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Julian Upton sits down with Subhanu Saxena for an update on Cipla's plans to leverage its historic visibility as an emerging market champion to the next level of global leadership in biopharma.
Cipla is an Indian company with a global point of view. During the long tenure of family scion Y. K. Hamied, Cipla was a vocal advocate for wider use of affordable generics through the reinterpretation of IP rules. Today, under the leadership of a big Pharma veteran, Subhanu Saxena, the company is following a more diversified path to growth, with a portfolio that includes prescription drugs, veterinary medicines, and OTC – 1,600 products in all, sold in more than 150 countries outside India.
More important, Cipla is investing heavily in R&D as part of an ambitious therapeutic expansion program covering some 200 new drugs at various stages of development in key areas of unmet demand, including respiratory, oncology and HIV. And like the rest of the Indian industry, Saxena has his sights on the US market, where the goal is to increase sales – from 10 per cent of overall global sales at present to 25 per cent by 2020 – through organic growth, development partnerships and targeted acquisitions.
Pharm Exec European Editor Julian Upton sat down with Saxena at the recent UBM CPhI Global trade show in Madrid for an update on Cipla’s plans to leverage its historic visibility as an emerging market champion to the next level of global leadership in biopharma.
PE: Could you tell us about your background and influences?
Subhanu Saxena: I was born in India but grew up in south London. But I was always very close to my roots in India. We were a family of classically trained musicians and dancers. I was very close to my maternal grandfather, who I call my first guru in life; he got me interested in Urdu poetry and Indian philosophy from a very young age, and this informed my values a lot. One of the things he instilled in me was that life is for living; it’s about getting great experiences. So I never really had a linear trajectory in terms of a career path, it was more, “Where can I go and get great experiences?”
I went to Oxford University and left around the time of financial deregulation in the city. I joined Citicorp investment bank and worked there for three years. I got some of the best financial training there was, which has stood me in good stead ever since. But as I’d originally trained as an engineer I felt the need to get more educated in the world of business. So I then went to INSEAD to get my MBA. From there I went to Boston Consulting Group and was there for three years.
After that I got a call from PepsiCo; I went to meet the president of the division, Bob Walker, and we just hit it off. If I click with people, I almost don’t worry about what the job is. So I joined Pepsi’s South Asian/African division, doing a lot of work in Africa. I was about to become CFO of Africa when I got a call from Mike White, the company CFO, who said, “How would you like a bigger challenge?” And I ended up going to Moscow for two years, which my wife and I look back on as two of the best years of our lives. Then I got a call about a company I’d never heard of called Novartis. All I knew was the job was based at the edge of Lake Geneva, Switzerland. I then met Thomas Ebeling, then head of Novartis’s Nutrition Division. He was also ex-Pepsi and we hit it off.
What kept you at Novartis for 14 years?
Ebeling introduced me to Novartis CEO Daniel Vasella, and it was clear to me that they were driving real a cultural change after the Sandoz/Ciba-Geigy merger. They wanted to bring more consumer marketing skills into the company. I started in Novartis’s consumer business, because of the Pepsi connection, and soon moved to business development and licensing, which is a perfect induction to pharma because you touch on all aspects of the business. After that I was asked to run one of the global business franchises, infectious disease, and from there went to take over the UK and Ireland Operation, for which I won the Pharma Excellence Award. Then Joe Jiminez asked me to come back and run the global commercial functions, because a lot of the things we’d done in the UK were new business models, there was the need to be able to engage payers and I’d cut my teeth under NICE.
How did the Cipla role come about?
In 2012 I got a call from Cipla chairman Dr. Y.K. Hamied, who said, “Come and help us take Gandhi’s message to the world and do something good for your country.” It was just the opportunity of a lifetime; with my background in philosophy, Gandhi has always been a hero. On July 4, 1939, Gandhi visited the Cipla factory and said to our founder, Dr. Hamied’s father (Dr. K.A. Hamied), “Look, the British will support India’s independence if we support them in the war effort.” And Dr. K.A. Hamied said, “Why are you telling me this?” Gandhi said: “Medicines are not coming to India. Put the health of the nation first and make India self-reliant on medicines.” That helped to set the mission of the company, which is “None shall be denied” - bringing affordable healthcare to whoever needs it. I thought, it’s an enormous privilege to be part of this.
How does the Cipla culture compare with that of Novartis?
In the generics world you’ve got to have a much sharper eye on cost. We’re much more agile in decision making, although I think we can be even faster. But it’s all about the patient: how do you serve the patient? Innovation is not just the domain of the large pharma companies; there is a ton of innovation in the work we do. Cipla is known for having one of the widest ranges of innovative delivery technology platforms. The focus on innovation is the same as large pharma. The timelines are similar but shorter.
One of the reasons I was so attracted to Cipla was that I worked at Novartis on the Coartem program for malaria when we took the decision to make the treatment available at zero profit. That can have a profound impact in energizing and motivating an organization. Dr. Hamied said something that stayed with me: “What’s the point in developing lifesaving drugs if no-one can afford to use them?” It’s our collective role as an industry to first figure out how many patients should have access to a particular medication, and then how we do that at a reasonable profit.
Because of how Cipla was founded, the company has a very strong connection with family and heritage. Being in a company that’s promoter-led and professionally managed is a good combination. Three other things Dr. Hamied said to me when I joined were “Don’t sell the company; don’t bet the house, there’s no need to take crazy risks; and ignore the short-term analysts.”
Did you have free reign to make cultural changes at Cipla?
When I started, the company had been in negotiations for about six months for a joint venture, a 51% acquisition of our partner in South Africa. I quickly realized we needed to buy 100% of this company. I got that mandate in my first eight days at the company, the first major acquisition Cipla ever made. We’ve made a number of organizational changes for which I’ve had the full support of the Board.
Did things need to change?
I think the company realized that they did. My predecessor Amar Lulla sadly passed away in 2010 from brain cancer; there was then a three-year period where the company was deciding how to move forward. So the timing was right when I came on board.
There’s an increasing sense that Cipla has a lot more to offer the world. Because of our investments in technology and manufacturing, our product range is vast in India. We operate in 17 therapeutic areas. We probably have the largest range of respiratory devices in the world outside GSK. We can make anything in any form. And what I’ve seen over the last couple of years is that many large pharma companies have realized that we’re the go-to company for complex products.
You’ve been quite ubiquitous in the trade and financial press. Has there been a deliberate attempt by you to raise Cipla’s profile?
Actually not. I learned in my Swiss days to keep my head down and get on with things. The attention has just come with the decisions we have made in the last few years. The message for all of us is to stay focused on the mission. We’re building a company to last for another 80 years and nothing should distract from that.
How would you distinguish Cipla from other Indian companies in the pharma space?
For 17 years Cipla has been the only pharma company that doesn’t pay a variable sales incentive to its field force, so we take away opportunities for inappropriate behavior. Cipla’s a very high-integrity company. It means that we’re able to focus on the science and focus on good medical practice. When we take on a therapy area, we educate the nation on how to treat a disease. We taught India how to treat HIV. We built a certification program where doctors could be certified to treat HIV. We taught India how to use inhaled respiratory therapies. We educated doctors how to treat TB, even though we don’t really have a product portfolio in this area. The notion of bringing medical education and partnering definitely differentiates us.
You’ve spoken of the need to “future-proof” the company. Can you elaborate on that?
It starts with people: building an organization that can be successful at scales of three or four times what it is today. Having gone through a period of hiring from the outside, the real opportunity is now to develop our talent to grow with the company. We’ve created opportunities, for example, for people from my India business to go and work in South Africa and other markets around the globe.
Second is securing our position in key therapies and key geographies. That means further investing in our respiratory pipeline, for example; continuing to invest in our HIV and anti-malarial business; continuing to invest in our Indian business - which we want to double. Outside India it has been about cutting out the middleman and making Cipla the prime mover, but equally focusing on a few strategic partnerships and deepening them.
Why is the US now so important to you?
It’s about bringing a balanced geographic profile to the business. Less than five years ago, India was 70 per cent of Cipla’s business; now it’s 45 per cent. It will be 30 per cent as we grow outside. In the past the US made up only 8 per cent of our business. But it’s the largest pharma market in the world. If you want to control your destiny and be relevant, you need to have some relevance in the US. We have a very robust organic plan for the US, to take it from 8 per cent to 20–25 per cent of our business. Also, for a lot of the issues around healthcare access in the US, Cipla can become a strong provider of solutions in the next 5-10 years. We will be happy to use targeted inorganic moves where appropriate to accelerate our ambitions a bit. We have two simple criteria when we look at any deals: are we the better owner and can we swallow the worst-case scenario? I have offers coming across my table every week, so we don’t have to overpay for anything and we can be very selective.
We’ll have a portfolio by 2020 where 30% is India, US will be 20–25%, Europe will be maybe 10–15% and the rest will still be emerging markets. At the moment we’re a 2-billion dollar company without any US or European presence. There’s a lot of runway ahead of us. It’s not a bad place to be.