Sunrise At Sunset Point
To win the battle of perception, the Indian pharma industry should focus on capital allocation choices and capability building.
The Indian pharma model has depended on a few fundamentals. It capitalised on a strong domestic base in India through rapid product introductions, the Hindu rate of price increases, a large army of medical representatives and a benign regulatory and IP system. Indian pharma companies chose pockets in Africa, Asia, Middle East servings as natural expansion outposts. They leveraged India’s formulation expertise to address the world’s largest generics market, US, fully exploiting the advantages that US offered.
All that is changing.
The industry faces a battle of perceptions. Despite being the supplier of over a third of the world’s requirement of medicine, and with over 20,000 companies competing in the domestic market, there is still a perception that the Indian patient is paying high prices for drugs. The remedy: more drugs under price control.
The trade channels in this industry take nearly a third of the retail price a patient pays. This share of the patient price may be one the highest in the world. With 5-7 lakh chemists and stockists, the distribution channels remain fragmented, and the cost of distribution reflects this. The remedy: a higher cap on these margins.
Indian medicines are identified by ‘brand names’. The doctor uses the brand name to identify the drugs he is choosing for his prescription. Under the belief that all drugs with the same ingredients are identical, we may move to an era where doctors prescribe the generic names of the medicines, and it will be left to the chemist and the patient to choose the company whose drug she wishes to use. But are similar drugs from various companies identical? They should be — by law – but they aren’t. Inspectors and analysts who work with national and state regulatory agencies, follow the same law, only in theory. Their implementation varies from office to office, state to state. Unless the drug regulatory laws are implemented in an identical fashion across every state and city of the nation, any doctor by prescribing a generic drug is putting his reputation at risk, as he is at the mercy of the choices that an ill-trained chemist and patient might make.
Indeed, the national regulator has a formidable task at hand–to engage, re-skill and train several lakhs of employees across the country and bring them to a common skill level and then hold them accountable to one common national standard. Who will fund the increased drug policing costs? If they come back to the industry, in some way, they might result in price hikes.
What happens to the several thousand companies? Will they be able to cope with these changes? One estimate is that not more than 500 companies will survive this.
The industry employs 7-8 lakh, medical representatives. What is their fate, if the industry turns generic? Are they going to become an extinct species? The reps, through the years, toiled hard, to be the knowledge interface between the doctor and the industry. Will their role change if the nature of the industry changes? Quite possibly: digital technology and social platforms are providing myriad ways of reaching doctors. What shape will the human touch take in this era?
Many companies, use multi-brand marketing strategies to cover the vast expanse of the Indian terrain, for the same drug. At the most simplistic level, a company could have two brands of a given drug — one for the hospital sector, the other for the retail sector. Over time, in pockets, it may have led to some distortions of pricing and trade margins. Very often, these are manufactured at contract sites. The contract manufacturing industry, in India, serves a useful purpose to provide bridge capacity, especially for those focused on high volume exports from their own plants. “One brand, at one site” could jeopardise a sub-sector that employs a few lakhs and turns over probably Rs 20,000 crore.
Such ‘remedies’ are some of the sweeping changes suggested in the Draft Pharmaceutical Policy 2017. If implemented, while quality and affordability will improve, the policy will unwittingly strike at the core of the business model of the industry and will disrupt it in fundamental ways.
The US market — the largest generic market in the world and where Indian drugs fill three to four out of 10 prescriptions – is seeing three big trends. Channel consolidation has led to 90 percent of the buying power concentration in three big companies. The FDA along with increased scrutiny has been approving the backlog of drugs aggressively, leading to hyper-competition. This double whammy is causing the prices in the base business to fall by high single-digit to low double-digit rates. Buyers have tightened the screws and are increasingly vigilant on even legitimate price increases.
The combined effect has wiped out nearly 40 percent of the core industry’s market cap in the last few months. A whopping value destruction of over five lakh crore.
So what should the industry look out for?
Three simple things: innovation, calibrated diversification, and consolidation or ICDC in short.
The industry needs to diversify the geography risk beyond US and India, invest in innovation beyond traditional generics and acquire more global scale. Aurobindo is doing just that. In contrarian style, it is going to Europe, when others have recalibrated their ambitions there.
India does not need more than 500 companies to have a reasonably competitive market. The rest must perish or be acquired. Of the dozen or so large and mid-sized companies, some should merge and acquire global scale. Two Ahmedabad-based companies are reportedly in discussion to do just that. Some more will surely follow suit.
Those with scale must invest in innovation – US specialty, global bio-similar, science-validated NCEs and digital. Zydus Cadilla is invested in a diversified portfolio — vaccines, animal health, bio-similars – beyond core generics. Dr Reddy’s, Cipla, Sun, Lupin, Glenmark, Biocon are exploring these themes. Success would depend on capital allocation choices, capability building and ring-fencing for focus. Investing community must probe the latter two – to be more informed.
This article originally appeared in Business Standard.
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Humane Approach To Health Care
It’s been a week of accolades for scientist and chairman of Cipla, Dr Yusuf K Hamied, who received the Indore Management Association Lifetime Achievement Award for 2018 last Friday. “It was attended by 5,000 management students and 1,000 business executives, and was really quite impressive,”he said, when we spoke.
The Cambridge-educated Cathedral-schooled Hamied celebrated for his philanthropy especially in Africa, where his decision to sell AIDS medicines at a highly-subsidised cost has saved millions of lives, as expected, made a strong case for a humane approach to healthcare.
“The right to live should not be contingent on the ability to treat. We need to provide essential, affordable drugs to safeguard a stable and healthy environment, not only in India, but wherever needed in the emerging world,” he’d said in his address.
“Of the seven billion people living on our planet, 6.2 billion live in the emerging and developing world. Healthcare is guaranteed to only 10% of the world’s population. One in three do not have access to even basic medicines. In Asia and Africa, this goes up to 50%.” Shifting his gaze specifically to India, Dr Hamied, son of the late nationalist KA Hamied (a close associate of the Mahatma), said, “We now require another national objective, a dream in which every Indian citizen can have a decent quality of life. As the educated elite of our country, all of us should pledge our fullest cooperation and support to fulfil this task of prioritising healthcare. We must be accountable to our future generations. They must not look back and accuse us for not doing what our conscience demands.”
Unsurprisingly, his big picture humanitarian approach has won him many an admirer, and no surprises then that almost immediately after his IMA recognition, Dr Hamied, who divides his time between Europe and India, picked up his second lifetime achievement award of the week yesterday, this time from a business newspaper. Slated to be in the country till mid-March, it is safe to assume there will be at least a couple more before the high-flying Padma Bhushan recipient flies out.
This article originally appeared in Hindustantimes.com
Of Patents and Patients
Pharmaceutical giant Cipla’s archive is worth emulating for all legacy companies. This diarist toured it last week and was surprised to see the effort gone into chronicling the company’s eight-decade-long journey.
A visitors’ book from 1939, signed by both Mahatma Gandhi and Sardar Vallabhbhai Patel; a 1939 photograph of a Cipla-monogrammed van, against the Great Pyramid of Giza; a photograph from August 15, 1947, with founder Khwaja Abdul Hamied and Dr Yusuf Khwaja Hamied, current non-executive chairman, as a child, celebrating with the staff.
There are also letters, telegrams, brochures, photographs of the labs, catalogues, tins that contained Calcima ACD (calcium tablets), an inhaler from 1993, and paraphernalia from Dr Yusuf’s world-famous HIV/AIDS offer of providing medicines for less than a dollar a day in 2001: all of these have been pieced together from different sources.
MK Hamied, non-executive vice-chairman and Dr Yusuf’s brother, tells us,
“A few years ago, several factors such as the generational change in promoter leadership, new emerging business trends, the changing Indian and international pharmaceutical scenarios, etc, prompted introspection. The general desire in the promoter family was to ensure that Cipla’s rich legacy was not lost. Cipla’s story is in many ways the story of Indian pharma. Work on building the Cipla Archives repository and accumulating material, starting with oral histories, commenced in 2015.”
Samina Vaziralli, executive vice-chairperson and MK’s daughter, says,
“For me, as a third-generation Ciplaite, the Cipla Archives is the custodian and record-keeper of the rich past, present and future of Cipla. It serves as a daily reminder of the might of our legacy and the need to watch against resting on past laurels, and as motivation to keep moving onwards and upwards. In the current business atmosphere, I believe corporate archives provide that extra competitive edge. [They] demonstrate pride in the company’s legacy, but also prove that we treat our legacy with the seriousness and sense of responsibility it deserves.”
This article originally appeared in mid-day.com
In Remote Villages, Surprising New Measures Save Children With Malaria
Malaria quickly kills toddlers. But rapid diagnostic tests, a new suppository drug and bicycle ambulances can buy enough time to get stricken children to hospitals.
During malaria season, children who live in remote villages are at tremendous risk. When parasites transmitted by mosquitoes swarm into the brain, the disease can kill within 24 hours.
Often parents do not realize quickly enough how close a toddler is to death. More than 90 percent of malaria deaths are in children under five years old.
Now, after 13 years of effort, a set of stopgap measures to keep youngsters alive long enough to get them to a clinic has been developed. Initial testing suggests the measures can dramatically cut death rates; in one pilot project in Zambia, they dropped by 96 percent.
The most important new element is artesunate delivered as a soft rectal suppository. Artesunate is the drug that hospitals inject into children in mortal danger from malaria infections of the brain. The new version comes in a form that can be given by a village health worker or even a parent.
Rectal administration gets the drug into the blood quickly and avoids the possibility that the child will vomit up the medication. Ideally, each two-dose box kills enough parasites to buy six to 12 more hours for a child to reach higher-level care.
The World Health Organization endorsed the idea of artesunate suppositories in 2005, but it was not until February that a version finally won full W.H.O. approval. It is made by Cipla, the Indian pharmaceutical company that in 2001 became the first to make inexpensive generic H.I.V. drugs for Africa.
A second artesunate suppository, by another Indian company, Strides, was approved in June.
Other advances that help save children with malaria include rapid diagnostic tests, training local health workers to recognize the disease and a fleet of bicycle ambulances.
The test gives a diagnosis in minutes with only a finger-prick drop of blood.
The ambulances are metal carts about six feet long and four feet wide that can be made in a local welding shop and attached to most bicycles. A mother and child can ride flat or sitting, and the cart can navigate dirt tracks too narrow for cars.
The multipronged program was tested during the 2017-2018 malaria season in a Zambian district where villages could be up to 10 miles over dirt tracks from any formal medical care.
It dramatically cut child mortality rates, and in April the Bill and Melinda Gates Foundation released a video describing the program’s success.
An analysis released in August calculated that deaths were 96 percent lower than they would have been without the combination of suppositories, ambulances, test kits and extra training.
(The comparison was imperfect, because the 2017-2018 season in the analysis appears to have been more severe than the previous season, and local clinics were well prepared in advance. Still, only three children died, which was far fewer than local health officials had seen before.)
The pilot project was supported by the Medicines for Malaria Venture, a partnership founded in 1999 to pursue new malaria drugs, and Transaid, a British charity that works to improve transportation in poor countries.
Donald G. McNeil Jr. is a science reporter covering epidemics and diseases of the world’s poor. He joined The Times in 1976, and has reported from 60 countries.
This article originally appeared in The New York Times
A first in Morocco: CIPLA MAROC opens an inhaler manufacturing plant in the Rabat region for an investment of 60 MDH
Inaugurated by MM. Anas Doukali and MM. Moulay Hafid Elalamy, the plant will produce 1.5 million metered-dose inhalers annually
Rabat, Morocco, October 13, 2018: Cipla Maroc, subsidiary of the leading global pharmaceutical company Cipla Ltd, today announced the official opening of its manufacturing plant for metered-dose inhalers in Ain Aouda in the Rabat region.
A total of 60 million dirhams have been invested in this project. This is the first time that an industrial unit of this kind has opened in the Country.
The ceremony took place in the presence of Mr. Anas Doukkali, Minister of Health, Dr. Y.K. Hamied – Non Executive Chairman of Cipla, Mr Niravkumar B Sutariya, Second Secretary, Embassy of India in Morocco, Mr. Christos Kartalis – Executive Vice President- Emerging Markets and Europe of Cipla, Mr. Ali Sedrati – General Manager of Pharmaceutical Institute & Mr. Ayman Cheikh Lahlou – General Manager of Cooper Pharma, as well as representatives of local authorities and the national pharmaceutical industry.
Spread over a total area of 4,000 square meters, the Cipla Maroc plant offers an annual production capacity of 1.5 million HFA metered-dose inhalers. Around fifteen references will be manufactured on the site, and eleven will be distributed for the first time in Morocco.
The Cipla Maroc industrial unit is built as per the guidelines of the World Health Organization (WHO), as well as European and American regulatory authorities. The facility received regulatory approval from the General Secretary of Govt on 18th of June 2018.
“We are proud of this addition to our manufacturing footprint, a first for the region. With this, we not only strengthen our manufacturing, but also ties between Morocco and Cipla. This factory will leverage Cipla’s well known expertise and experience in the respiratory inhalation segment to help patients in Morocco and the neighbouring regions in keeping with our purpose of Caring for life.”
Christos Kartalis – Executive Vice President- Emerging Markets and Europe of Cipla Said
“Cipla, Phi and Cooper have made a smart distinctive investment in Morocco in the inhaler technology that is a first for the country and region. This would allow to reduce significantly our imports of this technology and it would improve our value added product’s offer for the exports markets”
Mr. Ali Sedrati – General Manager of Pharmaceutical Institute & Mr. Ayman Cheikh Lahlou – General Manager of Cooper Pharma added:
About Cipla Maroc:
Founded in 2015, Cipla Maroc is a joint-venture between the Cipla Ltd, headquartered in Mumbai (India), and its Moroccan partners Pharmaceutical Institute and Cooper Pharma It focuses on the production and marketing of pharmaceutical products of the highest quality.
About Pharmaceutical Institute
Establised in 1988, The Pharmaceutical Institute (PHI) is a national laboratory with Multinational standards. It manufactures its own range of generic medicines especially for chronic diseases and cancers in a concern for universal access with the best quality price/ratio.
About Cooper Pharma
Cooper Pharma has been established in Morocco sin 1933. Its products portfolio cover most of the key therapeutic classes through branded generics, in-licensed innovative products and OTC. The geographical reach covers Morocco, North Africa, West Africa, East Africa, GCC countries and Eastern Europe through a network of 8 manufacturing plants operated on its own or through JVs. Cooper Pharma has been approved in 2008 by the European authorities, in 2011 by the Saudi FDA and by several other health authorities”.
About Cipla Ltd:
Established in 1935, Cipla is a global pharmaceutical company focused on agile and sustainable growth, complex generics, and deepening portfolio in our home markets of India, South Africa, North America, and key regulated and emerging markets. Our strengths in the respiratory, anti-retroviral, urology, cardiology and CNS segments are well-known. Our 44 manufacturing sites around the world produce 50+ dosage forms and 1,500+ products using cutting-edge technology platforms to cater to our 80+ markets. Cipla is ranked 3rd largest in pharma in India (IQVIA MAT Mar’18), 4th largest in the pharma private market in South Africa (IQVIA MAT Jun’18), and is among the most dispensed generic players in the US. For over eight decades, making a difference to patients has inspired every aspect of Cipla’s work. Our paradigm-changing offer of a triple anti-retroviral therapy in HIV/AIDS at less than a dollar a day in Africa in 2001 is widely acknowledged as having contributed to bringing inclusiveness, accessibility and affordability to the centre of the movement. A responsible corporate citizen, Cipla’s humanitarian approach to healthcare in pursuit of its purpose of ‘Caring for Life’ and deep-rooted community links wherever it is present make it a partner of choice to global health bodies, peers and all stakeholders.