In an interview to CNBC-TV18, YK Hamied, chairman and managing director of Cipla says, the company is launching an anti-malarial drug in India. "Today, being the World Malaria day, we are launching a new combination drug along with our partners who are based in Geneva called DNDI," he asserts.
In an interview to CNBC-TV18, YK Hamied, chairman and managing director of Cipla says, the company is launching an anti-malarial drug in India. “Today, being the World Malaria day, we are launching a new combination drug along with our partners who are based in Geneva called DNDI,” he asserts.
He further says, this is a group for drugs for neglected disease. "Cipla has been working very closely with them for a number of years to develop not only products against newer drugs for malaria, but we are also working with them for newer drugs for pediatric aids. So, this is the whole basis of today's launch of the product that we are calling Mefliam Plus."
Below is an edited transcript of his interview on CNBC-TV. Also watch the accompanying videos.
Q: We understand Cipla has plans to launch a Malaria drug. Could you walk us through?
A: Cipla way back, at the time of the Second World War, built Cipla up on anti-malarial drugs. At that point in time, the leading drug that we had was Qinarsol. Since then, the whole malaria treatment has changed rapidly. Today, being the World Malaria day, we are launching a new combination drug along with our partners who are based in Geneva called DNDI.
This is a group for drugs for neglected disease. Cipla has been working very closely with them for a number of years to develop not only products against newer drugs for malaria, but we are also working with them for newer drugs for pediatric aids. So, this is the whole basis of today's launch of the product that we are calling Mefliam Plus.
Q: While there is definitely a humanitarian angle to this, is there a financial gain also for Cipla in this launch?
A: We are a business company. We are not a charitable institution, so there has to be some gain whether direct or indirect.
Q: Can you walk us through what you are expecting from this drug in terms of sales?
A: You must first understand the drug. The drug in question is essentially for resistant cases of malaria. The type of malaria that it targets is essentially in South East Asia. We are targeting this drug in essentially nine countries - Bangladesh, Burma, Laos, Cambodia, Thailand, India, Malaysia. So, these are the countries where there are more and more cases of resistant malaria and we are therefore targeting this drug for South East Asia in partnership with DNDI.
Q: What could be the potential market size of this drug in the nine countries where you are planning to launch it and is there any competition from a similar kind of drug in the market?
A: There is no similar drug as yet in the market but people are free to market this drug. There is no monopoly. We never asked for exclusivity, so we don't have a monopoly on any drug. So, that has been Cipla's approach against monopoly. But, we will offer this particular drug at a very fair and affordable price not only in India but elsewhere in the world as well - South East Asia and perhaps even in Africa.
The big advantage of this drug is that it is very good against resistant malaria and it is also very good for pregnant women in the second and third trimester of pregnancy - not in the first trimester. This drug has been extensively tested all over. So far, 11000 patients have been treated with this drug successfully. I think we will be doing an immense service not only to the medical profession but also to the world by introducing this drug.
Q: Some ideas to what is the size of the market, in terms of million dollars or in terms of rupees?
A: Let's talk about the totality of the malaria world market. A minimum of about 200 million plus doses are required for malaria treatment all over the world. Last year Cipla supplied 45 million doses, that is roughly one fourth of all the drugs used in the world for malaria came from Cipla. Now, that in itself is a big achievement and this is now adding to the armaments against malaria. So we hope that Cipla will be a major contributor to the arena of drugs for Malaria in the years to come. This is not the only anti-malarial drug that we are targeting. We are targeting 2-3 other new anti-malaria drugs in the next year or so.
Q: Another important development in the Indian drug space has been the permission granted to Natco Pharma to manufacture a compulsively licensing drug, an anti-cancer drug. Is that a space Cipla is interested in and should we expect some requests from you or applications from you to the drug controller?
A: I think what is necessary is that the Indian government should take a major positive step forward and introduce a pragmatic compulsory licensing policy that means I do not have to apply to the drug control for permission, there should be an automatic license of right and we pay the patent holder a 4% royalty. Canada had this bill S91 which the Indian government should examine and I hope that people listening in will ask the government to follow the Canadian bill S91 which was in force from 1969 to 1992. If it was good enough for Canada during that period I sincerely believe that it is good enough for the developing world and the world to follow.
Q: Opposition to this comes not just from MNCs, it is coming from some of your domestic competitors?
A: I don't believe that. There are no domestic competitors; we work as a team and all national minded Indians should think the way I am thinking.
Q: Coming back to the malaria drug, could you give us some idea about the potential market size in the 9 countries?
A: It again depends on the registration. Right now the drug is already registered in Malaysia and we are hoping that the Malaysian government will purchase at least 10,00,00 packs from us in the near future. This is what is been indicted to us by DNDi itself. Then we will register the drug in various countries in South East Asia. I think you will see the potential of this drug within the next 2 or 3 years. It won't be automatic or overnight. But, I do believe that if Cipla today supplies 45 million anti-malarial dosages all over Africa, this could be another million or two doses in South East Asia alone.
Q: The ongoing debate on drug pricing is whether to have drug prices determined by market based pricing, the cheapest 3 drug makers or the costliest 3 drug makers, or to approach it from the cost based angle which is what a lot of NGOs and public interest organizations are demanding. Where would you lean?
A: My views are totally contrary to both the suggestions. My opinion is that the drugs that are sold under monopoly, where there is only one manufacturer, should be scrutinized and there should be price control on monopoly drugs, there should be price control on imported finished formulated drugs coming into India. That would really be a step forward to keep the price under control.
Where there is internal competition and 5-10 players are marketing the same drug, the competition only brings down prices and there are no controls that can bring down prices. So the government approach is not practical. I had also made a suggestion many years ago that we would give our technology for free to the public sector government companies if they wanted to market a product and they could fix the prices and then fall in line. Why don't they do that for essential drugs? They do it themselves and we will all fall in line but, they don't do that.
Cipla stock price
On January 27, 2015, Cipla closed at Rs 705.95, up Rs 31.20, or 4.62 percent. The 52-week high of the share was Rs 709.00 and the 52-week low was Rs 366.70.
The company's trailing 12-month (TTM) EPS was at Rs 15.02 per share as per the quarter ended September 2014. The stock's price-to-earnings (P/E) ratio was 47. The latest book value of the company is Rs 125.69 per share. At current value, the price-to-book value of the company is 5.62.
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