Most VCs in India don’t understand high science, hence don’t invest in bioscience start-ups: Kiran Mazumdar Shaw

Kiran Mazumdar-Shaw

Kiran Mazumdar Shaw started Biocon more than four decades ago in a garage in Bengaluru, at a time when hardly anyone had heard of biotechnology as a concept. It is now India’s largest biopharma firm by revenue and the first company from the country to foray into the flourishing biosimilars market in the US.

It has sold over 2.75 billion doses of human insulin globally and has Asia's largest integrated insulin factory in Johor, Malaysia. Biocon has also completed patient dosing in the phase 4 study of its drug Itolizumab for Covid treatment. Shaw is India’s wealthiest self-made woman entrepreneur, worth around $3.7 billion. Excerpts from an exclusive interview:

As a country, where do we stand in terms of qualitative research and innovation? Do we get enough credit for the work we do in biopharma?

Indian pharma companies had a perception that they cannot develop high-quality biologics. I wanted to break that image. I was keen on developing biosimilars for European and American markets so that we build up credibility for the country and the industry, even though it’s more expensive. Many analysts and investors in India thought it’s a bad idea. They said it was too high an investment risk. But I ignored them and went about developing biosimilars. It was a matter of great pride that Biocon became the first company globally to get US FDA approval for its biosimilar Trastuzumab. I never thought I was going to be the first. Companies like Amgen and Pfizer were also developing these products. I wanted to develop high-quality, affordable biologics, and USFDA approval endorses our quality and capability.

India somehow does not recognise or give the right value for novel innovation. We just want the low-risk innovation, the “me too”, which they believe is a better business model. That’s why everyone is after generics, as it’s a low investment model with predictable returns. Why are people not investing in biosimilars? This is because they know it’s risky and expensive, with no assured predictability of returns. But we at Biocon have been bold enough to go about our purpose with confidence. That has not been appreciated by anybody in the country until we started launching biosimilars in the US and Europe. At least now, the investors have realised what we are doing is good. However, they still constantly want us to show more predictability and better returns.

You had said Biocon Biologics Ltd, the biosimilars subsidiary of Biocon Ltd, will reassess its plans to go public only after the global health situation improves. What changes do you expect to see in the world, post the pandemic?

As the COVID-19 pandemic stretches healthcare budgets, the need for affordable medicines for non-communicable diseases such as cancer and diabetes would become increasingly important. Biocon Biologics, as an integrated biosimilars player with a focus on developing therapies for chronic conditions, has the ability to make a difference to patients and healthcare systems across the world. We believe we are well placed to deliver on our core purpose of developing quality alternatives to expensive biologics and enabling affordable access to these complex therapeutics. While near-term uncertainties linked to the pandemic remain, we are confident of growing our biosimilars business in a sustained manner, on the back of our robust business fundamentals, scientific know-how, and early-mover learnings.

The Biocon Biologics IPO may happen only in 2023 or 2024, with Covid having thrown a spanner in the works. The pandemic has delayed regulatory inspections and approvals.

How important is scientific temper for the growth of an economy? India has this love-hate relationship with science. Sometimes we take two steps forward and one step back. Is that a cause for worry?

We have to leverage science and technology in a big way, that’s certain. India should not ignore the talent that it has and use it in a way that it will lead to very high-end innovation. Unfortunately, we haven’t done that. We haven’t challenged our scientific talent pool enough and do not invest in cutting-edge science. Tomorrow, if a small start-up comes up with a cutting-edge scientific idea, will there be any takers? Investors would rather invest in Swiggy or Zomato because that business is easy to understand. It’s just a small software technology that anyone can build or replicate. It’s a `fastest finger first’, kind of game.

Why are we not like Boston or the Bay Area, where venture funds are going hammer and tongs at investing in any good scientific idea? Everything may not work. Look at Moderna. The company was invested in mRNA technology for a long time. It was a technology that had to be proven. Then Covid-19 pandemic hit the world and it gave them an unexpected opportunity to develop mRNA vaccines which not only rescued them, but made them into the most valuable biotech company in the world today.

Here there is no scientific temper in investments. Whether you are investing at an academic level or at a corporate level, the scientific investment temper is what is lacking.

So, are you saying VCs are keener to back an internet-led start-up?

VCs want low-risk investments. That’s the problem. Today, they will invest in an injectibles facility. They are just like contract manufacturing organisations. That’s a low-risk, money-spinning machine. Now that everyone wants injectibles, they know that it’s a good business that will give them good results. If you want to invest in high science, you also have to take high risks. With the onset of the pandemic, whether it’s in the area of diagnostics or novel drugs or novel vaccines people are willing to invest, but not at the scale at which it’s happening in other parts of the world. The thinking is, let’s licence it from someone than develop it entirely on your own.

Do you expect to see a turnaround in this attitude?

Basically, investors need to be excited about investing in this sector. You can’t get anybody to invest in a sector that they don’t understand. I would say that the government has done its job by providing seed funds and risk capital for bioscience start-ups. The mushrooming of biosciences start-ups is happening due to the government. But if we have to scale them and not stunt their growth, venture capital (VC) funds have to do their bit. Most VCs in India do not understand high science. That’s a fact. I know that investments in high science involve high risk, but it’s a matter of understanding the subject.

In the United States, investors understand science as many of them come either from the industry or are academic scientists. They get excited about bioscience ideas because they understand them. In India, they ask what your P&L will look like in three years or how much is your business going to be worth. When someone has an exciting scientific idea and is trying to be innovative, it’s tough to predict what this technology will do in three to five years.

Also, India needs to get more girls to study STEM subjects. We need to come together to challenge the flawed societal mindset that women are less capable of understanding science. Women in science need mentors that they can identify with. So, we need to take up the challenge of preparing the next generation of women scientists.

USFDA, the American drug regulator, has approved Biocon Biologics’ Semglee as the first interchangeable biosimilar insulin glargine, to treat diabetes patients. This seems to be a game-changer as patients will gain access to high-quality medications at lower costs.

The grant of interchangeable designation to our biosimilar insulin Glargine (Semglee) by the US Food and Drug Administration (USFDA) is historic and is going to be a game-changer for the entire industry as it creates a precedent for making affordable and high-quality biosimilars available to patients. This interchangeable designation will allow pharmacy level substitution of our biosimilar Glargine for the reference product Sanofi’s Lantus without the intervention of a prescriber. The US FDA decision validates Biocon Biologics' scientific, quality, clinical and regulatory excellence. It takes longer for the companies and the regulator to bring in such a landmark change and it certainly paves the way for companies invested in this space for a long time. It will support a competitive marketplace for biological products and ultimately empower patients by helping to increase access to safe, effective, and high-quality biosimilars at a potentially lower cost.

With this interchangeable label, Semglee (Glargine) will be introduced before the end of the year in the US market. In India, we had introduced biosimilar Insulin Glargine (Basalog) in 2009. The FDA’s high standards for granting interchangeable designation to our biosimilar Glargine will renew the confidence of healthcare professionals and patients in India in the safety and effectiveness of our product. It will help address doubts in the minds of healthcare professionals in India in prescribing biosimilar products because the FDA decision has validated the high science behind our products. We hope it will expand access as our biosimilar Glargine product is more affordable than the reference product.

Significantly, there seems to be greater co-operation in the field of biopharma, between Indian and American companies. Biocon Biologics’ partnership with Adagio Therapeutics is a case in point. Can you talk us through the deal and also comment on the importance of more such collaborations?

Biocon Biologics' partnership with Adagio Therapeutics for an exclusive licence to manufacture and commercialize their novel monoclonal antibody, ADG20, in India and emerging markets will strengthen our COVID-19 portfolio. Vaccines alone will not protect and make the world safer. Biologic therapies that arrest the virus in its path of devastation are a necessity for sustainable protection and safety. With its potential to address resistant variants, including the Delta variant, and its ability to be administered easily as a single, intramuscular injection in the outpatient setting, ADG20 is uniquely poised to address the current need for an effective, safe and convenient therapy for COVID-19.

Adagio is advancing ADG20 through multiple clinical trials on a global basis and plans to seek emergency use authorization (EUA) in the US as early as the first quarter of 2022. Under the terms of the deal, Biocon Biologics will get access to the clinical and non-clinical data from Adagio’s EUA submission to the US Food and Drug Administration to seek approvals in the emerging markets. The partnership aligns with our vision of bringing superior biologic therapies to millions of patients in low and middle-income countries.

Many Indian companies are making biosimilars in India, yet Biocon seems to be the only global player from India. What gives Biocon the edge here?

Developing biologics for global markets takes patience, deep pockets and an unwavering focus. Navigating the research, development, manufacturing and regulatory pathways for these cutting-edge therapies are akin to endurance races. Many competitors dropped out of the race when faced with the gruelling obstacles of regulatory and investment risks. Biocon’s unwavering sense of purpose led it to nurture internal scientific talent and R&D infrastructure to support exciting biosimilars programs. Our internal R&D capabilities spanned the entire development continuum from clone generation, process and analytical, pre-clinical and clinical development. We were prudent to strike strategic partnerships to manage risks and bridge near-term experience gaps. Our regulatory strategies benefited from the experience of navigating an evolving regulatory landscape as agencies gained confidence in delineating abbreviated approval pathways for biosimilars.

What’s your sense of the growth of the bio-economy sector in India?

The ability of the Indian biotech sector to innovatively leverage recombinant DNA technology has led it to deliver genetically engineered agricultural crops, biopharmaceuticals, vaccines and enzymes. India can today boast of being the world’s largest vaccines producer and a leading supplier of insulins and other biosimilars.

Biosciences offer huge opportunities for India and the synchronisation of resources, plans, policies and priorities could help the country realize its aspiration of building a $150 billion bio-economy by 2025, from almost $100 billion now. In the next four years, we want to get into exponential growth and of course vaccines are helping that a lot. The contribution of India’s vaccine sector alone can have the multiplier effect of adding $10-20 billion to that. It’s not just about the vaccine itself. It’s about the ancillary industry and the total impact on the economy.

For this to happen, we will need a conducive ecosystem with the following three components: financing avenues that will allow biotech entrepreneurs to raise the requisite funds to take ideas to market; a conducive regulatory regime that improves ease of doing business, reduces transaction costs and expedites approval timelines; and a strong market that is accepting of novel products and services. All three components need to come together to create a self-perpetuating virtuous cycle. India needs to build global scale bio-manufacturing capacity.

Do you see dual standards in the way in which international community sees our products and those coming from the West?

India and Asia need to build their own reputation around reliability and quality. India is the largest vaccine producer in the world. We have been supplying the world with all the vaccines needed for child vaccination programmes. No question was asked then.  Suddenly, this Covid politics has led to debates over vaccines made in India versus vaccines made in the west. This is very unfair. The vaccine produced by Astra Zeneca and that produced by Serum Institute are the same. So why can’t they be treated on par? This is a dual standard.

Everyone said m-RNA vaccines are better than viral vector vaccines. But where’s the proof? If we need a booster shot within six months, how’s it better? So, we need to wait and assess all these vaccines in a much better way. Faster immune response doesn’t make it a better vaccine. It’s about the durability of response.