Biocon founder Kiran Mazumdar-Shaw on how API supply chain can shift from China to India

Kiran Mazumdar-Shaw, Founder and Executive Chairperson of Biocon, is one of India’s most well-known entrepreneurs. She has managed to do things with a lot of common sense, a lot of determination, and a lot of ‘foolish courage’. Mazumdar-Shaw sat down for an exclusive chat as part of the Business Today PODS with Sanjeev Krishan, Chairperson of PwC in India, and Siddharth Zarabi, Editor, Business Today. Edited excerpts: Siddharth Zarabi: What was that instance of foolish courage that you deployed to get where you are today? Kiran Mazumdar-Shaw: I started Biocon on a rebound. Why do I say a rebound? Because I came back to India thinking I’m going to pursue a brewing career. And when none of the breweries would offer me a job, I decided to create my own job. And the job I chose was quite daunting in the 1970s, to try and be a pioneer in biotech, which is very capital intensive, and which at that time was a huge risk because nobody understood biotech. I started Biocon in defiance to prove people wrong. Sanjeev Krishan: You’re going to be completing 50 years as an organisation soon. How have you managed to take the team together? KMS: Quite a large number of people, especially in R&amp;D and manufacturing, have been with the organisation for over 25 years. That culture is very important because we have a can-do culture. Remember, a biotech company from India trying to compete globally was a big challenge. What we’ve also done over the years is to get a lot of good talent joining our company from outside. Especially during this global transition we’ve had a large number of very good people join us from different parts of the world. SZ: Your company employs a lot of young talent. How do you inculcate some good practices in the younger generation? KMS: I think there is a big difference between the youth of yesteryear and the youth of today. In many ways, people’s aspirations are very different today than it was 40-45 years ago. I also believe that people are not ready to stay in a job for too long. I think they all want to basically drop out, which wasn’t the case when I started Biocon because jobs were not that easy to find. People would join Biocon with the belief that they would retire here. SZ: But as an employer, are you okay with people wanting womb-to-tomb jobs? KMS: You need to strike a balance because you really need to have people with fresh ideas, you don’t want people who have been doing things in a set way. What succeeded in the past may not succeed in the future. Today’s business environment is totally different. You need to be agile, responsive, and you don’t have the luxury of time. There’s so much technology hitting you every day, what part of that technology should you adopt, how fast should you adopt new technologies, and how do you become more efficient? SZ: What qualities would you look for in a youngster applying to join your company? KMS: I always tell my colleagues that when you’re hiring for any position, please assess the potential of a woman and the experience of a man, because men are automatic choices since they come with experience. If it’s a woman, she doesn’t have that kind of experience, but she could be very bright. How do you make sure that you assess potential? Most people can answer technical questions, but then you have to have a gut feel to know who a problem solver is, who has got the ability to think on their feet, who is going to be resourceful, who is going to really think about the business differently. Even when I interview people, I don’t ask them technical questions, I want to understand how they think about situations, how they think about solving problems. SZ: Are you still looking for acquisitions of the kind you made? KMS: Right now, I’m trying to make sure that the integration and transition is seamless. To make such a big acquisition is not easy. Viatris was the front-facing partner, it was a known brand, but Biocon was not because we were doing the research and manufacturing. We were doing a lot of the heavy lifting. But the value of the business was largely attributable to Viatris. So, we were only getting 30% of the value of the total business for doing a lot of the heavy lifting and I think Viatris was really getting 70% of the value for front-ending. But there came a time when Viatris themselves came to me saying maybe it’s time to cull-out the biosimilars business from our general business and create a JV and if you can park all your assets into that JV and we will park all the commercial assets, then maybe we have a 50-50 joint venture. I’ve never believed in joint ventures. I’ve always believed in creating my own business, my own name. SZ: Why is that? KMS: I believe that creating value as a single entity is much greater than having a JV where neither of them really get the true value of the brand. So, I just felt that I would rather buy them out than to get into a JV. SK: What’s been the challenge in integration and getting people in the time of artificial intelligence (AI)? KMS: Let me answer that in two ways: one is that fortunately there were no overlapping functions between our two organisations, we were very good at research and development (R&amp;D) and manufacturing, and they were very good at commercialising products. To that extent, the integration was much easier than two entities merging their businesses and where you have a lot of replication of functions. But having said that, we were a largely India-centric workforce and then we had to bolt on a very global workforce. That is where we had to do a lot of thoughtful integration. We really focused on the human resources aspect of the integration. One of the big mistakes Indian companies have made when they’ve gone global, I think, is to send Indians to try and integrate the businesses overseas. We didn’t do that. We had people locate in those areas to help us integrate people into our business. So, we basically have three or four hubs in our global business. For anybody in India, or anywhere in the world, to enter the global biosimilars space, your starting cheque size is a billion doSK: How do you see the impact of regulation on business? KMS: The best example is our research services business, which is Syngene. Its biggest competitor is a Chinese company. The Chinese have done a very good job of embedding themselves in a lot of the biotech start-ups and big pharma in terms of being their preferred CDMO. We have not done such a great job because we kept positioning ourselves as a value arbitrage or a cost arbitrage. We lost out… and by the time we woke up to the fact that it shouldn’t just be a cost arbitrage, it needs to be an integrated drug development play, we had to play catch-up. Today, thanks to the Biosecure Act [passed in the US that seeks to restrict biotech imports from China], we are seeing a lot of people coming to us saying, ‘Let’s give you some pilots. If you do it well, then you’ll get more business from us because we do need to de-risk our Chinese operations.’ SZ: There’s a PLI scheme across sectors. What more would needs to be done? KMS: The key starting material and APIs for which we rely a lot on China can easily be made in India. But we need to have economies of scale. I believe the PLI scheme needs to focus on that aspect. You need to incentivise companies in terms of their capital needs. The PLI scheme only provides you a benefit after you make the product. You need to have economies of scale if you’re serious about competing with China. SZ: Sanjeev, is there a lesson for Indian policy in this regard, especially for the pharmaceuticals sector? SK: I think the focus on R&amp;D in the US has been outstanding. Look at what China is doing to make itself almost green indispensable. And, I think the third point, is that for many years we thought that big was bad. But I think big is no longer bad, particularly if you want to compete on the global stage. There is a huge amount of capital the government has been spending, but we need to encourage more private capital to come in to support this, particularly in this industry. KMS: I want to add to that the reason you only have one big biosimilars company out of India is the same reason we took that big gamble on investing in creating a global scale biosimilars company, which meant we had to spend over a billion dollars. We’ve spent $2 billion over the last 10 years building our biosimilars business. And then I’ve invested another $3 billion in acquiring the business from my partners. So, for anybody in India, or anywhere in the world for that matter, to enter the global biosimilars space, your starting cheque size is a billion dollars. How many people are willing to invest that kind of money and wait for another six or seven years before they can get any payback? SZ: What are the new trends that are going to sort of make a fundamental difference in the years ahead? KMS: If you look at diabetes or diabesity as I call it now. I think it’s taking a very different kind of dimension. It’s interesting that even in biosimilars, we are a very differentiated company because we’re the only company developing biosimilar insulins. We are today the third largest insulin producer in the world after Novo Nordisk and Eli Lilly. I think we would be the only company in the world with a combination of insulins and GLP ones. @Szarabi

Biocon founder Kiran Mazumdar-Shaw on how API supply chain can shift from China to India

Kiran Mazumdar-Shaw, Founder and Executive Chairperson of Biocon, on catching up with China, the right recruitment policies, and more.