The Price of Social Innovation
Kiran Mazumdar-Shaw is something of a modern business folk hero. She started her own life-sciences firm in a garage at the age of 25 on a shoestring of 10,000 Indian rupees (about US$200), at a time when the idea of a woman CEO in India was as remote as the idea of a competitor to Pfizer coming from the country. Today, her venture Biocon is a multinational publicly-listed pharmaceutical provider, based in Bangalore. The firm employs more than 5,500 people, offers more than a dozen therapies in areas from cardiology to oncology, and is hot on the trail of breakthrough oral insulin. Mazumdar-Shaw herself has been feted with just about every entrepreneurial award on the planet and is recognized as the wealthiest (self-made) woman in India.
But that’s not what this story is about. It is about what happens next. It is easy to script romantic endings for business legends. She might retire to a private island. She might fancy art or theater and create a charity with her enormous wealth. Or she might do something as surprising as creating a successful firm in the first place. Indeed – she would start again - taking what she has learned about business – taking what she has learned about wellness – and applying it to one of the most pressing social problems facing India today. The availability of health care for the 40% of the population (nearly half a billion souls) that fall below the poverty line, earning less than US$1.25 per day.
It would be easy for someone like Mazumdar-Shaw to simply throw money at the problem. With shares in Biocon currently trading around US$275, she has plenty to throw. But Mazumdar-Shaw is a self-titled “Compassionate Capitalist”, who spent the last 30 years learning that profit can be a solid foundation of impact, sustainability and progress. And so when she turned her sites to social purpose, she meant business:
“Innovation and commerce are as powerful tools for creating social progress as they are for driving technological advancement. The only difference is that when they are put to use for social progress, the implementation is a lot cheaper, a lot more people benefit, and the effect is more lasting."
Mazumdar-Shaw created two platforms to enable caring capitalism. The first was a foundation called Arogya Raksha Yojana. The name translates roughly to Health Help, and the mission is to run small rural clinics that serve a local radius of the population. The second was the Mazumdar-Shaw Cancer Center, a state-of-the-art facility in the heart of Bangalore. Each would deliver quality health care. And each would do so using a uniquely social business model.
Arogya Raksha Yojana: Micro Insurance
There is no socialized medicine in India, nor is there is health insurance provided by the government. Without those mechanisms, any significant treatment of injury or illness for a member of a poor family would mean financial ruin – or more likely – foregoing of treatment. But for 150 rupees a year (about US$1.50), an individual can buy health insurance from Arogya Raksha Yojana and secure a years’ worth of health care.
Mazumdar-Shaw Cancer Center: Social Pricing
At her high tech center in Bangalore, fixed costs are substantial, and micro insurance would not cover them. So Mazumdar-Shaw created a “subsidized convenience” pricing plan, enabling her to serve (wealthy) patients at full price between the hours of 8:00am and 5:00pm, (middle income) patients with more flexibility than money between the hours of 6:00pm and 10:00pm at half price, and offer the services of the center to the poor for free in the middle of the night.
In the process of creating healthy patients and healthy profit, Mazumdar-Shaw also shows us the path to healthy change. For her, business is not necessarily good or evil; it is merely a means that can be applied to many purposes – even many purposes at the same time. She shows us the cycle of the entrepreneur, continually creating with everything and anything available at hand. And she challenges us to improve the health and purpose of our own work.
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