CASE STUDY

KIRAN MAZUMDAR SHAW – THE SUCCESS STORY OF BIOCON INDIA

Biocon India (Biocon), the number one biotech company in Asia in terms of revenues and market capitalization, was founded in the backyard of a suburban house in Bangalore in 1978 as a small operation of enzyme extraction. The woman behind Biocon - Kiran Mazumdar Shaw (Kiran) who dreamt of starting her own business with just Rs. 10,000 in hand and a degree in brewery - is now the richest woman in India. The case study describes how Kiran recognized the future potential of biotechnology industry when not many people in India knew about it. It describes in detail the challenges faced by Kiran in terms of gathering resources when she launched her biotech start-up. It discusses how Kiran's firm determination and belief in herself helped in overcoming the various challenges she faced.

The case then examines how Kiran exploited the opportunities in the fast growing biotech industry in India and the major steps she took to grow Biocon's business. The entrepreneurship and leadership skills of Kiran are also discussed. Overall, the case focuses on 'opportunity recognition and exploitation processes,' and 'managing start-up and growth,' while highlighting the role and importance of women entrepreneurs and the problems they face when doing business in India...

If I can build a company like Biocon, anyone can… The first step was to dream however big or small…. If you have a vision, no matter how big or small, a plan, no matter if it is imperfect, but if there is passion and conviction for it, success is inevitable."

- Kiran Mazumdar Shaw, Managing Director, Biocon India Limited.

Businesswoman of the Year 2004

In November 2004, Kiran Mazumdar-Shaw (Kiran), the Chairperson and Managing Director of Biocon India Limited (Biocon) received the 'Businesswoman of the Year Award,' from 'The Economic Times of India,’ a leading Indian business daily. This award was to be given to a person who "was global in nature and would have shareholders' good uppermost in mind. The person should have followed her heart and vision relentlessly, broken all glass ceilings and pioneered the cause of women in business." It symbolized the increasing importance of the role of women in the Indian business arena. One of the most successful businesswomen in India, Kiran had received several awards during her career of over 25 years

She founded Biocon as an enzyme extraction company in a rented garage in 1978. By 2004, Biocon had emerged as the #1 biotech company in Asia, and #16 in the world in terms of revenues and market capitalization. The company made its initial offer of shares to the public in March 2004. The shareholders earned handsome returns on their investments as the stock, which was offered at Rs 315, touched a high of Rs 780 in early November 2004. Reportedly, Kiran had to break through the 'glass ceiling' effect on several occasions being a woman entrepreneur in the traditional Indian society.

She believed that Indian women can do well in business even if they don't belong to a business family or have political influence or immense wealth. Kiran believed that women in India were not meant for only certain kind of jobs like school teacher, nurse or personal secretary, or for running a small or cottage industry at the most. She considered herself a representative of the modern women who could work shoulder-to-shoulder alongside men and build mega businesses. Expressing a deep desire for equality, she said in her award acceptance speech, "I do hope that in the not-too-distant future, there will be one award for men and women alike - the Businessperson of the Year Award."

The Entrepreneur

Kiran was born and brought up in Bangalore in the state of Karnataka, India. She hailed from a middle-class family, which encouraged her to pursue higher education. Following the footsteps of her father, who was chief brewmaster in United Breweries, she went to Ballarat College in Melbourne, Australia, to specialize in Malting and Brewing Technology to become India's first woman brewmaster. Kiran came back to India in 1975 expecting to get lucrative job offers. However, she did not receive any. Though she possessed the required technical qualifications, her chosen profession was completely male-dominated one. After staying for two years as a consultant in India, Kiran went abroad and found a job in the UK.

There she met Leslie Auchincloss (Auchincloss), the owner of Biocon Biochemicals Limited, an Ireland-based company. Auchincloss was planning to start a business in India. The Irish company wanted to establish its operations in India to produce simple bio-products from indigenous raw materials. 

The Growth of Biocon

Biocon started with the manufacture and export of Papain, a plant enzyme, and Isinglass, a marine hydrocolloid, which are key products for the brewing industry. Within two years, Biocon established a steady flow of exports to Ireland. As the offtake of the company's products by Ireland grew, Biocon's manufacturing activity was shifted from the rented garage to a 20-acre site near Bangalore city in 1983. Kiran was not content with the steady growth in the product offtake by the Irish company. In 1984, she decided to recruit a team to commence research and development (R&D) in new areas of enzyme technology.

The Leader

Biocon emerged as the #1 biotech company in Asia and #16 in the world in terms of its fiscal 2003-04 revenues. For the fiscal year 2003-04, the company recorded net revenues of Rs 5018.824 mn, almost twice the previous year's figure, and a net profit of Rs 1246.726 mn. (Refer Exhibit III for the financial performance of the company). In the past 25 years, the company had evolved from a maker of enzymes to a major pharmaceutical enterprise, producing everything from insulin to antibodies. On March 11, 2004, the company launched its initial public offer (IPO) of 10 million equity shares of Rs 5 face value at a price band of Rs 270-315. With this, Biocon became the first biotech company in India to go public.

The IPO was oversubscribed by 33 times, indicating the confidence of investors in Biocon. In December 2004, Biocon's average market capitalization between April 01, 2004 and September 30, 2004 stood at Rs 54 bn.

Looking Ahead

Without resting on her past laurels, Kiran has moved onto even more challenging ventures of developing insulin and drugs that can cure cancer. With 120 mn diabetic patients worldwide and 30 mn in India, diabetes had emerged as an important area for disease research. Biocon, through its subsidiary - Clinigene, embarked on a longitudinal research program in Type II diabetes. In the later half of 2004, Biocon launched recombinant human insulin under the brand name 'Insugen.' The product pitted Biocon against leading multinationals like Eli Lilly of the US who had already lowered prices.

Questions:

1) Analyse the role of an entrepreneur and a leader in creating a start-up and transforming it into a global player and a leader in its industry.

2) Study the role of an entrepreneur in the struggle, survival and success of a company in the initial and subsequent stages in the biotech industry.

3) Analyze the leadership qualities of Kiran and identify those characteristics that contributed to the success of Biocon and made it the leading company in the biotech industry.

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