September 25, 2013 – Biswarup Gooptu, ET Bureau – NEW DELHI: Demand for quality healthcare and easier access to capital have led to the launch of many startups working in such areas as new drug development, stem cell therapy and advanced diagnostics. This has made the sector one of the most vibrant in India's entrepreneurial ecosystem.
Delhi-based Invictus Technology, which develops drugs for cancer care, is due to begin pre-clinical trials. "These platinum-based drugs will be less toxic and more effective," said Shiladitya Sengupta, 40, cofounder of the startup launched in 2011.
"We are not looking at simply treating cancer, we are looking to cure it," said Sengupta who is an assistant professor of medicine at Harvard Medical School. This is the third startup that he has cofounded after Mitra Biotech, a Bangalore-based company that develops technology for personalised cancer therapy and Vyome Biosciences, which addresses skin diseases.
Entrepreneurs like Sengupta are targeting India's $78 billion (Rs 48,984 crore) healthcare market, which is one of the most under-penetrated globally.
Startups, drawn by the huge opportunity, are turning to risk capital investors for capital. This year, venture funds have backed 10 early-stage companies with total funding of $42.8 million (Rs 268.8 cr), up from $35.9 million (Rs 225.5 cr) spread across 12 deals in 2012.
Twenty-four-year-old Zoya Brar quit her job at Google India last year to set up Core Diagnostics, along with colleague Arghya Basu, 27. The company offers high-end diagnostic services for cardiology and oncology, "In this space, it is the pipeline that matters, not revenue, when it comes to establishing valuation," said Brar whose startup has already received Rs 27 cr of seed funding from Artiman Ventures. The company is now looking to expand into endocrinology and full and partial genome sequencing services.
"There are some very innovative ideas coming out of India, but early investors need to take more risks in backing the ventures," said Amit Varma, managing partner of Quadria Capital, a healthcare-focused private equity fund.
Invictus has garnered venture capital funding in spite of not generating much cash flow. Backed by Navam Capital and Aarin Capital, the company is looking to earn revenue by licensing its product across markets by 2015.
"It's a valuation play. We want to come out with India's first blockbuster cancer drug, and if phase-I trials are successful, then the company can be valued at between $100 million (Rs 628 cr) and $150 million (Rs 942 cr)," said Sengupta. Support is also coming from large pharma companies and hospital chains.
Stempeutics Research, which offers affordable stem cell-based therapeutics for the treatment of osteoarthritis and cirrhosis of the liver, is backed by the Manipal Group which runs a network of educational institutions and hospitals in Karnataka.
The Bangalore-based venture is currently conducting Phase-II trials in India and Malaysia for three products: Stempeucel, which focuses on treating cardiovascular, orthopaedics and respiratory diseases; Stempeutron, a device used for cosmetic therapy and Stempeucare that helps in skin regeneration.
"Startups are playing a critical role but there has to be more innovation, and that requires money," said Anish Sen Majumder, chief scientific officer at Stempeutics. Pharma company Cipla also has a significant minority stake in Stempeutics.