  We formulate a time-dependent density-matrix functional theory (TDDMFT)
approach for higher-order correlation effects like biexcitons in optical
processes in solids based on the reduced two-particle density-matrix formalism
within the normal orbital representation. A TDDMFT version of the Schr\"odinger
equation for biexcitons in terms of one- and two-body reduced density matrices
is derived, which leads to finite biexcitonic binding energies already with an
adiabatic approximation. Biexcitonic binding energies for several bulk
semiconductors are calculated using a contact biexciton model.
