Biotech funding squeeze drives Indian startups overseas

A growing number of Indian biotech startups working on complex therapies are increasingly looking overseas for funding and clinical trials, highlighting gaps in long-term capital and regulatory timelines at home.

Founders working on areas such as oncology vaccines and infectious diseases say domestic venture capital remains reluctant to back projects that require 7–10 years of development and carry high scientific risk. As a result, several companies are exploring overseas holding structures to access global investors, even as their research teams and operations remain based in India.

The change comes as global biotech funding remains tight into 2025. According to EY’s Biotech Beyond Borders 2025 report, overall financing fell about 10% to nearly $73 billion in 2024, with capital increasingly concentrated in fewer, later-stage deals. Early-stage funding has become harder to access, even as average deal sizes have increased.

The structural gap is particularly visible in India. India carries ~20% of the global disease burden but accounts for only ~1% of global health spending, according to a healthcare financing position paper released by Praxis Global Alliance and NATHEALTH.
At the same time, India’s bioeconomy has grown from about $10 billion in 2014 to over $195 billion in 2026 and is projected to reach nearly $300 billion, according to a report by Endiya Partners.

Government-backed programmes have expanded early-stage support. The Department of Biotechnology India and the Biotechnology Industry Research Assistance Council (BIRAC) provide grants, equity support and incubation. Programmes such as the Biotechnology Ignition Grant offer up to ₹50 lakh for proof-of-concept work, while BIRAC has supported nearly 1,000 startups and operates about 95 incubation centres. Through its fund-of-funds model, it has committed around ₹349 crore, enabling investments of over ₹1,500 crore into biotech ventures.

BIRAC has also catalysed over ₹7,000 crore in total investment and supported the development of more than 900 products, reflecting the scale of early-stage innovation support, according to the agency.

At a larger scale, the National Biopharma Mission, with a corpus of about $250 million, and a ₹2,000 crore research and innovation fund aim to support product development and manufacturing. “However, most of this support is concentrated at early stages, leaving a gap in long-duration capital required to take products through clinical development and commercialization,” said Rajesh Pherwani, Founder and CIO, Valcreate Investment Managers LLP.

India will need to nearly double health investment from about 3–4% of GDP to 6–7% to support the next phase of growth, according to a study by Bain & Company and NATHEALTH.

The gap is also visible in clinical research. Despite accounting for nearly 20% of the global disease burden, India conducts only around 1–2% of global clinical trials, according to estimates from the World Health Organization (WHO) and published global health analyses.

“India offers a unique combination of clinical depth, technical talent and cost-efficiency that allows companies to advance drug development at a fraction of global costs,” said Dr. Vedha Sampathkumar, Endiya Partners.

However, gaps in pilot-scale infrastructure, late-stage funding and translational capabilities continue to limit scaling within the country, according to the Endiya Partners report.

Regulatory timelines remain another challenge. While reforms have aimed to streamline approvals, industry participants say clinical trial clearances can still take several months, compared with significantly shorter timelines in markets such as the US and China.

“Deep science biotech requires long-duration capital, and that remains limited in India today. At the same time, clinical development especially for biologics and biosimilars is complex and often requires multi-country trials to meet global regulatory expectations. As a result, many companies are structuring themselves overseas to access both capital and execution capabilities,” said Pherwani.

As a result, some startups are choosing to run early-stage clinical trials overseas, even when the underlying science and patient base are in India.

“India has strong scientific capability and early-stage support, but the gap lies in funding late-stage clinical development and predictable regulatory timelines. That is often what pushes companies to look overseas,” said Rashmi Chaturvedi Upadhyay, founder and chief strategy officer at ProVanta Life Tech.

Industry executive say addressing the gap will require both financing and policy changes, including government-backed funds with longer investment horizons and faster, more predictable regulatory pathways.

Without such changes, experts warned, India risks losing ownership of intellectual property and value creation to global markets, even as the science and talent remain domestic.