Having set an ambitious target of $3 billion by FY13, Dr Reddy?s Labs entered the list of top 10 generic companies in the US by improving its market share from 2.1% to 2.7%, thus nearing its target to become a leading generics player in the US. Umang Vohra, senior vice-president & chief financial officer, has been part of several of the company?s key initiatives like acquisitions, R&D de-risking transactions and operational improvements in accounting, governance and finance processes. Speaking to BV Mahalakshmi, he says that transition from small molecules to bigger ones and demand for off-patent small molecules in emerging markets is increasing.
What are your views on FDI in the pharma industry? With the ministry becoming cautious about domestic pharma companies? selloff plans, how do you perceive the current scenario? Do you see consolidation taking place in the Indian pharma industry?
As long as FDI improves patient compliance and brings in more effective care this should help the overall Industry. We also see some of the FDI as ?longer term alliance oriented? combining the expertise and market understanding of local players with technology and innovation from some of the western players. Such FDI could be very beneficial in areas such as vaccines and other such sub-segments where prevention is key. In these areas, the product and its technology are more important and there are fewer local alternatives available.
What are the key trends in India?s pharma industry?
We are witnessing healthcare penetrating deeper into tier two and three cities. We are also witnessing an increase in prescriptions driven both by awareness and infrastructure as well as affordability. We are seeing newer business models evolving that integrate technology, faster diagnostics and cheaper care . Also, there is a greater government focus, incentives and participation and discussions around public-private partnerships that herald a newer paradigm for the industry.
How do you look at the increasing pricing pressure on generic business?
As the market is expanding with more people able to access and afford healthcare, overall value in the market will still be protected. But there are signs of pricing pressure in some segments. Our analysis suggests that even there overall value seems to be protected as more people demand healthcare due to higher penetration . This will require companies to think through business models differently.
Emerging markets are the next big opportunity for pharma companies. How do you see that playing out?
Most of the growth in the pharmaceutical industry will be coming from emerging markets expansion. However, each emerging market is different and business models to succeed are very different than elsewhere. Most of these markets are ?self pay? and so innovation is rewarded if it is affordable, and offers very significant differentiation.
What will Indian pharma companies need to do succeed in the near future?
For one they will need to think differently. The market will reward differentiation ? whether its product, reach and access, prevention and faster detection, or technology. First mover advantage will be rewarded.