AsianScientist (Feb. 11, 2016) – It’s safe to say that Ms. Kiran Mazumdar-Shaw knows a thing or two about growing a successful Asian biotech company. Under her guidance, Indian biopharmaceutical company Biocon Limited grew from a two-employee operation in the 1970s into a billion dollar enterprise that seeks to deliver healthcare solutions across the biopharmaceutical innovation chain.
As for Mazumdar-Shaw, even though she started out in the brewery industry, her switch into the biotech space been successful enough to see her named as one of Forbes magazine’s 100 most powerful woman in the world, and as one of the top 50 women in business by Financial Times.
The little biotech that could
“I’ve had many highlights in my journey with Biocon, starting with my success with enzymes manufacturing and my ability to transform that into a broad biopharmaceuticals business,” Mazumdar-Shaw shared with Asian Scientist Magazine.
Biocon’s first product was a plant enzyme known as papain, which is extracted from papayas and used in the fermentation of beer. Over the next few years, Biocon’s industrial enzyme portfolio grew to include enzymes for textiles, biofuels and food products.
The Indian company would eventually divest its enzymes business, but in the interim, it grew a strong pipeline of biopharmaceuticals. Mazumdar-Shaw foresaw key opportunities in the patent expirations of drugs such as lovastatin, a cholesterol-lowering drug from Merck & Co., to develop generic versions that would be more affordable.
“We need biosimilars; we need generics. Without that kind of innovation, we will not be able to bring down the cost of drugs,” she stressed. “It’s a necessary kind of innovation, the kind that drives down costs.”
That said, it was also clear to Mazumdar-Shaw that the way to tackle the many challenges of surviving in the biotech world would also require a commitment to innovation. Biocon has taken the approach of balancing “inventive innovation” targeting new drugs, remedies, therapies and other products, with the kind of innovation that gives the world biosimilars.
“Most companies that go into biosimilars tend to focus on biosimilars. But our pipeline takes a bet on both biosimilars and innovative drugs. We believe the former will deliver predictable growth, while the novel products will develop non-linear growth,” she added.
Unlocking Asia’s growth potential
“The immense growth of our biopharmaceuticals business in turn allowed us to go public in 2004, which was a personal highlight and revelation,”added Mazumdar-Shaw. “We were able to reach a one million dollar market cap on day one of our listing. It made me realise that in its first 25 years, our company had unlocked great value in India, Asia and the world.”
She recognizes, however, that many other companies have not been so fortunate. According to Mazumdar-Shaw, the major issue faced by would-be Asian biotech companies today is the lack of access to capital markets where stocks, bonds, derivatives and other investments are traded.
“Companies are unable access capital markets until they first attain a certain scale and size. This makes it difficult for biotech companies to invest in innovation.”
“In the US, even start-up companies can access capital markets,” Mazumdar-Shaw noted. “As soon as a company has a proof of concept, they’re allowed to go to the capital market, and raise their next level of financing.This allows them to quickly scale up their technology, and make it to the market.”
Innovation is gestational
Enabling access to capital markets will not be enough, however. Innovation is gestational, Mazumdar-Shaw opined, and the expectation of profit generation right after entering the capital market makes it more difficult for companies to develop and deliver on long-term strategies.
“These companies need time—say, three to four years—to advance. Of course, if a company fails, investors should exit from the stocks. Otherwise, it should suffice to ensure that a particular firm is making steady progress.”
“It’s possible that the Asian mind set is to reduce risk as much as possible,” mused Mazumdar-Shaw, when asked why investors in Asia appeared to be conservative when it came to investing in regional biotech companies.
While such a philosophy to investment is practical, it is also why there aren’t as many biotech companies in Asia able to hit the market as compared to the US, Mazumdar-Shaw explained. Which isn’t to say there any companies, she was quick to point out; there are numerous small, innovative start-ups out there.
“One is a very interesting company called Strand Life Sciences, formerly Strand Genomics,” she said. “They have a very big genomics story around their business. There’s also another company called Sea6 Energy, which is trying to get into biofuels in a big way.”
Many of these companies are eventually acquired by Western firms, she added, but Asian biotechs could be losing out by cashing out too early.
“Western companies see the value in what these Asian start-ups are doing. Unfortunately, these Asian firms end up selling out at very low value.”
Building credibility for Asia
Despite the interest from investors, the impression of the world at large is that Asia does not have such a strong track record of innovation, according to Mazumdar-Shaw. She is especially conscious of this perception as Biocon works to develop the world’s first insulin tablet, allowing patients to do away with injections.
“We are very confident that this can be done. It will be a fantastic product.”
Mazumdar-Shaw was keen to emphasize that Asia has huge innovation potential.
“Our Asian success stories—like Biocon, like Celltrion, like WuXi—should stand up and speak for themselves.”
She added that Asia is ultimately the bigger market, and thus just as important as the US or European markets.
“The world’s growth markets are here. Everybody is eyeing the Asian market; it is ours for the taking.”
This article was first published in the print version of Asian Scientist Magazine, January 2015.
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Photo: Biocon Limited.
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