She might be the richest self-made businesswoman in India, but Kiran Mazumdar-Shaw calls herself an “accidental entrepreneur”. As she recounts how she became one, the 65-year-old chairperson and managing director of biopharmaceutical company Biocon says in characteristic plain-speak that it was the product of “gender bias”. “I call myself an accidental entrepreneur because I never intended to start a business,” she says.
Despite the accidental start, over the nearly four decades she’s been in the business, Mazumdar-Shaw has put the Indian biotechnology sector squarely on the global map. The Bengaluru-based businesswoman founded Biocon in 1978 and since then has turned the company from just a manufacturer of enzymes to India’s largest manufacturer of biopharmaceuticals targeting diseases ranging from diabetes to cancer. And that’s why she’s consistently featured in Fortune India’s Most Powerful Women in business list and ranks No. 2 in 2018.
But to get back to the beginning, after returning to India with a Master Brewer certification from Australia (she wanted to follow in her father R.I. Mazumdar’s footsteps), Mazumdar-Shaw hoped to land a job as a brewer. She was in for a rude shock when she found that most brewing companies were “condescending” towards women. Given that brewmasters work odd hours and handle blue-collar workers, most companies believed it wasn’t a job cut out for a woman.
Just as Mazumdar-Shaw was preparing to leave for Scotland to pursue her ambition, fate intervened in the form of Leslie Auchincloss, a biotech entrepreneur and promoter of Biocon Biochemcials, an Irish specialty chemicals firm. Auchincloss wanted to develop a papaya-based enzyme and was looking for an Indian partner to help him. With her experience in brewing, Mazumdar-Shaw was the perfect fit, even if she didn’t think so initially. She overcame initial apprehensions and decided to join Auchincloss as his partner and the head of Biocon in India. That was in 1978, and from an aspiring brewmaster, Mazumdar-Shaw went on to become a 25-year old woman entrepreneur with no business background and limited financial resources.
When Mazumdar-Shaw was running from pillar to post trying to secure bank funding for her fledgling venture, bankers demanded that her father stand guarantee for the loans she took. “I told them that my father had nothing to do with my business and refused to allow him to stand guarantee,” recounts Mazumdar-Shaw. “Some bankers even suggested I take loans under the SC/ ST or disabled category, to which I strongly objected.” She says one person she owes her success to is N. Vaghul, the former chairman of what was then Industrial Credit and Investment Corporation of India (ICICI), which gave Biocon the much-needed venture capital to scale up. Her gender also made it difficult for her to recruit people for Biocon in the early days. “Some even assumed I was the secretary and not the MD when they came to appear for job interviews. Finally, I got two retired tractor mechanics to be my first employees and started operations in a modest, rented factory shed.”
The beginning might have been humble, but Mazumdar-Shaw took a big leap when she became the sole owner of Biocon in India. The way it happened was Unilever bought Biocon Biochemicals from Auchincloss in 1989 and ended up with the latter’s stake in the Indian entity. Keen to run the business independently, Mazumdar-Shaw mustered up the resources to buy out Unilever. The second person she owes her success to, Mazumdar-Shaw says, is her husband John Shaw. He sold a prime piece of real estate he owned in London to mobilise funds for Mazumdar-Shaw to buy out Unilever’s stake in Biocon. The investment paid off.
Cut to 2018, and Biocon, with operating revenue of ₹4,130 crore and a net profit of ₹380 crore, is India’s largest biotech firm. It has over 3,000 employees and a manufacturing presence across India and Malaysia. It has become the first Indian company to get approvals from the U.S. Food and Drug Administration for biosimilars such as Trastuzumab (for treatment of metastatic breast cancer) and Pegfilgrastim (a chemotherapy drug). It is also among the first few companies to receive approval for Insulin Glargine from European and Australian drug regulators. Biocon is also the first Indian firm to launch a biosimilar in the U.S. market, Fulphila (another cancer drug), through its partner Mylan.
While Bengaluru-based Biocon started off as an exporter of enzymes (a division that was divested in 2007), its main growth came after it branched out into healthcare in 1999. That’s when it began making biologics, or drugs made from large molecules derived from living organisms like plants. These included insulin for diabetes and statins for cholesterol. By foraying into biologics and later into the globally lucrative market of biosimilars (generic versions of biologic drugs), Biocon became a trendsetter as most Indian pharma companies were still manufacturing low-cost generic drugs from small molecules chemically synthesised in a lab. With a few potential blockbuster drugs approved by global drug regulators and waiting to be commercialised, investors are quite bullish on Biocon. Over the last financial year ended March 31, 2018, its market capitalisation increased a staggering 62% to ₹35,600 crore. On September 3, the company’s market value had increased further to ₹37,350 crore.
But the market hasn’t always been this kind to Biocon. Investors have long preferred to invest in pharma firms making small-molecule generic drugs which provided for quick returns owing to an established business model. Biocon lagged its peers in valuation as it focussed on spending heavily on research and development, without it resulting in immediate cash flows from sales, to build the product pipeline it now boasts.
But the winds of structural change blowing across the pharma industry in India and globally work in favour of Biocon. While small-molecule generic drugs are cheap and mass-produced, they are also known to have more side effects. Biologic drugs, on the other hand, have fewer side effects and higher efficacy. The flip side is that they are expensive. But as more drugmakers across the world take up biosimilars for production and regulators like the USFDA encourage the use of these medicines, costs are expected to go down.
In 2017, biologics accounted for 11 of the top 15 drugs by value. As many large-molecule drugs go off patent, the market for biosimilars is expected to explode and reach $28 billion by 2020, from $5 billion now, spelling good business prospects for firms like Biocon. A research report by Morgan Stanley expects Biocon’s revenues from biosimilars to increase from $120 million in FY18 to $475 million by FY21.
Arun Chandavarkar, the company’s CEO and joint managing director who has worked with Mazumdar-Shaw since 1991, says that much of Biocon’s achievements are driven by her and the founding team’s core attributes, including a purpose of solving unmet needs through technology. Despite having worked together for 27 years, the two most senior executives of Biocon have their creative differences from time to time, and Chandavarkar says that is welcome as creative differences are essential for the “progress of science”. Mazumdar-Shaw is one of the few industrialists who aren’t afraid to publicly air their opinions. She has over 640,000 followers on LinkedIn and 1.43 million followers on Twitter, many of whom descended on her like a tonne of bricks when she tweeted after journalist Gauri Lankesh’s killing that Lankesh’s murder exposed the “ugly n bigoted divisive forces in our society – horrifying to see trolls justifying her killing”. She was unfazed. “I don’t believe in mincing words when it comes to political, social or economic issues that are of national relevance,”
Mazumdar-Shaw says. “On social media, I’m aware that certain statements I make might not be well accepted and lead to trolling. When I am dealing with trolls, I try to provide valid data and facts. Many are amused by the fact that I try to educate some of them.”
Even her competition recognises MazumdarShaw’s contribution. Vinita Gupta, Lupin’s chief executive officer ranked No. 19 on the Most Powerful Women list, says she is a pioneer among Indian pharma entrepreneurs. “She [Mazumdar-Shaw] got into biosimilars early and dedicated the entire company to biologics in a risk-mitigated way since investments in biosimilars is huge,” says Gupta. “Every product requires an investment of around $100 million and the commercial barriers are very high. Biocon has come a long way and what they have done is admirable.”
Mazumdar-Shaw says Biocon’s revenues so far have come mainly from medium- to low-risk businesses including research services (through its listed subsidiary Syngene), small molecule APIs (active pharma ingredients), and branded formulations. These have generated predictable earnings and enough cash to support the investment needs of higher-risk businesses like novel biologics and biosimilars, where Biocon is working with international partners such as Mylan and Sandoz.
But while initial help is welcome, MazumdarShaw believes a venture should eventually stand on its own feet. That’s why, she says, Biocon’s biologics business will have to fund itself, which will happen once cash flow from biosimilars rises. “We’ll also consider raising equity by unlocking value of our biosimilars business at an appropriate time,” Mazumdar-Shaw says. Given Biocon’s recent stock price performance, investors will be waiting for that time to come.
The story was originally published in the Oct-Dec special issue of the magazine.