India: Good Endings, Good Beginnings! - Pharmaceutical Executive


India: Good Endings, Good Beginnings!

Pharmaceutical Executive

The abundant presence of entrepreneurial spirit and family businesses in India has also resulted in an adverse attitude towards the dilution of equity, making the latter more the exception than the rule. Ajit Kamath describes what he did differently with Mumbai-headquartered Arch Pharmalabs, where he is chairman and managing director. In 1999, together with his associates, Kamath put all his savings into taking over a company in Hyderabad that had filed for bankruptcy. "We formally became owners in 2003 and this is when we got in touch with private equity," Kamath notes. For Arch Pharmalabs, it was the private equity that underpinned the turnaround and nourished the growth from $2 million to $300 million in turnover, in just over a decade. "At some point, we had diluted nearly 60% of the shares to private equity," Kamath says. The strategy was very clear. "We decided to focus on a few products, engage in backwards integration, and bring on the necessary technology. In 2005, when we were not as big as today, we invested a lot in an R&D center with 250 scientists. Then we got into alliances; a lot of people wondered how Arch, as such a small company, could get into these alliances. Once again, the dilution of equity played a major role, because it enabled us not only to acquire companies, but also to acquire technology. We now have three facilities FDA-approved, and we are expecting to have two more by the end of the year. In a next step, he envisions to evolve from an API/intermediate company to a complete healthcare company in the future.


Ranjit Shahani, Managing Director of Novartis and President of OPPI
With three of India's cities—Mumbai, Delhi, and Kolkata—ranking among the top 21 mega cities on the planet, the World Bank sees India's urbanization process as an integral part of its economic growth story. Yet, a 2011 report by that same institution also indicates that roughly two thirds of the Indian population still reside in rural areas, of which 80% live below the median developing-country poverty line of approximately $2 per day (Rs 22). And while most pharma companies have not been successful at penetrating the rural areas, Swiss drug maker Novartis has excelled with its award-winning rural access business model, Arogya Parivar. Vice chairman and managing director of the Indian operations, Ranjit Shahani, stresses that the initiative has given 50 million people access to medicines. "We now operate in 11 states, and are very actively making sure that products are available, accessible, affordable, and that people are aware of them. These are our four 'As of Arogya Parivar," Shahani says.

Safia Rizvi, Managing Director of UCB
Other players have slowly been launching pilots to go "ur-beyond." US-based MSD, for example, has forayed into innovative product development to overcome cold-chain distribution problems, by setting up a local joint-venture for vaccine research together with the Wellcome Foundation. K.G. Ananthakrishnan, managing director, explains, "One of the first projects that is going to be taken up by these laboratories is indeed the development of a heat-stable rotavirus vaccine." If successful, this will be another breakthrough for vaccine development for developing countries, where infrastructure and distribution channels often pose significant challenges.

For a country that desperately needs to pull its lowest income classes into a more humane existence, India is a country where Corporate Social Responsibility programs are really put to the test. Such programs obviously exist in all different shapes and colors, but are likely to be most relevant where they can capitalize on a company's core competencies and respective therapeutic areas. This is of particular importance in India, where many diseases still carry a certain social stigma. Epilepsy, for example, is perceived rather differently than in other nations. "There is a lot of work that remains to be done to destigmatize epilepsy in India and have it treated for what it is—an illness. Public awareness and education is as crucial as the availability of the best drugs," explains Safia Rizvi, India's managing director of the Belgian CNS-focused company UCB. All the more reason that Rizvi is not only proud of bringing UCB's products to her country of origin, but even more so of concurrently implementing India-tailored CSR programs. "We therefore have a large educational effort as part of our outreach programs. There are a lot of companies that have been making a significant effort to implement meaningful initiatives."


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