based firm is among ðndia's fastest growing biotech
companies and is considered a one-stop shop.
KIAN MAZUMA- VALUE: Rs 725
SHAW, crore*By producing VILLOO PATEL,
5 CEO, BIOCON INIA ðndia's first genetically- 48 CEO, AVESTHAGEN SWATI PIAMAL,
engineered Hepatitis-B 47 IECTO,
GENGAINE
vaccine in his NICHOLAS PIAMAL
Hyderabad-based
laboratory, Reddy
brought down its price
from Rs 8 per dose
to Rs 4 .
VALUE: Rs 6 crore* A
VALUE: Rs 4,843 crore Set scientist-turned-
up in a garage in Bangalore entrepreneur, (atel has VALUE: Rs ë2 crore* The
in ë978, now the country's focused on innovative Mumbai-based firm is
largest biotech firm spread research and biotech involved in a range of
on an 8 -acre campus. She services in pharma and biotech services, including
is ðndi's richest woman agriculture. Her Bangalore- diagnostics, clinical trials,
today based company has 49 gene testing, lab services
patent applications. and drugs.
 Ms. Anuradha Acharya, r. Cyrus Poonawala
r. Bala S. Manian
Founder & CEO of Ocimum of Serum Institute of
He is a successful life Biosolutions India, Pune
science entrepreneur Ms. Acharya has an MS in
transcending three decades, Management ðnformation systems
who founded (and/or co- from the University of ðllinois at
founded) companies like Chicago. She also has an MS in
Quantum Dot, Surromed, (hysics from the same school. She
Entigen, Biometric ðmaging, has a Bachelors and Masters from
Lumisys, Molecular the ðndian ðnstitute of Technology at
Dynamics and Digital Optics Kharagpur. She worked as an ðT
Corp. Dr Manian holds more professional for six years, before
than 3 patents, many of founding Ocimum Biosolutions.
which have resulted in Ocimum Biosolutions is a life
successful commercial sciences R&D enabling company
products. (h.D. in Mech. with three focus areas, BioðT,
Engg. Microarrays and Research r. Krishna Ella of Bharat
Academy Award in ë999 for services. The Microarray division of Biotech International Ltd.,
advances in digital Ocimum has been recently
Hyderabad
cinematography. acquired from MWG Biotech.
These include Catalog ³OciChip´,
Custom ³OciChip´ and microarray
services.
Incentives for investment in biotechnology industry and &

ë ë per cent foreign equity investment is possible in almost all

sectors.
ë ë per cent foreign equity investment is automatic in drugs and
pharmaceuticals sector, and over 74 per cent is on case by case
basis.
ë ßast Track Clearance route for ßDð.
ë Depreciation allowance on plant and machinery set-up, based on
indigenous technology.
ë Customs duty exemption on goods imported for use in Government
funded R&D projects.
ë Customs and Excise duty exemption to recognized Scientific and
ðndustrial Research Organizations (SðROs).
ë ë25 per cent weighed tax deduction on R&D Expenditure.
ë Three-year excise duty waiver on patented products.
ë ë per cent rebate on own R&D expenditure.
ë ë25 per cent rebate if research is contracted in public funded R&D
institutions.
ë Joint R&D projects are provided with special fiscal benefits.

ß

 ›
www. techno-preneur.net and www.dbtindia.org
What can be promised at the end of this presentation is
perhaps familiarity with the language used to communicate business.

If You are stimulated its your inner drive!

and
If you become an entrepreneur its your skills!
(ë
Entrepreneurship evelopment Programme in Biotechnology by Biotech
Consortium India Ltd (BCIL
, New elhi

(rogramme will include topics on (i) Business management, (ii) business approvals,
(iii) regulatory requirements and (iv) ð(R management for Biotech enterprises, (v)
insights into the profiles of contemporary biotech projects and (vi) funding feasibilities
will be provided by experts with working experience in these areas.
(rojects to be discussed include- Biofertilizers, Biopesticides, (robiotics,
immunodiagnostics, Herbal Extracts, (lant Tissue Culture, Biofuels and Enzymes,

(2
MAINE BIOTECHNOLOGY ENTEPENEUSHIP EVELOPMENT

POGAMME by



       , Government of Gujarat
Block ëë, 9th Floor, Udyog Bhavan, Gandhinagar ± 382 ë7

(3
Center for evelopment Communication, 64, aghu Vihar, urgapura West,
Jaipur- 3 2 ë8 INIA
The organisation is working to develop & refine entrepreneurial talents among
youths. The earlier concept was training & landing by two different institutions having
no linkages. Taking both integratedly, CDC had developed its own model
(erformance Entrepreneurship Development (rogramme ((ED() this has been
accepted as a policy by SðDBð. Trainings are provided to equip the youth with latest
knowledge & information so that they can start & run their business enterprises in an
efficient manner; this integrated model keeps into account the foremost important
task of market appraisal to final monitoring & follow up.
EKTA INCUBATION CENTE - TECHNOLOGY BUSINESS INCUBATO,
(Established by West Bengal University of Technology

A ë3/ë, Salt Lake, Sector - V, Kolkata - 7 9ëJOINTLY WITH
SUBHASHEE BIOTECH
KOLKATA
TECHNOLOGY ENABLE ENTEPENEUSHIP EVELOPMENT
POGAM IN BIOTECHNOLOGY
On Plant Tissue Culture