Full article reprinted from PharmAsia News February 24, 2009
With a robust business strategy of strengthening its U.S. operations, India's Sun Pharmaceutical has emerged as the most valued Indian drug company. As stock markets hammered down valuations for other top Indian drug companies like Ranbaxy, Dr. Reddy's and Cipla, analysts have largely held Sun's valuations steady. In a rare interview with PharmAsia News' Indian bureau, Sun Pharmaceutical Chairman and Managing Director Dilip Shanghvi shares his thoughts on the long term goals for the company and speaks out on the tangle that his company is engaged in to acquire Israeli drug maker Taro. Read on...
Full article reprinted from PharmAsia News February 24, 2009
PharmAsia News: You have not been very active in anti-retroviral or WHO-led tender businesses. Why?
Shanghvi: It has not been our philosophy to be in volumes driven businesses.
PharmAsia News: How do you analyze growth in the domestic market?
Shanghvi: My view is that market growth in emerging markets look very attractive, and it is just not my view. Sanofi-Aventis and [GlaxoSmithKline] are also saying the same thing. So it is in a way validated. If a company of that size wants to buy units in Pakistan or in Egypt, the thinking must be that those old products will grow otherwise there is no reason to pay so much.
PharmAsia News: Do you think there will be a churn in the top Indian rankings in the pharmaceutical industry?
Shanghvi: It is difficult for me to respond, but I think that could become correct.
PharmAsia News: So do you think it will be a multinational led consolidation in the Indian market?
Shanghvi: It all depends upon the appetite that they show to acquire in India.
PharmAsia News: Are innovator companies deviating significantly from their core competencies in the way they are acquiring generic companies or looking at entering the bio-similar market?
Shanghvi: I think if you really see from that point of view, they are all using their core competencies. For example, Eli Lilly perhaps has the oldest recombinant protein and production technology in the industry. Also if you see the regulatory pathways that are likely coming for biologics, it is not going to be very different from the branded generics. So, biologics is not going to be like pure generics as it stands today, though the situation is very hazy. These large companies have the technological and scientific capability, they have the regulatory capability for clinical trials for such products and they have the marketing advantage too. There are very valid reasons for them to be in those markets.
PharmAsia News: Do you think generics will grow well in the future though there has been major price undercutting by big players like Teva? Again, Teva has also bought companies in the biologics segment.
Shanghvi: Teva may have bought companies with an objective to be a large player in the innovation segment but that does not mean that their interest will reduce on the generics front.
PharmAsia News: Do you think you will take some interest in biologics in India or elsewhere?
Shanghvi: As on today, we have no presence, but that does not mean that we are not looking at options for the future.
PharmAsia News: Do you think as in the past, MNCs will come back in a big way in India, say in the next five to ten years? In the 1970s, big multinational companies accounted for about 70 percent market share.
Shanghvi: I do not see that possibility if they do not buy out companies in India, and I do not see that happening as of now. Even if they do buy companies, I do not see multinational companies occupying 70 percent of the Indian market so soon. Again on the back of organic growth, this will be impossible. Look at it logically. At the moment, MNCs have 12 percent market share. That will be sales of 4000 crore rupees. Now, if they want to go to 70 percent share of the market which could be roughly 60,000 crore five or six years from now, MNCs will need to have sales of at least 42,000 crore rupees. So mathematically, it does not look to be possible. There growth will be definitely incremental and not dramatic.
PharnAsia News: But aren't MNCs launching large products in India?
Shanghvi: There are not really too many great products coming. If you see products in Phase III or Phase II, they are not dramatically superior to current products, so I do not see any reason why they will take away huge markets shares in India.
PharmAsia News: What if prasugrel, which is seen as a big drug once it is launched, comes to India?
Shanghvi: I am not disputing that prasugrel is going to be a big drug. The question is in India, clopidogrel is available at 3 rupees or 4 rupees for each tablet. So, even if prasugrel is available in India at a significant discount it will still be no less than 50 rupees, so it will still be hugely expensive. The doctor will have to seriously decide when prescribing that drug about the therapeutic advantage that prasugrel will have over clopidogrel.
[Editor's note: Despite some cancer concerns, Daiichi Sankyo/Lilly's platelet inhibitor prasugrel recently received a unanimous recommendation for approval by a U.S. FDA advisory committee (PharmAsia News, Feb. 4, 2009).]
PharmAsia News: Do you think deliberate trade barriers are being created to restrict Indian exports like the EU move to seize goods in transit?
Shanghvi: I think we have to wait for the final EU position to be made clear. I think the Dutch authorities have asked the EU on what should be the legal standing on this issue. The simple fact is that the product is legal in the exporting country and the product is legal in the importing country. Just because it is passing through a country and is not to be used in that country, do the authorities have the right to seize the products? My understanding is that the UK law does not restrict goods movement if the products are not to be used in that country and to me that is a fair position. We still need to wait for the situation to become clear.
PharmAsia News: What is your opinion on this entire move of blocking Indian drugs from reaching their destinations, mostly in Latin America?
Shanghvi: Not only to block exports, I think it is a strategy to contain the growth of generics business. So, the interested parties will have the means to classify counterfeit drugs and there are so many things that they keep on doing. I think the Indian industry will need to remain very vigilant because some innocuous change in the wordings of key definitions may be used in the future to hurt the Indian businesses. For example, Kenya has a law that any product patented anywhere in the world cannot be imported. To me that is an extreme position.
PharmAsia News: Coming to Sun Pharma Advanced Research Company, you have been very low on divulging details about your research. Could you share any progress on those products under development?
Shanghvi: I think we will soon give an update on the progress made on SPARC products. Because we have not shared our progress or given an update, it does not mean there is no progress. We are very happy with whatever we have achieved. We have added some new projects beyond the point that we have shared but sometime soon we will come out with all those developments. There was an extended release technology platform called Wrap Matrix and one more called GRID. If our Effexor XR had got registered in the U.S., which is based on Wrap Matrix, our cash flow for SPARC could have started much earlier. Unfortunately, the FDA has asked us to re-file. We are steadily building our pipeline of molecules, and then when it reaches some strong point, we will consider licensing.
- Vikas Dandekar
