From: nikhil.kamath
Kiran Mazumdar Shaw made a strategic pivot with Biocon, moving from its foundational enzyme business to biopharmaceuticals, a decision that transformed the company’s scale and market position [01:00:53].
The Enzyme Business: Foundations and Challenges
Initially, Biocon focused on enzyme technologies, aiming to replace chemical processes with eco-friendly enzyme solutions [02:28:07]. This approach was considered “an idea ahead of its time” as it championed sustainability and green technologies long before they became mainstream concerns [02:32:04]. The company developed enzyme technologies for applications like effluent treatment and the paper and pulp industry [02:27:07].
Despite the environmental benefits, it was challenging to convince companies to adopt enzyme technologies due to their higher upfront cost compared to cheaper chemical alternatives, even though the long-term benefits of reduced waste treatment costs were clear [02:50:53].
The Strategic Pivot to Biopharmaceuticals
By 2000, Kiran Mazumdar Shaw recognized that the enzyme business, while successful, had a limited growth potential [00:53:27]. She understood the concept of a business having a “shelf life” and the need for continuous reinvention to avoid reaching a “cliff” where it’s too late to adapt [01:10:10].
The decision was made to pivot to biopharmaceuticals, a sector that promised greater scale and size [00:53:30]. This pivot involved leveraging existing enzyme technologies and fermentation knowledge to produce pharmaceutical products [00:53:40]. This strategy allowed the company to be “agnostic” about the end product of a technology, focusing instead on its potential applications [00:53:53].
In 2007, Biocon divested its enzyme business to Novozymes, its biggest competitor, to focus entirely on biopharmaceuticals [01:38:39]. This decision was a “hard decision” but allowed the enzyme business to grow five times more under new investment [01:38:47].
Growth in Biopharmaceuticals
Biopharmaceuticals are distinct from traditional pharmaceuticals as they are produced using living organisms, rather than chemical synthesis [00:54:50].
Biocon’s foray into biopharmaceuticals began with:
- Statins: The company started by making Lovastatin from fungal fermentation [00:54:24]. Today, Biocon is the largest Statin producer globally, holding a 50% market share of Statin APIs (Active Pharmaceutical Ingredients) [00:55:57]. In the U.S. market, Biocon holds a 40% market share in Atorvastatin and Rosuvastatin [00:56:53].
- Immunosuppressants: Biocon also developed fermentation-based immunosuppressants like Tacrolimus, Everolimus, and Sirolimus, used by transplant patients to prevent organ rejection [00:57:30]. The company has a 50% dominance in the raw material and finished product for these globally [00:58:07].
- Insulin: Recognizing India’s position as an “epicenter of diabetes” and the reliance on expensive imported animal insulins, Biocon initiated its insulin program in 2000 [00:58:39]. In 2004, Biocon launched India’s first recombinant human insulin, dramatically lowering prices and forcing competitor brands to follow suit, eventually phasing out animal insulins [01:00:17].
Impact and Future Vision
The pivot to biopharmaceuticals was a pivotal moment, leading to Biocon’s IPO in 2004 [01:01:53]. This move propelled Kiran Mazumdar Shaw into the limelight as “India’s richest self-made woman” [01:04:54].
Biocon Biologics, a subsidiary, is now positioned to become the number one biosimilars company globally, driven by a broad portfolio and deep research pipeline [01:43:57]. The company recently completed a 100 billion of biologic drugs coming off patent in the next decade [01:44:22].
Kiran Mazumdar Shaw emphasizes the importance of differentiation and taking “bigger risks” as an entrepreneur to lead the way and future-proof a business [01:07:05]. This forward-thinking approach allowed Biocon to invest in high-risk areas like biosimilars, building a competitive advantage that would be difficult for others to replicate without significantly impacting their financial performance [01:07:36].