Financial Times
October 15, 2008
If Kiran Mazumdar Shaw had had her way, she would have been a brewer. Inspired by her father, a brewmaster at United Breweries, Ms Mazumdar Shaw qualified as a master brewer at Ballarat University in Australia at 22. Yet when she returned to India in 1975 she found she could not land a job in the country’s male-dominated brewing sector. Sexism thwarted Ms Mazumdar Shaw’s early aspirations, but it also pushed her into the uncharted territory of biotechnology.
The detour proved fortunate. Today Ms Mazumdar Shaw is chairman and managing director of Biocon, one of India’s largest biotech companies. From a start-up in a garage in Bangalore, Biocon has grown into a listed company with revenues of $260m last year and Ms Mazumdar Shaw has become a leading light among India’s home-grown entrepreneurs.
The skills required to brew beer and create industrial enzymes are not dissimilar – something that Les Auchincloss, an Irish entrepreneur, was aware of when in 1978 he met Ms Mazumdar Shaw through mutual contacts in Australia and persuaded her to work with him. The idea was to start a joint venture making enzymes cheaply in India for sale to western markets. Mr Auchincloss put up $9,000 in traveller’s cheques as seed capital for Biocon, giving him a 30 per cent stake in the Indian venture.
Ms Mazumdar Shaw devoted her energies to developing papain, an enzyme from papaya used to clarify beer. “Once I got into the business I was determined to make it work. I wanted to show all the breweries who rejected me that I could run a business,” she says.
Yet the novelty of being a female entrepreneur in India continued to cause her trouble. As a young, single woman she had great difficulty renting an office and work space. When she did at last set up an office in Bangalore, she could not persuade anyone to join Biocon. “I couldn’t find people to work for me – not even women. I couldn’t even find a secretary.”
Banks refused to lend to her, asking for a male guarantor. The third hurdle was the novelty of biotechnology. “Banks didn’t know what biotech was. People said, ‘What are enzymes? We’ve never heard of such products.'” Ms Mazumdar Shaw continued to pitch her plan to bankers, even though they turned her away. Her big breakthrough came when she met a local banker at a national bank who became interested in Biocon. “He said, ‘This is a no-brainer. You have an Irish partner and you have a business plan.'”
The bank eventually offered Ms Mazumdar Shaw a credit line of Rs500,000 (about $45,000 at the time). “They were the first bank to take a bet on me. I still bank with them,” she says. From a small facility in Bangalore, Biocon began making enzymes for the brewing industry. Then it started producing enzymes for baking, textiles, paper, biofuel, starch and fruit juices and exporting to the US and Europe.
With her strong research bent, Ms Mazumdar Shaw began developing novel enzymes and finding new applications for them. Flush with success, she decided in 1988 to scale up Biocon’s technology to create more sophisticated products. Yet she encountered another roadblock when banks turned away her requests for loans. “They said, ‘Other companies are licensing or importing technology. Why are you taking such a big risk?’ I thought this was crazy. Enzyme technology is about innovation. I was all set to scale up and I was hitting a wall. I was in the depths of despair.”
Her break came in 1989 when another banker made a bet on her. She met the chairman of what is today ICICI, India’s largest private sector bank, who had just established a venture fund. When he heard Ms Mazumdar Shaw’s plan he offered Rs750,000 for a 20 per cent stake in Biocon’s new subsidiary – an injection of capital that prepared the company for its eventual move into biopharmaceuticals.
In the same year as the ICICI investment, Mr Auchincloss sold his stake to Unilever, which went on to buy ICICI’s stake and become a 50:50 partner in Biocon. A further phase of growth followed. “Over the next 10 years we became professional and multinational,” says Ms Mazumdar Shaw. “We were no longer an amateur company.”
By 1996 Biocon had started moving towards more advanced work, establishing a pharmaceutical research outsourcing unit called Syngene that picked up work from the likes of Bristol Myers Squibb, Novartis and Merck. In 1998 Unilever sold its stake back to Biocon. Now a wholly Indian-owned entity, it began pushing into higher-margin business, making cholesterol-lowering drugs known as statins as well as creating a new unit, Clinigene, devoted to clinical research and testing for other drugmakers.
In 2004 Biocon went public in India and closed its first day of trading with a market value of $1.1bn. Today about 70 per cent of Biocon’s sales are international but the company plans to focus more on India’s own burgeoning market. India’s biotech sector produced $1.5bn in revenues in 2006 and is projected to reach $5bn in 2010.
Over Biocon’s 30-year history, Ms Mazumdar Shaw believes her gutsiest move was the foray into developing highly complex original drugs such as oral insulin and treatments for rheumatoid arthritis and cancer. She says the shift into biopharmaceuticals from enzymes was akin to “making bicycles, then getting into rockets”. In her favour, though, were the characteristics that have made India a hub for generic drugs with the potential for innovation. With the country’s vast pool of skilled scientists, local companies can develop drugs at a fraction of the cost of developed countries.
Ms Mazumdar Shaw is adamant that standards at Biocon are as good as any in the west: “This is not just about doing this cheaply,” she says. Of Biocon’s 3,000 employees, about 40 per cent have masters’ degrees and 5 per cent have PhDs. Half the workforce is devoted to research and development. And while, a decade ago, global drugmakers were skittish about doing research in India owing to uncertain intellectual property controls, Biocon’s pioneering reputation helped Ms Mazumdar Shaw forge partnerships. That stamp of approval was a big boon for an entrepreneur who fought hard to earn her business credentials.
Happily, Ms Mazumdar Shaw says that sex discrimination against her disappeared in the early 1990s once Biocon became successful. “Now I’m treated on a par with my male counterparts. The gender barrier gets obliterated once you succeed,” she says. “I tell young women not to give up. When you overcome challenges it makes you more confident.”
Not for turning: woman who squared up to a macho union culture
When Kiran Mazumdar Shaw founded Biocon in 1978 at the age of 25, plenty of obstacles stood in her way. As a young, single woman in male-dominated India, Ms Shaw could not secure bank loans, lease office space or hire employees for her pioneering biotechnology company.
Ms Mazumdar Shaw cleared those hurdles but met a greater challenge in 1984 when a restive labour union, fearful of plans to raise levels of automation, halted work. She says some sceptics doubted that a woman had the “demeanour to deal with issues they thought only men could deal with”. The strike was organised by a small group of unskilled workers.
“They started threatening you, burning effigies and warning that if you didn’t give in some dire consequences would happen,” she recalls. But Ms Mazumdar Shaw stood her ground, dealing with the unrest even though it meant shutting down Biocon for almost six months. “I said, ‘I need to automate everything and that’s what I’m going to do.’ “If you have people striking or sabotaging, you have to fight it. You have to be strong about it.”
http://www.ft.com/cms/s/0/ee65590a-9a51-11dd-bfe2-000077b07658.html#ixzz1sYrwFxqe
Amy Yee 