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On The Offensive

The future lies in innovation and building businesses in chosen therapeutic categories

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In our view, the future of Indian pharma is quite promising and not bleak, as is often portrayed these days. The Indian pharmaceutical companies that have crossed over Rs 6,500 crore or $1 billion in sales in the US and are on a higher base, it will be challenging to sustain their earlier growth levels. The only possible way to survive in the present market situation, and through challenges of price control by the drug price regulator in India, and other competitive headwinds in the foreign markets, is to keep the new launch portfolio aggressive and alive.

Fortunately, price controls in India do not necessarily mean that we need to reduce our prices as long as they are within the defined limits. However, the future price increases are capped only to the extent of wholesale price index. That said, we completely understand government’s responsibility towards people, and will cooperate to increase access and affordability.

We have consciously increased our research and development expenditure. We used to spend 3-4 per cent of our sales on R&D earlier, which today stands at approximately 8 per cent. By next year, our R&D expenditure will be in the range of 8-9 per cent of our total sales, without impacting our earnings before interest, tax, depreciation and amortisation (EBITDA) margins. We will invest higher amounts in R&D by bringing efficiencies in operating costs.

The future lies in innovation and building businesses in chosen therapeutic categories. The focus of Cipla is to grow in the promising categories of oncology, respiratory, HIV, urology, cardio, anti-infectives, central nervous system, diabetes, etc. Presently, 70 per cent of the Indian inhalation market in respiratory is held by Cipla. In anti-infectives and cardiology too, we have a very strong foothold.

Now, we are in the process of building our complex generics portfolio. Today both profitability and growth are becoming a challenge in selling plain-vanilla generics. Hence, complex generics is the future of India’s drug making.

The business of generics has become a low-barrier-entry segment, where a number of new entrants are getting approvals.

India has a strong chance. While the U S Food and Drug Administration (US FDA), in the recent past, has raised multiple concerns, the customers in the US understand that the US FDA process is quite robust and it highlights genuine issues that need addressing. We are exporting to regulated countries in America, Europe and other continents, and we haven’t faced any biases that show that India’s reputation in the global arena has been dented.

That said, I agree the industry needs to innovate in technology while maintaining absolute control in data integrity and other compliance practices. The Indian pharmaceuticals industry needs to invest more in innovation and work on enhancing the quality of drugs in the pipeline.  

(As told to Himani Chandna) 

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

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magazine 22 July 2017 indian pharma pharma cipla

Kedar Upadhye

Upadhye is the global chief financial officer of Cipla

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