Kiran Mazumdar-Shaw: Beer, brewing and biotech

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1:52Welcome to Good, Bad, Billionaire from the BBC World Service. Every episode, we pick a billionaire and find out how they made their money. And then we judge them. Are they good, bad or just another billionaire? I'm Simon Jack, the BBC's business editor. And I'm Zeng Singh. I'm a journalist, author and podcaster. Our billionaire this episode is India's first self-made female billionaire. You may not have heard of her, but you probably have at some point interacted with the things she's had a hand in making because she is very big in biotech. Yeah, Kiran Mazumdar-Shaw has made her money from a company called Biocon, which is India's biggest biopharmaceutical company.

2:30So she makes her money in the lucrative industry of medicine. And it's a fascinating story because Biocon actually started off extracting enzymes from the fruit of the papaya tree. And enzymes are a big part of the story we'll explain later. Right now, however, the company is Asia's biggest insulin producer. The company has filed over 1 ,700 patents globally, nearly 900 of which have been granted. And in 2010, she was named among Time magazine's 100 most influential people in the world. But while she's now a biotech billionaire, she started out trying to brew beer. Yes, and it's a very interesting story because if you like a pint of beer, maybe you could become a billionaire.

3:12Who knows? Yeah, because enzymes are very important in that. And I thought I knew what an enzyme was, but I just thought I'd check. And they're basically things which aid chemical processes like digestion, going to the loo, getting drunk. Fermenting beer. Fermenting beer and all sorts of other types of chemicals. She trained to become a master beer brewer, was unable to get a job in brewing because of gender bias in India. And that's why she calls herself an accidental entrepreneur. In fact, she says, if there hadn't been a gender bias in 1978, I would never have started Biocon, the company which made her fortune.

3:46But she may very well have brewed her own beer. She may well have done. So let's go all the way back to the beginning from zero to a million.

3:59Kiran Mazumdar, as was then, was born in 1953 in Bangalore, now Bengaluru, in South India. She had a middle class upbringing and described her childhood as very charmed. Yeah, Bengaluru is now famed as India's Silicon Valley, but it was for a long time the science capital of India. Yeah, Kiran has said that, you know, they had the famous Indian Institute of Science, the National Aeronautical Laboratory. There was a science museum, which we used to frequent quite a lot. So as kids, we grew up loving science. So it sounds like a very smart, intelligent, educated family. Yeah, and her father was sort of a scientist.

4:34He was the head brewmaster at United Breweries. That means he was in charge of a brewery at India's largest beer company and they brewed for other people like Heineken and Amstel and other big brands. Her family actually lived in the staff compound at the brewery and she says that her and her two younger brothers used to play hide and seek in the cellars and she always loved the aroma of brewing. Yes, it's a very strange, I don't know if you've ever been to a brewery, it's a kind of really heady sort of syrupy sweet. It's a sort of wheaty, right? Wheat, exactly so. Anyway, while she was... Huffing the beer aromas.

5:08Yes, while she was inhaling the beer aromas, she went to a private high school and then to Bangalore University. She'd really wanted to go to medical school, but she actually failed the scholarship test. So she ended up studying biology and zoology, which she thought was the next best thing. In fact, she applied for medical school after graduating from university, but was again rejected, luckily, as it turns out. because this is when her dad's influence really comes to the forefront. I really like the background here because her father was, she says, a man way ahead of his times, liberated, and he really believed he needed to bring up his sons and his daughter in the same way.

5:46Pretty unusual for India in the 1960s. That's right. So Kieran credits her father for her whole attitude to society and life in general. Not to forget about her mother. She says her mother was also very supportive, but that she did confess secretly, quote, that she would have liked me to be a bit more traditional, but your father wouldn't let it be that way. Even so, when her father suggests that she follows in his footsteps and studies fermentation science, become a brewmaster like him, she herself, Kieran, is a bit worried about being a woman in that field. I think she knows the reality of the situation then.

6:17Yeah, she does indeed. But her father actually ends up convincing her that brewing is the oldest form of biotechnology known to man. and that she should look at it as a science. I mean, this is maybe the best justification I've ever heard for going to the pub. It's actually science, guys. It's science, darling, yes, yeah. So in 1974, at the age of 21, she goes to a college in Melbourne, Australia, to study malting and brewing. Of course, Australia, no stranger to beer. No, they certainly are not. And this is actually where her dad sent many of his young brewers. And at first she was kind of worried about what she'd learned there, but she became fascinated by the science of brewing beer.

6:56She says, I found the whole fermentation science very exciting. I was very proud then to become a brewmaster. But guess what? Kieran was the only woman on her brewing course. So this was a pretty defining time for her. She says of her male fellow students, for a couple of months they came with a patronising attitude but I think very soon they realised I was pretty competent. I mean, she was more than competent. She actually graduated top of the class and also she learnt to drink with the boys. It's a very important skill. So she returned to India, top of the world, self-assured, independent, competitive.

7:29But that's when she comes back down to earth with a bump. Let's hear her take up the story talking to Rahul Thandon of the BBC World Service in 2022. You know, I was in for a rude shock when I got back because I couldn't get a job. What would people say to you when you went for a job? What sort of comments did you get in those days? All of them said, look, you're very well qualified and we'd love to hire you. But, you know, it's very tough for us to have a woman in our leadership team in a brewery because I don't think it would be acceptable. This would have been in the 1970s, at the time when India had had a female prime minister in Indira Gandhi running the country.

8:10But it didn't extend to making alcohol. No, it didn't extend to the business world, unfortunately. Fascinating. So she is trying every brewer in India. But as you heard there, she was told it's a man's job. She's high risk. Fellow workers, unions won't accept her as a member of the brewmaster fraternity. And I think this is quite unusual for a lot of our billionaires because she actually at this point sort of gives up on her dream. She kind of realises she can't change India's attitude to women by herself and she can't succeed alone. And she actually pivots. She does get some consulting work in the brewing industry.

8:48After two years, she becomes disillusioned. It's not going anywhere. She gives up that dream of being a brewmaster in India, but she doesn't give up the dream of becoming a brewmaster altogether and looks to Europe. So she figures the gender bias there won't be as severe. And she is right. She gets a job in Scotland. But before she's even moved to Scotland, she meets the guy who's going to change her life. Yeah, an Irish entrepreneur called Les Orkinclos, the founder of something called Biocon Biochemicals of Cork, Ireland. So his company produces enzymes used in brewing, food packaging, textiles, and Les wants to set up an Indian business so he can source a very specific enzyme used to tenderise meat that's extracted from papaya, which is, of course, widely cultivated in India.

9:35A specific enzyme to tenderise meat extracted from papaya, that is niche. It is very niche. But you know what? It's not unheard of. I think you can use lots of things to tenderise meat, but I've never heard of papaya. But he can't set up a business by himself because Indian law doesn't allow foreign businesses to operate in the country without local partners owning a big chunk of the business. And we've actually discussed this before in our episode on Narayana Murthy, who's the founder of Infosys and also the father-in-law of former UK Prime Minister Rishi Sunak. Yeah, basically the Indian government at that time was very protectionist.

10:10it requires foreign companies to have Indian partners who have at least 70 % ownership of the company. So through mutual contacts in Australia, Les had heard of Kiran. So he arranges this urgent meeting with her when he's in India. And they meet for breakfast because Kiran is in a rush to catch a train. Don't forget, she's got that job in Scotland waiting. Yeah, and Les is so impressed by her that he asked Kiran to be his Indian partner and to run the business. He said she was so focused and had such a forceful personality. I think you can tell a bit of that from that clip we'd played. that I knew she could hold her own.

10:42Initially, Kiran turns him down. She says, I'm the last person you should ask because she has no business experience. I've got no money to invest. Plus, she knows how hard it is to be a woman in business in India, first hand. But Les convinces her, you know, after all, she's always wanted to stay in India. Here was her chance. And they make a deal that Les will guarantee her another brewmaster job, exactly like the one she ends up giving up in Scotland, if things haven't worked out after the first six months. Okay, so here we go. Kiran starts the business with Les, putting in all her life savings.

11:13That's about 10 ,000 rupees. That would be in about$1 ,000 back in 1978. And in exchange, she gets 70 % of the company. And instead of going to Scotland, she ends up going to Ireland for six months of training at Biocon in Cork. And then once she's back in India, Les pretty much leaves her to it. So she writes a mission statement, gets the permits that she needs, and Biocon India is born. But she's also, as you can probably tell, short of money. So like a lot of our entrepreneurs, like Bill Gates, Jeff Bezos, she starts the business in a garage. And this one is in her rented home in Bangalore.

11:50So she's back in Bangalore. She again has pretty much the same problem she had in brewing, sexism. Yeah, it's nearly impossible to find anybody to work for her because she's a woman. And she gets lots of applicants. But she says it's a big problem when they just turned up and they were greeted by some woman in a garage. Yeah. So she said even female applicants would assume that she was the secretary, announced, I'm sorry, I've got a meeting with the managing director. Yes. And then she said she sought 40 candidates before she found two retired car mechanics who would agree to work for her. Yeah.

12:23Her next big struggle was financing the business. She needed to get some credit, someone to lend her some money. She said, I was only 25 years old. The banks felt I was a girl trying to run a business which nobody understood. She describes herself as being high risk in every sense of the word. And at the time as well, there's no culture of risk-taking venture capitalism in India. They're still pretty protectionist at this time. Yeah, but Kiran finally finds a backer following another chance meeting at a friend's wedding. He's a banker and like Les, he's super impressed by her. So he agrees to buy an equity stake, an ownership stake in the company.

12:57Yeah, it's so interesting how Kiran's story is kind of marked by these big pivotal meetings. Yeah, we've had so many of those in our billionaire stories, haven't we? There's sliding doors moments. If that meeting hadn't happened, if Michael Jordan's mum hadn't said to him, go and see what Nike have to say. Yeah, it makes you really worry about all the emails you're missing in your inbox. People asking to meet for a coffee. Who knows? That might be the person who makes you a billionaire. It makes me think that I've missed a chance breakfast meeting which could have propelled me to great riches myself.

13:24It hasn't happened yet. In the enzyme industry, who knows? Anyway, she gets some credit. she can properly get the company moving. She built her first factory, which is a 3 ,000 square foot shed near the garage. And they expand beyond enzymes from papayas into an enzyme called isonglass, which is used to clarify beer. It's made from tropical catfish. That's so great. I thought that the other one was niche, but tropical catfish enzymes. Anyway, Biocon begins growing microbes in these big, large vats under precise temperatures and pressures, which is a bit like brewing. It really is. And it's actually familiar to Kieran.

13:58But she said it was a big setback when I realised the scaling up assumptions I had used did not work. So making enzymes for food and production can be quite different from making enzymes for beer. But she persevered. Her backer was understanding. And within a year, Biocon India is manufacturing enzymes to export to the US and Europe. It was the first Indian company to do that. And that early success means Kiran is able to buy a property. Now, it's going cheap because it's the only place on a rural road in the middle of nowhere. No facilities, not even a phone line. So she has to drive for miles to every meeting.

14:32But there is a lot of space, 20 acres. And that's important because she says, I never imagined Biocon would be so big when I started out, but I did dream of at least building this campus to its full capacity, which is why I bought 20 acres. I knew I could do something useful with 20 acres. That's a very, very large dose of foresight, isn't it? Yeah, for sure. So through the 1980s, Biocon does well. But she started a science business in a country with some limitations at the time. You know, there's poor infrastructure, unreliable power, the water isn't that clean, labs aren't that sterile. There's a lack of research equipment and a limited number of trained workers.

15:09But she perseveres. She invests in research and development. And they pioneer some new techniques for cultivating these enzymes. And they kind of collide with a really interesting time in Indian history because the government regulation of businesses starts loosening up. So venture capitalism is becoming more common. Yeah, I think that probably a lot of that is to do with the burgeoning tech industry, which is beginning to happen in Bangalore. They're beginning to see these partnerships, which we've talked about before. Infosys, for example, was partnering in the US. So India was seen as actually a really valuable reserve of talent and technological ability.

15:46So suddenly it wasn't such a weird thing having partnerships with other people. So really, she's riding that kind of backdrop in political and economic development. Exactly. So in 1987, Biocon gets a quarter of a million US dollar investment from an investment bank and Kiran builds a new plant. But then in 1989, two years later, Les, the Irish businessman who was her first partner, exits the picture. He actually sells his whole company to Unilever. Yeah, Unilever are a massive multinational company. They make all sorts of things from sort of toothpaste, washing powder, you name it. but they buy Biocon of Ireland and end up with a stake in Biocon India, kind of by accident.

16:27Yeah, you've bought this huge shopping bag and now you're just looking at all the things you've bought. What's in it? But they soon realise, to their credit, that the Indian company is actually really valuable because of the technology it's developed. So they decide they want to increase their stake, which Indian law now allows. So they attempt to buy out the investment bank that gave the initial money, but the bank is well aware of how much this company is worth and instead they quadruple their investment. So Kieran says initially she had no idea that this IP she created, intellectual property, that it was worth so much, but now it's starting to make her very rich.

17:00And she's already becoming known as a very significant businesswoman in India. She's recognised by the government, which awards her something called the Padma Shri, which is a sort of civilian honour in Indian society, given to people who make exceptional contributions to the nation's progress. It's a bit like an MBE or an OBE. here in the UK, the Légion d 'honneur, for example, in France, that kind of stuff. So in the 90s, Kieran plans to make an even bigger move. She wants to expand from enzymes into medicines, which, you know, isn't actually that far off from each other. She realises that enzymes alone won't fulfil these ambitious plans to scale up that business and fill up that 20 acre compound.

17:38And medicine is a massive marketplace. I mean, the world medicine market is worth trillions of dollars. and actually India is becoming quite a big player in this. So she sets up this subsidiary company which focuses purely on research and development but then her ambitions are about to get stifled by an unwanted partner. Yeah, we've spoken before, I think it was the episode on Jim Ratcliffe, the guy who owns Ineos, is now a big owner of Manchester United, how big multinationals were selling off various bits and pieces of their company in the 1990s. Now he took advantage, bought up lots of divisions, bundled them all up.

18:13You can listen back to our feed on that episode if you haven't already. But this trend affects Biocon too, because Unilever decides to sell its specialty chemicals division, which includes Biocon, to another big multinational. There's a bit of horse trading going on here. Yeah, so that multinational has no interest in drug research whatsoever. And Kiran is desperate to avoid this partnership. Luckily, a partner she very much does want is about to save her. So in the 90s, Kieran has become close to a Scotsman working in India named John Shaw. Now you'll recognise the last name. You know what's about to happen.

18:47Yeah, they've been spending a lot of time together. Kieran said they shared interests in art and golf. Classic billionaire hobbies, although she's not a billionaire at this point, don't forget. They only realise they are in love when John's company decides to return him to Europe. So they try a long distance relationship for a while, but apparently miss each other just too much. So in 1998, John returns to India. They get married and she becomes Kiran Mazunda Shaw. Their wedding mixed Hindu and Christian traditions. And she says her family accepted him completely, which is not that surprising given what we know about the family and what her dad was like.

19:21Exactly. I think it's really sweet, actually. It's a very sweet story. Clearly a meeting of equals. John comes to the rescue to save Biocon from the buyout from Unilever by another big multinational. And there's a clause in Kiran's contract with Unilever, which gives her the first option to buy the company. So John raises the$2 million necessary to stop the sale and buys the stake in Biocon India for Kiran, as she jokingly refers to this as her dowry. So John leaves his job as chairman of a fabric manufacturer and joins Biocon. And the exact size of Unilever's stake in Biocon is unclear. But we can say for sure that her stake in Biocon was definitely worth more than$2 million.

20:01So by 1999, Kieran is a millionaire. OK, but how does she go from a million, which is, you know, millionaire is a turn of penny, to a billion, which is a much, much bigger number?

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