Companies you didn't know were bootstrapped—part 2: the pharma juggernaut

This is part two of a series about bootstrapped companies. Click here to read part one.

What led a family with zero experience in a particular industry to build a business empire in it? And how did it grow large enough for the founder to make the claim, "we reach more children than Coca-Cola and PepsiCo can ever hope to"? It all started with a coincidental conversation with a veterinarian.

Origins

The Poonawalla family had its roots in horse racing and breeding, owning 70 acres of stud farms. As the young Cyrus Poonawalla came of age, besides expanding the farms, he wanted to start a venture that would allow him to branch out of the family business. First he considered high-end racing cars as a potential venture but decided he wanted to create something for the masses instead. It was his connection with horses that eventually served as a gateway to the world of vaccines for the Poonawallas. Retired horses used to be procured from the stables by the government-run Haffkine Institute, for the production of vaccines. However, despite vaccines being produced there, mass production for the country's needs was not possible, and the government had to rely on imports. It struck Cyrus then that they could get into the production of vaccines themselves.

From farm to pharma

In 1966, Cyrus and his brother, Zavary, set up the Serum Institute of India. The brothers raised $12,000 in capital for the venture by selling the one thing they had plenty of—you guessed it, horses. They made up for their lack of expertise in the field of vaccines with an investment in talent acquisition. They hired three doctors directly from the Haffkine Institute, who are now board members of the company.

Today, SII is the largest manufacturer of vaccines in the world by number of doses produced and sold. It's a name most Indians are familiar with today, since the pandemic created a massive demand for COVID-19 vaccines. What has helped the Poonawallas grow despite entering a field they had no knowledge of? Having a vision linked to the well-being and health of millions of people, especially children, gave them a clarifying purpose. The company now works with international bodies such as UNICEF to export vaccines to 150+ countries.

Freedom and vision

Being bootstrapped gives the Poonawallas freedom and flexibility in their decision-making. Cyrus once stated there was no need for the organization to scale up further unless his son was "capable of running the companies." However, Adar Poonawalla has proved his mettle and is now CEO of SII, and has helped it navigate some truly turbulent times.

Despite this generational handover, the financial freedom that comes with bootstrapping and the focus on growth through self-generated capital remains important to the Poonawallas. In an Economic Times article, Adar states “When you’re spending other people’s money, you do a whole lot of things that often go wrong. When it’s your own money, you have to think things through. Your strategy is limited but clear.”

Financial freedom has allowed the company to scale up the organization's resources without it hinging on the opinions of investors or shareholders. It is this mindset and freedom that allowed them to double their capacities to meet twice the demand for vaccines, back in 2014. In Adar Poonawalla's words, "Our manufacturing facilities are the best in the world. Everything we do is world-class."

The fact that SII has zero debt, in conjunction with the power of their extremely low overhead (one of the lowest among their peers), means that they're able to quote the lowest prices to international bodies purchasing vaccines and still turn profits. What does that mean? It means that from SII to bodies like UNICEF to the children and adults who are in need of vaccines across the world, everybody wins.

We hope you enjoyed reading about the Serum Institute of India and their growth journey. In the next part of this series, we'll discuss another bootstrapped business that rose to the top by disrupting its industry.