Indian Pharma’s 2-Billion Dollar Club

by buildingpharmabrands

Dilip Shanghvi, Late Dr. K. Anji Reddy, G. V. Prasad, K. Satish Reddy, Late Dr. Parvinder Singh, Arun Sawhney

Dilip Shanghvi, Late Dr. K. Anji Reddy, G. V. Prasad, K. Satish Reddy, Late Dr. Parvinder Singh, Arun Sawhney

 

What is a major milestone for an International Specialty Pharma company?

To cross the one-billion dollar mark in revenues.

What could be the second major milestone?

To cross the two-billion dollar mark in revenues.

In 2013, there are three Indian Pharma companies that have crossed the coveted two-billion dollar mark in revenues. The latest or the most recent member of this ambitious, hardworking two-billion dollar club is the prodigious Sun Pharma. Lupin with annual revenues of $1.8-billion is knocking on the doors rearing to get in.

Ranbaxy, although has been in the news a lot for wrong reasons recently was the first India-based Pharma company (as it has been acquired by Japanese Pharma major Daichi  in 2008) to cross the $2-billion mark in 2011. Dr. Reddy’s achieved it by December 2012. Sun Pharma did it by March 2013.

Sun Pharma

While it took 27 years for the first $1 billion in revenues for Sun Pharma, the next billion came up very fast in just a matter of three years. Sun Pharma has crossed two milestones. The first one is crossing US $2-billion in revenues. The second one is crossing ₹ 1lakh-crore mark  (around US $ 16 billion) in market capitalization.

Started with just five products in 1983, in thirty years Sun Pharma took giant leaps to cross the coveted 2-billion-dollar mark in revenues in thirty years with twenty-six manufacturing facilities in four continents. Sun Pharma has three-pronged strategy to propel itself into the next orbit: Focus on chronic therapies, differentiation through technically complex products, and speed to market. All these at sensible costs by achieving cost leadership.

Dr. Reddy’s Labs

Dr. Reddy’s defined their purpose as providing affordable and innovative medicines for healthier lives. Their strategy is to achieve this by leveraging industry-leading science and technology, product offering and customer service through operating excellence. Their business model spans three segments: generics, active pharmaceutical ingredients and custom services, and proprietary products.

Ranbaxy

Ranbaxy’s mission is to enrich lives globally, with quality and affordable pharmaceuticals. The company has a ground presence in forty countries and its products are being sold in about 150 countries across the world. Ranbaxy’s strategic focus is threefold: focus on building worldwide branded generics business, leveraging Ranbaxy’s strong presence in emerging markets that are growing rapidly, and to continue to create exclusive and niche opportunities.

Common Thread

What is the common thread that has been running among these three winning Indian Pharma companies? Right from inception they have viewed world as their market. All of them have followed the winning strategy of TEVA, the global leader for the generic industry that has reached uncommon heights.

They have reached the critical mass that is required to fuel their ambitious growth plans through strategic acquisitions of products, facilities and companies to create a beachhead, or augment their presence in the difficult-to-penetrate markets. All of them have upgraded themselves periodically to world class levels in technology, and manufacturing to be globally competitive. They have targeted the US generic market which is the largest and most lucrative in the world. They have aggressively pursued a PARA IV-Challenge route to gain the 180-day exclusivity, which is the dream of any generic company and took considerable risks.

They have been steadily stepping up their R&D capabilities along with substantial increase in investments in creating a research and development infrastructure and the required knowledge base to launch even the drug-discovery programs. All three companies have their own pipelines for abbreviated new drug applications and new molecular entities.

They have also entered into strategic alliances with global Pharma majors for generic alliances in emerging markets. Ranbaxy is a part of Japanese drug major. Sun Pharma has entered into a strategic alliance with Merck. Dr. Reddy’s have entered into a strategic alliance for bio-similars with Merck Serono.

These companies are international and are increasingly acquiring the international character with manufacturing facilities in a number of countries. Over three-fourths to four-fifths of their revenues from international sales. Sales from their domestic sales account for about 26 per cent for Sun Pharma and less than 20 per cent for both Dr. Reddy’s and Ranbaxy.

What is the next milestone for each of these companies?

5-billion dollars in annual revenues? Lupin, the company that is close on heels of these three winning companies has already announced that it is determined to achieve US $5-billion in revenues by 2018. Surely the three frontrunners would like to achieve it before that.