Can India's Drug Discovery Push Help Startups Bridge R&D Funding Gap?

India’s drug discovery funding push is drawing attention to a persistent challenge in pharmaceutical innovation: how startups can finance promising research beyond the laboratory.

Moving a potential medicine towards advanced testing requires sustained investment, scientific validation and the ability to attract institutional capital before commercial returns become visible.

The government’s latest funding round introduces a dedicated route for indigenous drug discovery, raising a crucial question about whether targeted financial support can help Indian innovators move promising research closer to development.

Where Funding Falls Short

The Department of Pharmaceuticals has invited applications for the second round of its Promotion of Research and Innovation in Pharma & MedTech (PRIP) scheme, offering eligible startups and MSMEs up to Rs 50 crore each under its new Discovery Track.

The funding targets a key challenge in drug development: financing the transition from laboratory research to advanced testing. Smaller companies often need sustained investment to validate promising discoveries before their commercial potential becomes clear.

The Discovery Track supports indigenous new chemical entities (NCEs) and new biological entities (NBEs), covering development up to advanced prototypes and animal testing. Applicants must secure at least 25% of their total project expenditure from bona fide institutional investors, making access to external capital an important eligibility requirement.

The broader PRIP scheme has an Rs 5,000 crore outlay until FY2030. This includes Rs 700 crore for Centers of Excellence at seven National Institutes of Pharmaceutical Education & Research (NIPERs) and Rs 4,200 crore to accelerate pharmaceutical and MedTech R&D investment.

Under the first call, announced on 30 September 2026, approximately Rs 1,600 crore was approved for 41 innovation projects. These are expected to attract Rs 3,020 crore in private co-funding, potentially mobilizing Rs 4,620 crore in total R&D investment.

What Happens Next?

The second round offers three funding tracks based on project maturity.

The Discovery Track provides up to Rs 50 crore for indigenous NCE and NBE programs. The Early Stage Track offers up to Rs 5 crore for laboratory research across new medicines, complex generics, biosimilars and novel medical devices. Projects costing up to Rs 1 crore can receive full government funding. For higher-cost projects, applicants must contribute half of the expenditure exceeding Rs 1 crore.

The Later Stage Track provides up to Rs 100 crore per project for eligible companies with working prototypes or early experimental data. Government support is capped at 35% of the approved project cost, with applicants funding the remaining 65%.

For startups, the appropriate track will depend on research readiness, available capital and achievable milestones. Projects extending beyond FY2030 may qualify, but funding will cover only milestones scheduled for completion within the scheme's timeframe.

Applications close on 10 November 2026. A dedicated committee will assess proposals based on project readiness, development timelines and compliance with co-funding requirements.

The scheme's impact will depend on whether grants translate into measurable research progress. By supporting different stages of development, PRIP could help eligible Indian innovators address funding gaps and attract further investment. Its long-term contribution will be reflected in the research milestones achieved and the ability of public funding to sustain pharmaceutical innovation.