• Given the demography of India, VCs need to step up their game and understand the holistic development of molecular diagnostics, keeping all levels of stakeholders involved in their studies
• The initial and follow-on capital for R&D is critical to the success of the early-stage capital-intensive phase of molecular diagnostic startups in India
• Let’s take a look at an 8X Ventures research study that helped identify the key areas where various stakeholders must collaborate to build the country's molecular diagnostics infrastructure

760,360,956 confirmed cases and 6,873,477 deaths. This is what the WHO reports on the Covid-19 pandemic. Why begin with these hard-to-count numbers? What if I told you that if we had widespread infrastructure and adoption of molecular diagnostics in place, these numbers could have been way, way smaller? And are these just numbers or real people who could not be saved?

One could argue that the pandemic is almost over, why bother now? Because history repeats itself in one form or another, and we better be prepared when it does. The next good question is, who will help set this momentum and infrastructure up? Governments, corporations, non-profits but also investors who are ready to bet their money and energy on early-stage startups are where these deep science technologies come into being.

According to Suraj Nair, Project Lead and Researcher, Deep Science Technologies at Ankur Capital, “Early detection of infectious diseases is key to ensuring appropriate treatment and safeguarding the health of individuals. Molecular diagnostics tools with very high sensitivities and specificities are best suited in this regard and are expected to see widespread adoption over the next decade.” Let’s understand it by stacking it against traditional diagnostics, which typically involve the analysis of physical or visual signs and symptoms of a disease, such as X-rays, CT scans, or blood tests that measure the levels of certain chemicals or hormones in the body.

Molecular diagnostics, on the other hand, involves the detection and analysis of specific molecules such as DNA, RNA, and proteins in order to diagnose diseases and conditions with greater precision and accuracy.

• Higher sensitivity and specificity: higher accuracy and fewer false positives and false negatives
• Early detection: can detect diseases at an early stage, even before symptoms appear
• Personalised treatment: can identify genetic mutations and other molecular markers, allowing for personalised treatment plans
• Cost, sensitivity and speed mix: More accuracy and speed do not always imply more cost

PCR has been the most widely accepted molecular diagnostics tool due to its high accuracy and ability to quantify (more than 80% of the market share goes to PCR). However, it is costly due to the need for multiple temperature cycles involved in the reaction and the need for a thermal cycler. Hence, it has found difficulties scaling up in cost-constrained markets. This opens up opportunities for isothermal amplification tests such as LAMP, which operate at single temperatures and thus can be deployed at the POC.

These tests are, however, not that accurate, so the opportunity lies in developing a highly accurate test that can be deployed at the POC and can be affordable and easy to use, especially in resource-constrained geographies. The global molecular diagnostics market was worth $9.2 Bn in 2020 and is expected to reach $23.9 Bn by 2030, with a CAGR of 9.86% from 2021 to 2030. On this side of the globe, the Indian molecular diagnostics market was valued at around $920 Mn in FY 2020 and is estimated to grow at a CAGR of approximately 10% until FY 2026. Let’s take a look at this question with respect to molecular tests for detecting tuberculosis (TB) and drug resistance, which can be used for diagnosing many other diseases as well.

The tests endorsed by the World Health Organisation (WHO) are highlighted in blue in the below figure, which includes NAATs (nucleic acid amplification tests) like LPAs (line probe assays), Xpert Ultra, LAMP (loop-mediated isothermal amplification), and Truelab. These tests are widely recognised as effective and reliable for detecting TB and drug resistance.

There are also other tests that are not yet endorsed by the WHO but are still being developed or evaluated. These are highlighted in orange.

It is important to note that some of these tests are able to provide drug sensitivity testing (DST), which can help determine which drugs will be most effective in treating the patient’s specific type of TB. Additionally, some tests, like GeneXpert (GX) and LAMP, can be used at the point of care (POC), meaning they can be used in remote or low-resource settings to quickly diagnose TB and drug resistance.

“Tuberculosis, despite being a common problem in India, had 2.6 Mn cases just last year. Despite the depth of the problem, we still rely on old techniques. Molecular diagnostics startups, like D-Nome, are poised to make this change happen” said Ajay Singh Rajput, Partner at 8X Ventures. 8X Ventures conducted research to consolidate the prime areas where different stakeholders need to play their part in building the molecular diagnostics infrastructure in the country.

• Increased Startup Activity: VC activity was comparatively lower in India when the first-generation companies such as Medgenome and Molbio Diagnostics started, hence scaling has taken time. On the other hand, new-age startups such as DNome have a comparative advantage of scaling things faster with funding support and the push from the ecosystem.
• VC Investment: Both large and small VC players have set up the precedence, and a lot of unconscious VCs will follow suit. Though they will have to catch up with the mechanics of this space — diagnostic lab developers, care staff, intermediaries, government regulators and more while providing strategic guidance to the startups.
• Customer Adoption: With widely available solutions, the customer adoption J-curve is expected to activate. This could lead to increased demand for better and cheaper technology, such as LAMP MDx, which is currently underutilised. Additionally, there is a need for improved point-of-care diagnostic infrastructure.
• Government Support: The power to develop the infrastructure and resources required for molecular diagnostics, such as laboratory facilities, a skilled workforce, and funding for research and development, lies with the government of India and its collaboration with the private sector and academic institutions.

Given the demography of India, VCs need to step up their game and understand the holistic development of molecular diagnostics, keeping all levels of stakeholders involved in their studies. The initial and follow-on capital for R&D is critical to the success of the early-stage capital-intensive phase of molecular diagnostic startups in India.