Can an Indian biotech start-up list before it earns? The rules do not say clearly
| AUTHOR | Arindam Goswami |
| DATE | November 2, 2026 |
| CATEGORIES | High Tech Geopolitics Research and Development Biotech |
It’s widely believed that India’s listing norms don’t permit pre-revenue or pre-clinical biotechs to list. SEBI’s Chairman made the same point on 28th October, stating that the IGP and SME IPO rules are under review. Can a biotech company with no revenue list and on what basis?
Why it matters: the India Bioeconomy Report 2026 has 11855 biotech start-ups and a bioeconomy of $195.3bn. Venture funds are able to get their capital back via exits. Research across 32 countries shows that equity markets are a driver of innovation in technology intensive industries. India’s own deal record for 2022-2023 is a case in point with a fall from $938.8m to $199.6m.
What the rule actually says: Reg 6(2) permits a company to be listed without a profit if 75% of the offer is to institutions and there is no revenue test. However, no Indian biotech start-up has used it prior to making a profit. The one clinical stage developer that has been listed under the rule (SPARC) has lost approximately Rs. 1160 crore over the four years to 2024-25. It is valued at around Rs. 6400 crore and is around 70% promoter held.
What the US data shows is that of the 945 life science IPOs since 1991, 43% had zero sales (one in five until 2012, three in five after) and the odds of that were up by a factor of about six. In years with fewer total IPOs the proportion of zero sales was higher so biotech is the sector that tends to list in thin markets. First day gains were actually higher when the proportion of zero sales was higher and venture backed biotech IPOs underperformed the market by around 24% over the three year period. The median age at IPO has remained pretty much at six years regardless of the zero sales share.
China and Hong Kong. STAR’s 5th batch of standard companies included 22 drug developers of which 21 had received approvals and 16 had revenue in excess of 100m yuan. Chapter 18A in Hong Kong has 94 listings and most probably actually requires Phase I to be complete. The common design is a clinical milestone, a value floor and venture capital investors already in place.
India’s missing link. The 2019 trial rules provide for India-discovered drugs to be granted permission within 30 working days and name the foreign regulators that would be involved. The founders still go abroad to raise money and run their trials. BIRAC grants come to a maximum of Rs. 10.5 crore. Immuneel Therapeutics just raised Rs. 100 crore ($10.5 million) in a Series B round.
Six steps: (1) SEBI says Regulation 6(2) is available to issuers with no revenue; (2) Phase I completion (either Indian or under a named reference regulator) is the entry criterion; (3) Institutions will be investing prior to listing and the Deep Tech Fund of Funds under the RDI scheme can be the anchor; (4) A standard disclosure schedule will cover product stage, success assumptions, cash runway and what each use of proceeds will buy; (5) BIRAC will add a follow on tranche which is released at Phase I completion; (6) Review over 3 year windows with a minimum of 3 listings as a working target (annual counts can swing seven fold).
Why these six? Each one addresses one of the findings. The first addresses the silent text of the rule and the industry’s opposite view. The second addresses the milestone design used in China and Hong Kong. The third addresses the venture backing that you see at STAR. The fourth addresses the pricing gains in the US data and the valuation issue in SPARC’s own filing. The fifth addresses the grant cap and the fall in the number of deals. The sixth addresses the sevenfold swing in annual listings.