We are prepared to launch 100 products over the next 3 years

Written by MG Arun | Updated: Aug 28 2012, 08:41am hrs
At a time when generic pharma companies are challenged by intense competition and price erosion in the US market, the R7,000-crore Mumbai-based Lupin has leveraged on two of its products in the branded generics space Suprax and Antara to further its growth in the worlds largest pharma market. For the first quarter, the company derived 36% of its business from the US, of which branded products constituted 30%. Going forward, the US would contribute around 38% to Lupins revenues share, as the company targets to achieve $3 billion in sales by 2015, says Kamal Sharma, managing director. Lupin also plans to manufacture four products for Japan, a stringent market by regulatory standards, from its Goa unit, and is eyeing to acquire branded products in the US and Latin America, he tells FEs MG Arun in an exclusive interview. Edited excerpts:

Focus on branded generics is a major component of your US strategy. What was the thinking behind this

We were late in the game, compared with our peers. We decided that we will not use pricing as an entry strategy in the US, since that is self defeating. We decided to compete on cost, quality, availability and service. Today, 21 of our 42 products in the US are number one in market share. Branded business was going to protect us against the losses from generics because of price erosion and cut-throat competition.

People were sceptical, since it can guzzle up a lot of money. Suprax, in-licensed from Fujisawa in 2005, had a strong brand recall. The other was Antara, which goes for primary health physicians. Also, we have AeroChambers, an inlicensed product from Forest Labs, but that has some generic competition.

What are your plans to expand this branded portfolio

We keep evaluating brands. It is a challenging pursuit. Brands with a good amount of IP (intellectual property) left in them may be costly. We also look at products that do not require huge sales team.

Also, we target niche segments like pediatrics, ophthalmology or urology, where the number of doctors you need to approach is limited. We should be able to launch one or two more brands by the end of this year. The ratio of generics to branded products would continue to be 70:30.

How important is biosimilars (copycat versions of biotech drugs) for you

We are seriously evaluating biosimilars. We will take more time for the US market, but there are opportunities in Turkey, Russia, Latin America and India. We have two products that have cleared the clinic, and another five products will follow. If we can gather clinical data in other countries in real time, that will be of help in advanced markets.

We are intensely evaluating some of the emerging markets, notwithstanding the fact that each country is trying to evolve a framework on biosimilars. We are doing the development work with an idea that it should be internationally marketable.

Japan has been a tough market, but you have firmed up your footing there...

We wanted to be number one in some market, and Japan was the largest market after the US. We knew Japan is a difficult market, due to the language, the regulatory framework, and the immense brand loyalty. We wanted to build value for ourselves and our partners. After taking 100% ownership of Kyowa, we leveraged all our synergies from India.

We were not in tearing hurry to shift production to India and improve margins. That would have given a loss of credibility. Rather, we expanded our capacity by about 30%. We also expanded the R&D team, which today has some 45-50 people, and they give us six to eight products every year.

Have you started manufacturing products in India for Japan

Since the capacity in Japan facility is occupied, we have four products for which we have submitted the files from India. The new filings will be coming from Goa. The products should be in the market in a years time. With our acquisition of Irom, we are $260-270 million business in Japan. One keeps looking for strategic additions in Japan, but its not easy, because people are not selling

How achievable is your target to become $3 bn in sales by 2015

Our targets are part of a vision and an aspiration. When we set a target of $1 billion from $250 million by 2009, we achieved that in 2010. The US and Europe now give us 38%, India about 29-30%, Japan 14%, and 17% comes from the rest. So, we need to have a growth of 40-44%. In terms of product line, the patent cliff will come only by 2017, so we have scope to launch as many as 100 products in the next three years. We would like to add two countries in Latin America, and those will be inorganic.

In Brazil, which is a $22-billion market, and Mexico, a $14-billion one, our approach is to go through the speciality route. Also, we would like to look at Russia in a bigger way, where we are on the fringe now. Japan is another potential growth engine, since the generisation in Japan is only 25%, and the entire healthcare there is paid for by the government. It will be a growth driver for 10 years. Meanwhile, India is growing at 15%, since healthcare grows at twice the GDP rate. I am sure our target for 2015 is achievable.