In less than a decade, Pune-based Vlife Sciences Technologies has come of age. While recording profits for the last four years and clocking revenue of 1.5 crore, the company also invested in creating intellectual property. In a short span of time, it has eight candidates in the development pipeline, with one of them in the human clinical trial stage.

The man behind the company, Mr Supreet Deshpande says that the road to success has not been without hurdles. There were issues like feasibility of the venture, consistency in the inflow of funds, putting together a core team, long gestation period for return of investments and above all the high probability of failure. “However, you need to have patience and perseverance, and you must not succumb to disappointments because those are aplenty in this business. But above all, have faith in God,� he says.

An enthusiastic tabla player, Mr Deshpande learnt to play the instrument at the age of three and has given solo performances in over 35 countries. He cites an anecdote from his childhood days that gives a glimpse of his entrepreneurial capabilities. “Once in order to get a theme right, I did riyaaz for 11 hours every day for seven days until I mastered it. Nothing in this world is difficult. If you keep trying you will overcome the obstacles. The universe is hand-in-glove with your struggle and determination,� he says.

Pursuing an idea
Mr Deshpande started his career with Bajaj Automobiles and then moved to Mahindra & Mahindra as the head of international marketing. He shifted to Pune when he was asked to join Mahindra British Telecom (now Tech Mahindra) as its business strategy head with the task of identifying other avenues of growth for the telecom business with focus on software. He says during this period, he noticed that one of the inefficient processes pertained to the drug discovery field. Mr Deshpande interacted with a group of scientists whose primary focus was to convert complex algorithms into software, which could then be applied to telecom. He understood the co-relation between businesses and information technology, and the role of the latter in preempting failure and help to save on finances. He then came up with a business case to get funding from the Mahindra-British Telecom corpus. But when they chose to focus on telecom, Mr Deshpande did not give up on his dream.

He discussed his plans with the same team of scientists who had sown the seeds of his business venture. His communication skills helped him a lot. According to his team members, he is a “brilliant communicator and possesses enormous energy to present his views�.

Dr Atul Aslekar, who is now the director of VLife Sciences Technologies, was then based out of Japan and keen to return to India. “I told him about my plans and with him came the first set of funds. We put in our savings as seed capital for our company. The total seed capital, including those from angel investors, was 2.5 crore,� he says.

In 2002, Vlife Sciences came into being with the core team comprising Mr Deshpande, Dr Aslekar and Dr Sudhir A Kulkarni, who is now vice president, discovery, of the company. The company recently appointed Ms Yogini Garud as the head of finance when they realized that the purse strings of the company needed to be handled by a different person.

The journey towards success
Like any other company, VLife rolled out its business with service-based projects that continued till 2006, as the concept of computational biology was still in its infancy in India. Prominent clientele in the initial years included Glenmark and Reliance for their polymers business. In 2006, the company received its first round of private equity funding from Kotak Private Equity Group (India Growth Fund). The team then started prototyping technology and invested the money to use this technology to create their own intellectual property for drug discovery. Since the beginning, Mr Deshpande never felt the need to depend on external sources, except for experimental studies. Today, all the tools and and intellectual property belongs to the VLife Sciences team.

In 2008, when the company had some discoveries, and software technologies were finding customers, Mr Deshpande decided to separate the discovery division into a separate company called NovaLead Pharma. Kotak was given the same percent of holdings in NovaLead as VLife Sciences. Kotak has 23 per cent stake in both the companies.

When discoveries at NovaLead reached a significant stage, the company raised more funds. Though Kotak showed interests, the company looked at other investors. “Tata Capital came on board NovaLead with a fund of 25 crore, but we took only 13 crore from them,� says Mr Deshpande. The company raised funding to the tune of 22 crore in eight years and was able to develop eight drug candidates, of which one has reached the human clinical trial stage. The company has been reporting profits for the past four years clocking revenue of 1.5 crore year-on-year by licensing technologies and servicing projects.

He believes that willingness of investors to take risk by investing in a start-up is critical. “I can never say that my investors never took risk. Mr Nitin Deshmukh of Kotak had the courage to take risk in a business like ours. Same for Tata Capital,� he says. “When Mr Deshmukh came in, our technology was just a thought. There were no such companies operating in India in this field. There were no academic institutes doing such activities in India during that time.�

Business strategy
Today, the company looks at three forms of revenue streams, namely licensing of technology, servicing for a fee and investing in developing intellectual property (at NovaLead). The innovative part here is that licensing of technology to scientists can span from one year to five years or can be as short term as a week depending on the customers' demands. “Our idea is to enhance the return of investments for the pharma and research companies. There is no point burdening a company with a technology that will become obsolete after some time,� explains Mr Deshpande.

The company has eight candidates in the pipeline. With new chemical entity (NCE) research being a high risk business, the company follows the drug re-purposing pathway, which is looking at identifying different therapeutic indications for an existing drug already approved by the USFDA. The lead candidate Galnobax for diabetic foot ulcers is entering human trial stage, while others are in different stages of validation. The idea is that by the time Galnobax passes phase I trials, other candidates will hit clinical trials.

The market size for this product is between $8-$20 billion. The global diabetic population is estimated to hit 285 million by 2025, out of which 15 percent will have foot ulcers at least once in their life time.

Human data for Galnobax would be available by December 2012 that will decide whether the company can become a billion dollar company in the next two years. The next lead candidate is an anti-wrinkle application for age-related wrinkles. “The strength of each candidate is very important and you just cannot look at one candidate,� he says.

Pillars of success
Besides the core team, Mr Deshpande attributes the success of the company to his employees. “When we set up the company, we had young talent who came on board and have now become pillars of our research and technology work,� he asserts.

To keep up the interest in research among his team members and to retain them, Mr Deshpande mooted a novel initiative by setting aside a certain sum of money for “scientific quests� that may or may not translate into revenues.

The company now has 18 people. Mr Deshpande says that he does not expect the total strength to go beyond 50, even when the company is at its peak. “Our business is not headcount-oriented but resource-oriented.�

The vision
His vision for the company is that all stakeholders should get their return. The patient should get the end-benefit, the company licensing the product should not lose money, service providers should get a fair deal, stakeholders (employees) should have confidence and a sense of ownership towards the company and investors should get a fair return on their investments.

Mr Deshpande also believes that an entrepreneur should have an open mind to question and learn from his colleagues. “Success or failure is never in our hands. But doing the work whole heartedly is in our hands. That's what makes a difference,� he concludes.

-Nayantara Som in Pune