Pricing pressure in US biz cyclical in nature: Cadila Health

In an exclusive interview with CNBC-TV18, Pankaj Patel said that the pricing pressure in US is cyclical in nature and competition is going to exist in the generic medicine market in US.
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Oct 18, 2016, 04.17 PM | Source: CNBC-TV18

Pricing pressure in US biz cyclical in nature: Cadila Health

In an exclusive interview with CNBC-TV18, Pankaj Patel said that the pricing pressure in US is cyclical in nature and competition is going to exist in the generic medicine market in US.

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Pricing pressure in US biz cyclical in nature: Cadila Health

In an exclusive interview with CNBC-TV18, Pankaj Patel said that the pricing pressure in US is cyclical in nature and competition is going to exist in the generic medicine market in US.

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Indian companies have a cost advantage in the US market which enables them to compete there even with increased competition says Pankaj Patel, Chairman and MD of Cadila Healthcare .

In an exclusive interview with CNBC-TV18, Patel said that the pricing pressure in US is cyclical in nature and competition is going to exist in the generic medicine market in US.

On the domestic production and business front he said that ten site transfers from the company's Moraiya plant have been completed and the USFDA has been requested to inspect the facility.

Below is the verbatim transcript of Pankaj Patel’s interview to Ekta Batra on CNBC-TV18.

Q: This is your 20 acre research and development facility and let us start with a little bit of a brief on that. Tell us more about your facility?

A: This research facility which is located here is known as Zydus Research Centre. It is focussed on new chemical entity research. So, whole facility takes care of all the kind of research requirement for new chemical entity research. It would mean that from an in silico developing a molecule concept to ultimately doing the phase one clinical study we can do it in this facility.

So, we have basically focussed on creating a world class facility with all kind of capabilities in terms of either it is animal testing, whether it is chemistry, analytical chemistry, whether it is in vitro biology, formulation development, first in man study, all the facility exists here.

The uniqueness of this facility is that it is a facility at one place which can do everything that basically helps in better collaboration with each other scientists in different discipline. So, the NC research is usually a teamwork and this team work is achieved through this one big facility with all the people at once place. The other uniqueness of this facility is this is the first facility in India in private sector which has also capability of doing study in primates. So, apart from large animals we also do study here in primates which is the only facility in private sector in India.

Q: There is one criticism about Indian pharmaceutical companies as opposed to their counterparts in the US and Europe that we are not that capable when it comes to R&D as compared to others. We are good at generics but not as good in terms of R&D. Why is there a lag, why is there a difference between us and the rest?

A: We started much later than most of the industry. If you look at the top of the pharmaceutical companies globally they have a history of 100 plus years. Our industries have maybe history of 50 years or around 50 years and we started from scratch and as a result initially our focus was to develop formulation. Then we went into bulk drug, then we went into value added generics. Now we are moving into NCEs and other areas. It is kind of a path of development.

People believed that India cannot make a tablet or a liquid or an injection in 1950s, it is no longer a truth. People believed India cannot make active pharmaceutical ingredients (APIs). India became the API capital of the world. People believed that Indian products cannot be sold in every market. Today we sell in every country in the world. So, the question is we need time and it is a learning exercise that we can actually achieve.

If you go to any pharmaceutical company globally and you look at the list of the people about 30 percent of the people are Indian origin. So, there is no reason why Indian scientists cannot develop drugs.

Q: So, currently R&D is around 7-8 percent of your sales. Say, by 2020 how much will it possibly be?

A: We would remain at that range. Our goal has been initially from the beginning is to - we are relatively small company from a global size point of view and it is very important for us to ensure that we optimise and take advantage of India fully. India advantage; India cost advantage, Indian capital advantage is a big advantage we have in India and how do we maximise it. That is why you see this big facility here that we can do everything in house. We don't have to outsource and as a result we can keep our costs lower.

So, at the same time while we want to do everything we want to ensure that we do not overspend on something which is not to be spent and make sure that everything is done in a reasonable cost and that is what we achieved here.

So, we believe that this exercise which we have created of creating kind of a model by which we can do research in a very disciplined way there are very stage gates set up in every research project to make sure we stop a project if we feel that at stage we have not reached a goal. We also make sure whatever we do is done in a cost optimised way.

Q: One of the key diabetes molecules that you managed to launch in the Indian markets is Lipaglyn. What is the state in terms of revenues in India for that particular molecule and how are you scaling it up in the US and other regulated markets particularly?

A: In India that drug has received very good response from the medical fraternity. Today there are about 300,000 patients who are already consuming this drug and the drug is doing very well in the Indian market and growing rapidly. We have also stated phase II study in US where we are basically doing study in Dyslipidemia, Hyper Dyslipidemia area. We are also are starting another study in US for hyper liver diseases and so and so forth.

So, the whole game plan is really bring these drugs to the world. So, apart from US we are also brining this drug to the other market. So, we believe very strongly that these drugs has a very good promise and future to offer to the world.

Q: One of the key focus areas for you has been transdermals where you have around five Abbreviated New Drug Applications (ANDAs) which you filed for in the US plus one which you acquired from Teva very recently as well. What is the progress when it comes to transdermals in particular?

A: So, we are close to approval. We cannot give a specific timeline but we have reached to a stage where we should be having approvals of few products in a short period of mite.

Q: You have also signed up for maybe researching anti-malarial as well as something for chikungunya. So, when can we expect something because there are millions of people in India right now who are either suffering from dengue or chikungunya or something to do with mosquitoes?

A: One of our goal is also to basically while being research based pharmaceutical making sure that we do something meaningful for our people in India. And as you rightly said these are the major issues we all face today. So, our work has been going on a fast speed both in the area of dengue and chikungunya and we are in the clinical trial phase.

Q: What about the US markets because last quarter your revenue was down around 14 percent odd. You have received eight approvals in 2016. Your guidance is around 15 approvals, 20 approvals rather. Is it going to pick up?

A: It is going to pick up from next quarter onwards. We have received several CRLs and we believe that the products are reaching at advance stage of approval. We are confident that we would get those approvals this year.

Q: When does US starts growing?

A: We will see from the quarter which is the fourth quarters onwards the growth will be seen in the US market.

Q: One of the key approvals that you have received recently is Asacol HD but you have launched it as an authorised generic (AG) at this point. What is the likelihood that you may you would get final approval from the USFDA and you would possibly launch it on your own, is that something in the pipeline that you would be working for?

A: Currently, we have launched the authorised generic of Asacol HD and we are expecting FDA approval. We will take a decision based on the approval what next step we should do.

Q: One of the criticisms some analyst share is that may be Cadila is doing too many AG launches which is authorised generic launches, are you going to start focusing more towards getting the final approval and then less towards the AG launches or is that going to be a strategy which you will still focus on?

A: AG launches are not as a part of a strategy, however companies do approach us for a launch of AG and then we do accept those assignments. Because we have global relationship with those companies, companies approach us to launch their AGs. If they are not in our pipeline then we would launch the AG. As far as Asacol HD is concerned this was part of our settlement that we would launch the AG and that is the reason why we have launched the AG.

Q: The other big potential that the market is focusing towards is also Lialda which is the same family as Asacol HD which is supposed to be a big potential for Cadila. What is the status on that?

A: As you might be aware that we have won the first court judgement in our favour that we are not infringing the patent. We would await till the next action is taken by the company. We are also at advanced stage of approval process as far as Lialda is concerned. It is contingent to our Moraiya plant get approved by FDA which once that is approved we should expect also the regulatory approval of Lialda.

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