India is funding biotech startups, but investors aren't coming back: Kiran Mazumdar-Shaw explains why

Biocon Executive Chairperson Kiran Mazumdar-Shaw on Monday said India had made significant progress in providing early-stage funding to biotechnology startups, but warned that a shortage of follow-on capital and limited exit opportunities for investors remained major challenges to building a strong biotech ecosystem.

Her remarks come as India seeks to move beyond its traditional strength in generic medicines and develop innovative drugs, with the government introducing several funding initiatives to support research and startups.

"India has indeed improved access to early-stage and risk capital for startups in biotech space," Mazumdar-Shaw wrote on X. "What we need now is to ensure the follow-on funding, and creating clearer exit opportunities for investors and according innovation the value it deserves."

The Biocon founder said addressing these challenges was essential to converting scientific research into commercially successful businesses. "And I think, getting these fundamentals right is key to building a strong biotech ecosystem and turning scientific discoveries into successful businesses," she said.

Why biotech startups are struggling to attract more funding

Mazumdar-Shaw had raised similar concerns on October 13 during a discussion at the Bloomberg New Economy Forum, where she spoke about India's ambitions to develop innovative medicines rather than focus primarily on generic drugs.

"India has already made a statement that it wants to move from generic drugs to innovative drugs," she said.

She pointed to government initiatives such as the Research, Development and Innovation (RDI) scheme, BioShakti and the Promotion of Research and Innovation in Pharma MedTech (PRIP) scheme as examples of efforts to support drug innovation.

According to Mazumdar-Shaw, these programmes have helped improve the availability of seed capital and early-stage risk funding for biotechnology companies.

"Government has basically committed itself to providing the early-stage capital, the risk capital, the seed capital. And I think that's going to help a lot of innovative companies and startups to start doing interesting things," she said.

However, she argued that government-backed early funding alone would not be enough to help these companies grow.

Venture capital investors need faster exits

Mazumdar-Shaw said biotech startups require additional investment from venture capital funds after their initial research and development stages. But investors remain hesitant because they lack clear opportunities to exit their investments within a reasonable period.

"What you need now is follow-on capital from venture funds. And I think for venture funds to invest in biotech, they need an exit strategy much sooner than what we are providing today," she said while speaking to reporters. "And that's why you're not seeing follow-on venture capital."