India is the pharmaceutical capital of the world today: Dr. YK Hamied, CMD, Cipla

In an exclusive interview with ET Now, pharmaceutical guru Dr. YK Hamied, CMD, Cipla analyses the broad trends in the Indian pharmaceutical scene & explains the recent spate of foreign aquisitions of the biggest names in Indian pharma.

Let me first start with the big pharma trend. Why do you think Indian pharma promoters are selling to MNC pharma promoters because if I look at Ranbaxy, Nicholas Piramal, Indian promoters are indeed exiting their businesses?

Dr. YK Hamied: First question is that today India is the pharmacy capital of the world that India today supplies one third of all the pharmaceuticals produce in the world. So by the grace of God, India today is the foremost producer of pharmaceuticals essentially in volume in the world. So we are being looked at by all major companies worldwide and you will see 3 things happening, you will see mergers, you will see acquisitions and you will see what I term as partnerships.

There will be partnerships for individual products, partnerships for individual countries that if some companies, strong sales of Philippines, I would like to partner them for marketing products in the Philippines. So I am seeing a major trend, not only for Cipla for but major pharmaceutical companies, big and small towards partnerships and restricted joint ventures with international companies.

But don’t you think US FDA’s rules are now getting tightened on Indian pharma, how should Indian companies tackle this problem?

Dr. YK Hamied: No, your question is not entirely correct. What the US FDA wants is that companies that manufacture and export to America should be No. 1, current GMP approved and that the quality standards are maintained for supplies to America. I personally think this is a very very good step forward. They do not discriminate between companies in America or Europe or India or elsewhere as for products that are exported into America. So the better the regulations, the better for Indian companies in the long run.

Nobody can point a finger at Indian companies that are today exporting to America that their products are not on par with those produced in America or the western world. So overall, it has been a very good exercise for Indian companies today that over the last 20 years, about 70 to 100 factories in India are US FDA approved, more than in any other country in the world and that is fantastic achievement for the Indian pharma industry. Cipla alone has 11 factories that the US FDA approved which is a big feather in our cap.

Indian pharma companies especially the ones which are generic in nature, they have the unique advantage of ANDAs and drug master files and Indian companies were the first ones to move up with that but when it comes to traditional manufacturing, do you think Indian pharma companies are not globally competitive and China scores ahead of us?

Dr. YK Hamied: No, Indian companies, again it depends what you mean by globally competitive. We are very much globally competitive when it comes to selling products in the developed markets where there are rules and regulations where you have to adhere to quality standards etc. but that is in the regulated developed markets, Australia, Japan, Europe, America, Canada. Now slowly other countries are joining this group of companies like Brazil etc. So it is a very good thing that the high standards of quality are maintained and nobody today can point a finger at major Indian companies being so called substandard or the quality issues etc.

So that is of the past. People raise these issues mainly as a PR for their own needs and what not but to run down Indian companies but this is not true. Now when you come to emerging markets, emerging markets in Africa, Latin America, Southeast Asia where the regulatory authorities are a little more lax than in the developed worlds that includes India of course, then how to be competitive because competition is very high. So one has to amends about quality etc. in the non-regulated markets. So I would suggest that we focus our attention as top quality producers of pharmaceuticals for the regulated markets and use that as a platform for the rest of the world.

According to you, how big would bio-similars be for the Indian pharma players?

Dr. YK Hamied: Indian pharma players today that include Cipla looking at bio-similar products in the next 2-3-4 years, they will be launched worldwide. The question is regulatory, how do you show bio-similarity and that is a very very big issue and the people today, the regulatory authorities particularly in US, Europe are not yet 100% ready with the rules and regulations to show bio-similarity. What the Chinese do and what we Indians are also doing is that you do clinical trials in your product.

So instead of calling the products bio-similars, the Indians are going to coin the word ‘biobetters’. Our product in clinical trials is showing efficacy equal to or better than the original biotech product. Please understand that that biotech product originator was done 5-10 years ago and once you put in a permission for a biotech product, you cannot change the method of manufacture. So will the developments that we are doing or India is doing, some of the biotech products from Indian companies will be what I classify as biobetters and not bio-similars.

Just want to get back to the point that you were making earlier as to how you foresee heightened M&A activity in the pharma space both in terms of emerging markets players being eyed by the developed world or vice versa. While you have already denied stake sale plans but are there any such joint ventures or partnerships in the offing for Cipla?

Dr. YK Hamied: Partnerships, we are looking at business opportunities. So let’s coin your word of partnership as business opportunities. We are looking at business opportunities as to what is best not only for Cipla but what is best for our country as well and whether we can earn adequate foreign exchange for the country. So our emphasis is on that and it all depends on the emerging markets or so called emerging markets, it also depends on whether we can manufacture sophisticated products for the developed world that is also a trend which one is seeing today etc. etc. So one has to look at the basket of things that companies like Cipla can do or will do in the future.

So what kind of partnerships are you looking at?

Dr. YK Hamied: Partnerships that are marketing partnerships, manufacturing partnerships that we manufacture sophisticated products in the anticancer line for the regulated markets. We manufacture sophisticated anti-AIDS drugs for Africa. We manufacture respiratory products for Russia. So it is country designated as also product and group product designated. Pharma is not one item or one product, it is a multitude of products. For example in Cipla’s range today, we have approximately 2000 different products formulations in India for example. So it is a very difficult to specify what we will do or cannot do but the whole area of partnerships is there which today more and more companies are looking at. 5-10 years ago, this was not the case but today, it definitely is.

Let me ask you a question which is of immense market curiosity. Is the succession plan for Cipla in place?

Dr. YK Hamied: In answered this on TV a few years ago. I do not know what you mean by succession. The last time this was raised, I said why you are killing me off. We in Cipla, I have said time and time again, we in Cipla and the size of Cipla, we work here as a team. It is a team effort, team decisions, everything is a team. So if one member of the team is not there, that does not mean that the team would not continue. You see a football match. A person is sent off, the team still manages with 10 out of 11. The same we are seeing on the cricket grounds. So our approach to business and the development of Cipla over the years has been a team effort and by the grace of God, the Cipla team which is in place today is a very strong and hardworking, honest reliable team and let’s keep it with that.

When one member of the team retires, the team often gets a replacement...

Dr. YK Hamied: When the team retires, we all look for replacements. For example who is going to be your next Prime Minister, that is also a succession plan, you do not know today. So these things take time but we are always on the lookout for good people to join our team. So if you can recommend people from the pharma industry to come and join our team, that would be very welcome.

Are you saying it is not going to be one of the existing team members at Cipla and an outsider?

Dr. YK Hamied: That is not a fair question to ask, so let’s leave it at that. Again I repeat that we are working as a team. One question I would like to answer for you is that India must consider as a country what they want in healthcare in the next 5 or 10 years because with the current intellectual property rights that prevail, we are going to see in India more and more monopoly by the multinational companies of drugs which definitely will lead to higher prices etc. That somehow has to be controlled by the government and the intellectual property rights have to be again closely looked at.

In particular what I have realised time and time and time again is that India requires a very pragmatic compulsory licensing policy and the government should work on this so that Indians are not denied drugs and that access to medicines, which to me is a human right, should see any restrictions and no monopoly in availability of medicines particularly in India where the population is estimated to reach 1.65 billion by 2050.

So I sincerely hope that the Indian Government whoever is listening into this, look at the prospects of putting in place a pragmatic compulsory licensing system. I have always said that India should decide its own destiny in healthcare and the destiny of India particularly in this area of monopoly in healthcare has to be decided in Delhi and not in the capitals of the world.