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India's budget windfall for biotech entrepreneurs

In the 2016–17 budget announced February 29, the Department of Biotechnology (DBT) took the lion's share of the spoils with a 12% increase over the last year, whereas most science agencies received just enough to cover costs from rising inflation (currently at 5%). The overall Rs.18.2 billion ($271 million) is modest by industry standards, but the focus on applied research is timely. 'Startup fever' is sweeping the country after the government's January launch of a Rs.100 billion ($1.49 billion) initiative to promote entrepreneurship in various sectors including biotech. Arumugam Muruganandam, managing director CSO and founder of Affigenix Biosolutions in Bengaluru (Bangalore) says, “The good news is that we are seeing many academic scientists thinking of becoming entrepreneurs.”

The gates of India's Parliament House in New Delhi. Credit: © Xinhua / Alamy Stock Photo

Within DBT's budget, a separate division dedicated to 'industrial and entrepreneurship development' received Rs.2,200 million ($32.7 million). Its emphasis on public-private partnerships signals that DBT's support for industry has jumped significantly following the 'Start-up India' program launched by Prime Minister Narendra Modi in January.

Incentives for startups contained in the recent budgets, such as tax-free status for three years and accelerated patent registrations, will foster the growth of 2,000 new companies in four to five years, says DBT secretary Krishnaswamy VijayRaghavan. “I am very, very optimistic,” he says, about achieving DBT's recently announced goal of turning India into a “world class bio-manufacturing hub” and its biotech sector into a $100-billion industry by 2025.

The optimism may not be misplaced. The four-year-old Biotechnology Industry Research Assistance Council (BIRAC)–set up by DBT to promote industry-academia partnerships, has so far funded around 400 projects with 300 companies. “Around 20 products have matured and my assessment is that roughly 15% of the total projects will succeed commercially,” says Govindarajan Padmanabhan, who chairs BIRAC technical committees.

Not all industry leaders are so positive. “This budget for DBT is really too small,” says Villoo Patell, founder of Avesthagen, a biotech company in Bengaluru. “To convert early science into product takes time and requires real soft funding.” But for Raja Mugasimangalam, CEO of Genotypic Technology, also in Bengaluru, “shifting the focus from basic to applied research should bring more money into industries indirectly.”

Funding will not be an obstacle, insists DBT's VijayRaghavan, who hopes to supplement the budget with money from other sources including a joint corpus created with national and global equity funds. Much of the translational research will be done under the aegis of the health, agriculture and energy ministries, each with its own budget, thus freeing DBT's own for risky and basic research, he says.

Even as the government is encouraging a homegrown biotech industry, Indian companies are also investing globally, especially in the US. According to reports, pharma companies headquartered in India invested $1.5 billion to acquire 31 US firms since 2010. This trend may have resulted from the US Food and Drug Administration's heightened scrutiny of facilities in India, which may have failed to meet the necessary standards. Setting up in the US will allow Indian manufacturers to increase their share of the market for generic drugs.

Funding apart, to make any real impact on the industry, “the government should clarify its policies and reform intellectual property laws,” says Arvind Kapur, CEO of the biotech firm Rasi Seeds in Coimbatore, Tamil Nadu. “The recent decision to cut the prices of Bt cotton seeds, and slash royalty fees by 70% have shaken the confidence of the innovation sector,” he says.

DBT's pampering of industrial research and increasing by 13% the allocation to its own institutes (DBT has 15 of them) has left the academic community in the cold. “Clearly, the message is to push DBT towards applied and industrial orientation, which is not bad per se,” says Nandula Raghuram, dean of the biotech school at Indraprastha University in New Delhi. “But the 8.6% cut in extramural funding will severely impact university research projects, and manpower development.”

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Jayaraman, K. India's budget windfall for biotech entrepreneurs. Nat Biotechnol 34, 367 (2016). https://doi.org/10.1038/nbt0416-367

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