“Celebrate wealth creators,” says Kiran Mazumdar-Shaw

Few people who have dominated rich lists for years can make you feel that they may be doing the best work of their lives right now. Kiran Mazumdar-Shaw is one. In the four decades that it has taken her to shape Biocon into India’s premier biopharma company, with potential to be a world leader in biosimilars, she has become a veritable supernova of entrepreneurial energy that startups look up to. At 66, she continues to be scheduled down to the last second, speaking on the conference circuit, meeting the media, industry bodies and the Government, serving on several company boards and listening to disruptive pitches. Her own company has just made a disruptive move, slashing the retail price of its recombinant human insulin by 50 per cent in low and middle-income countries—to 10 cents for a daily dose of 40 units per patient—to improve access to the life-saving drug. Mazumdar-Shaw is clear that she wants to leave a mark on the entire spectrum of healthcare—from prevention and diagnostics to cancer care and state-of-the-art therapies. Ten years after she built the 1,400-bed Mazumdar-Shaw Cancer Centre in Bengaluru, she is now collaborating with oncologist Siddhartha Mukherjee to bring cell therapy to India and using philanthropic capital to do so.

Since she took her company public in 2004, Mazumdar-Shaw has been giving away chunks of her wealth to fund novel efforts to solve the problems of the developing world. Only the second Indian, after Azim Premji, to take the Giving Pledge in 2016, she has since committed two-thirds of her wealth—she has a net worth of $2.5 billion—to philanthropy. Equally, she has shaped public discourse on corporate taxation, public health, governance and civic accountability. In a conversation with Open, she talks about wealth and value creation in India and why the man in the street who is opprobrious of the rich is wrong. Edited excerpts:

As a self-made billionaire, what has shaped your idea of wealth?

I equate wealth to value creation. Having built a company, I know that wealth is the value of your effort. No entrepreneur understands at first the full potential of their venture. When I set out to build Biocon with Rs 10,000 in the bank, I did not think I could create a multibillion-dollar business, or the multiplier effect that the wealth I create could have. The Eureka moment came when we went public and became a billion-dollar company on the first day of listing. It was then that it struck me: Wow, this is the value of what we have created! I had no inkling that this was the worth of the business. To me, that is wealth creation.

You have pledged 75 per cent of your wealth to philanthropy. What drives you to give away your wealth and what is it that makes the ultra-rich in India hold on to much of theirs?

Because I am a first-generation entrepreneur, I have never believed in hoarding wealth, and my view of what I do with my wealth is very different. In the West, people are more philanthropic because there is a tax angle to it. It is human psyche that makes people think, I don’t have control over the part of my wealth that is taken away by tax and if I can avoid that, then I can utilise the wealth in my own way. I am part of the Giving Pledge, and I know that with Bill Gates and Warren Buffett and anyone who is a major philanthropist, what made them so was certainly that if they didn’t turn philanthropic, a large part of their wealth would be taken away in taxes. In India, that logic doesn’t apply. There is no incentive to be philanthropic. In my case, though, the reason is not tax-based. I believe that knowledge and wealth have to be shared with society as an important stakeholder.

You occupy a special spot on the Indian socio-economic landscape, where you are creating jobs and contributing to economic growth on the one hand and ensuring better access to affordable healthcare on the other. What goals do you set for yourself on this journey?

I am inclined to investing my time and money in looking at healthcare delivery models for India. I just announced that Biocon would make insulin available at 10 cents a day (assuming a dose of 40 IU per day) to patients in low and middle-income countries. I have done some health economics around the burden of diabetes—by diabetes, I don’t mean glucose management but the number of co-morbidities that it comes with, such as retinopathy, neuropathy, renal disease, lower limb amputation and cardiovascular complications. The combined burden of this metabolic disease runs into a trillion dollars for the US. In India, the burden of dialysis alone is $2 billion—and we do it at such low costs. I have been saying that if you make insulin available at 10 cents a day, it is the best way of managing diabetes and preventing co-morbidities. We constantly prescribe patients a stack of oral pills and the cost of the pills adds up to Rs 50 a day. You cannot manage diabetes with just a metformin tablet, which itself costs Rs 10. These days, you add a DPP4 inhibitor or an SGLT2 inhibitor to the regime. Each of these costs Rs 30-40. So you are actually multiplying the cost of the basic insulin that is required by five times, just because people don’t want to take insulin through the needle.

I am very excited about Ayushman Bharat. If we shape it in the right way, it can become an effective model. The focus should be on primary healthcare, not final-stage disease management at the hospital. Yes, families are thrown into poverty because of hospitalisation costs, but you have to try to prevent them from landing up in hospital in the first place. Early diagnosis at primary healthcare centres is key. We have set up several digital centres that channel innovation in diagnostics, and this is an exciting model with a lot of promise.

I am trying to get Ayushman Bharat to draw up models where they incentivise patients to take care of themselves and to get routine checks. Give them wellness points. If they come every six months, they will get points that could translate to a topup on the Rs 5 lakh insurance—which they may never need to use. Suppose you tell a diabetic, I am going to give you wellness points based on how you control your weight, your sugar levels, your HBA1C, you can actually nudge them into good behaviour. Your whole healthcare paradigm can change. These are the sort of things that I am willing to back, invest in and run pilots for. The Government needs to use philanthropy to do gamechanging things, instead of saying adopt one hospital or insure 10 patients. I want my philanthropy to be used as a catalyst for change—as risk capital to catalyse exciting ideas, like digital PHCs, new insurance instruments and new educational methodology, into something real.

“I want my philanthropy to be used as a catalyst for change—as risk capital to catalyse exciting ideas, like digital PHCs, new insurance instruments, and new educational methodology—into something real”

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You are using venture philanthropy to bring CAR-T cell therapy to India.

I want to use my money as a currency to make a difference. On the one hand, I went the traditional way and built the Mazumdar-Shaw Cancer Centre, but I am also experimenting with new ideas. Cell therapy is expensive but India is a huge opportunity because it is a hospital service. Our clinical and nursing costs are very low, so we just need to focus on optimising the processing costs. Immuneel, a company I have set up with oncologist Siddhartha Mukherjee, employs a new model. It will work through my philanthropic capital and that of many others (totalling $15 million). When I discussed it with Bill Gates, he said it would be great to see how it works and that he would love to adopt it for some of his healthcare efforts.

What other social experiments are you investing in?

I am investing in setting up a museum of contemporary art in Bangalore. To me, urban spaces are very important. To those who ask ‘Is this necessary? Do we really need a museum of contemporary art? Is it not too elitist?’ I say that our artists need spaces where they can be recognised. We need to nurture creative talent. When there are no longer any conventional jobs available, these are the kind of jobs that will survive.

I have invested in Krea University (a new liberal arts and science institution in Sricity, Andhra Pradesh, whose governing council includes Raghuram Rajan, Anand Mahindra and Manjul Bhargava) because I believe we need to create new thinking and learning institutions. We have a large number of institutions in India but a lot of them have got stifled and set in the way they educate young people. Today the world is changing so rapidly that if we don’t adopt design thinking-led learning approaches, we will be at a big disadvantage. Because of the people behind Krea, I thought I should put my money into this bold experiment.

“Today, in India, anyone who is a wealth creator, no matter how legitimately they have prospered, is a dirty person. You have a Swiss bank account, you are a dirty person. Why have we become such a mistrustful society?”

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How do you envision India becoming a $5-trillion economy?

The math is easy to do. In fact, the southern states are already a $1-trillion economy and we can easily double in the next five years. I am convinced that entrepreneurship is the only way India can attain its economic goals. The problem, I think, is that we have bound ourselves into small, incremental ways of thinking. We have not thought about exponential growth opportunities that are staring us in the face. Let me give you an example. Immuneel is a startup and in order to even get the business going, the number of formalities I have to go through is ridiculous. I have to give a 10-year business plan, get a valuation report and, based on that, create a capitalisation table, fill in some forms and get all the investors to sign off before I can do anything with the money. After all this, I pay angel tax if my company is deemed to have received equity infusion in excess of the fair valuation. They have now exempted startups that have raised Rs 25 crore or less but what is the logic behind exempting foreign investors while viewing local investors with suspicion?

This sense of suspicion about wealth creators and equating their wealth to illicit money is very sad, you know. Today, in India, anyone who is a wealth creator, no matter how legitimately they have prospered, is a dirty person. You have a Swiss bank account, you are a dirty person. Why have we become such a mistrustful society? There is an unfortunate notion that people in business have stolen taxpayers’ money to create wealth and that all of us have prospered because of the largesse of the system. You keep referring to me as a rich woman but how come you are not looking at the way I built the company? What you should draw inspiration from is that people like us have created wealth from nothing. The narrative India needs to build is that this is a land of opportunities. Celebrate your wealth creators. And it is happening in some sectors. There is excitement and respect for young startups that have made it.

Are you saying that India does not value genuine wealth creators?

The Modi Government has started putting fright into fraudsters by saying that if you are going to try and dupe the system, you are going to pay a hefty price. That is all they need to do to keep malpractices in check but equally, they must untie the hands of the genuine wealth creator. There needs to be more trust in the system. We should incentivise sectors that can bode well for India—physical and digital infrastructure, for instance. The Government has finally allowed CSR money to be used for research and innovation, but shouldn’t they allow it in urban development too? Are we not a country that is urbanising?

We have created absurd corporate laws. We do not permit ESOPs to be extended to independent directors citing conflict of interest. On the one hand, we want there to be alignment of interest, so wouldn’t it make sense to vest the board member in the company? What is happening as a result is that a lot of us are taking companies overseas so that we get a good board to which we can give ESOPs. Startups, especially those that are innovation-led, need a really good board but they are not willing to come to India because you are not giving them stock. I think the babus who have written company law regard everything as a conflict and that is a wrong attitude to adopt when you are a country with big dreams.

You were one of the few captains of industry to criticise Finance Minister Nirmala Sitharaman’s maiden Budget.

If she had said then all that she is saying now, it would have been a dream Budget. But she went about it in such a badly advised way that she made all the wrong statements, she spooked the markets, spooked businesses and then she had to retract everything. The market would have never taken a beating, people would have never taken money out of the markets had the Government addressed the emotive issues around the economy by creating a good perception. They should not have announced the rich tax and the tax on share buybacks, or put a Rs 400-crore revenue ceiling for the revised corporate tax rate of 25 per cent. In fact, I wrote Nirmala a long letter and I am grateful that many of the points I made have been addressed in the latest set of measures announced by the Government.

“Behind closed doors, everyone tells me, Kiran, you are so bold, you can make all these statements and still walk free. I don’t understand—I have not said anything that is tantamount to sedition”

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How far do you think the confidence-building measures announced by the Finance Minister will go in reviving the economy?

The measures are not enough. If you really want to incentivise manufacturing, you should impose a flat tax rate of 15 per cent—and even lower for export-oriented companies. Why extend the special rate only to prospective manufacturers? I have been like a stuck record on corporate tax and GST. The notion that a service or a product for the affluent needs to be under a differential GST slab than others is skewed. On a TV show with Arun Jaitley, I had said that GST is a major reform but that by making it multi-tiered, the Government had shot itself in the foot. Someone asked Jaitley about it and he said, “Kiranji jaise ameer log ye samajh nahi sakte hain ki kya cycle aur Mercedes gaadi ko ek hi rate lagana chahiye? (Can’t rich people like Kiran understand whether a cycle and a Mercedes car should fall under the same rate?) He asked a very simplistic question. To a person riding a bicycle, it would sound right—why should he pay the same GST as someone who buys a Mercedes? But of course, the GST on a cycle might be Rs 200. On a Mercedes, it could be Rs 20 lakh.

There is a trust deficit between India Inc and the Government. They should be on the same page. The UPA Government considered India Inc a partner in terms of scripting industrial policies and tax policy. CII, ASSOCHAM, FICCI and NASSCOM were very much a part of the consultative process and they were entrenched in the Government’s thinking. I am not saying the UPA got everything right—far from it. It encouraged crony capitalism where some companies took advantage of their closeness to the Government, and one cannot condone that. Having said that, the balance has tilted the other way today. Since the Modi Government took over, India Inc is not even allowed to comment and to give them advice. You can see it—from how the captains of industry are silent today. There is a need for the Government to reach out to them and tell them, you are our partner. It is slowly happening now. Nirmala Sitharaman is reaching out to industry bodies, which was not happening in the past, and there is some dialogue taking place.

The death of Café Coffee Day founder VG Siddhartha shook the business community. When you started talking about the anxieties plaguing India Inc, you and Mohandas Pai reportedly got calls from Government officials asking you not to. What drives you to continue to speak up?

To be clear, the call was from a friend who said, ‘You and Mohan talk too much, you will get into trouble.’ I said, ‘Come on, what kind of a country are we living in if we cannot express constructive criticism?’ Behind closed doors, everyone tells me, Kiran, you are so bold, you can make all these statements and still walk free. I don’t understand—I have not said anything that is tantamount to sedition. I was just as critical of the UPA and no one threatened me. Why am I getting this friendly advice now? I honestly believe that this Government will learn from criticism.

When you started out 40 years ago, you had trouble raising funds. Now that access to finance is once again limited given the tight credit situation, what is your advice to entrepreneurs looking to fund business plans?

There are many channels of raising finance that most prospective entrepreneurs don’t really bother with. There are HNIs who can invest. There is crowdsourcing. Go to a company which might support you because your idea fits into what they are doing. Or approach wealth managers. In the end, it is about better storytelling. If you believe in your idea, you can find someone to back it.

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