Cipla is on a continued growth path, says MD and Global CEO Umang Vohra

Umang Vohra, MD and Global CEO, Cipla

The biosecurity act, which prohibits US pharma companies from doing business with certain countries that are considered adversaries, presents a unique opportunity for Indian pharma companies, Cipla managing director and global CEO Umang Vohra has said, as Donald Trump returns to the White House after a famous win.

In a conversation with Moneycontrol, Vohra highlights how the act, alongside the “America First” agenda, aligns well with the trusted trade relationships Indian companies have built in the US. Expressing confidence in Cipla’s growth, Vohra talked about the company’s commitment to FDA-compliant facilities in the US and its adaptability to potential disruptions, bolstered by FDA’s approvals and an expansive product pipeline. Edited excerpts of the interview:

What are your initial thoughts on the US presidential election outcome and what implications do you see for the Indian industry, especially in the backdrop of tariffs and the China-plus-one factor?

At this stage, I think it’s early to make definitive predictions but a few things seem set to remain consistent. First, the drive to increase domestic manufacturing in the US is clear, especially with the recent bio-security acts focusing on self-reliance. This policy direction likely won’t change, emphasising “America first,” and this focus on localising supply chains will likely continue across both parties. The emphasis on trusted trade partnerships will also play a role. While tariffs could affect various sectors, it's too soon to predict if they’ll be applied universally or selectively. But overall, I think we’re going to see a continued push for more US-based manufacturing and job creation, similar to the previous administration’s approach.

Do you see any specific impact on the Indian pharmaceutical industry, particularly concerning generics, arising from this policy stance?

From an Indian pharma perspective, I don't anticipate any sweeping changes. India is viewed favourably by the US. While there could be some incremental shifts, they wouldn’t be tectonic enough to redefine the industry.

The U.S. maintains a favorable view of Indian manufacturing capabilities. I don’t foresee major policy-driven changes impacting Indian pharma exports to the U.S. The industry’s structure should stay largely the same, with perhaps minor adjustments here and there.

How do you view the opportunities presented by the Biosecure Act for Indian pharma companies, especially those with FDA-compliant facilities? Will the act influence Cipla’s manufacturing strategy?

The trend of manufacturing closer to the US market isn’t new; it’s been unfolding for a few years. At Cipla, we already have US-based manufacturing for inhalers and other products, including facilities we’ve acquired or built over time. Besides, a significant portion of our production is already US-based, either directly or through partnerships. So, we have been diversifying our supply chain to ensure proximity to the market. As for the Biosecure Act, we are aligned with the act’s objectives, I don’t foresee drastic changes in how we already operate.

Shifting gears to Cipla's recent financial results, revenue growth has slowed year-on-year. What are the reasons and how do you plan to address them?

There were a couple of unusual factors that influenced our revenue. First, a temporary supply disruption affected one of our major products (Lanreotide) in the US, as we work with a partner for its supply. Unfortunately, this issue might carry into Q3.

The second factor is a high base effect in India, particularly in anti-infectives and respiratory products, which saw high demand post-COVID. Now, it’s a more normalised base. Without these factors, our growth would have been around 12-13 percent, which we’re comfortable with.

We’re also optimistic about our Goa facility receiving FDA clearance, which should help our US portfolio. The respiratory season in India is picking up, and we hope to resolve the supply issue in Q3, which should help normalise growth.

Could you share your outlook for growth and how Cipla plans to address any challenges?

Our focus remains on a strong pipeline of products to bridge any potential revenue gaps. For instance, a significant exclusivity period for one of our products is set to end soon, but we have a robust pipeline ready to offset that. With Goa’s FDA clearance, we’re better positioned to bring more products to the U.S. market. Our peptide portfolio and upcoming launches are also promising. So, while there’s a temporary lag, we are confident in our growth trajectory and believe that unlocking our pipeline will positively impact revenue.

What growth rate do you foresee for Cipla in the Indian market, given government health initiatives and growing healthcare access in Tier 2 and 3 cities?

We are looking at around 10-12 percent growth in India. The 5-7 percent growth in recent quarters doesn’t reflect Cipla’s potential, as there were disruptions related to our transition in distribution. The anti-infective season also saw a slowdown. Government health programmes like Ayushman Bharat and elderly health coverage create significant demand, especially as people become more proactive about treatment. This, coupled with rising healthcare penetration in Tier 2 and 3 cities, presents robust growth potential for Cipla in India.

How significant is the government’s healthcare push, particularly with Ayushman Bharat and senior citizen insurance schemes, for Cipla's growth?

These initiatives are indeed transformative. Government-backed insurance for the less privileged, capped at Rs 5 lakh, has seen high uptake and utilisation.

The recent coverage expansion for those over 70 can be a game-changer. For instance, many elderly patients are now considering elective procedures like knee replacements, which they might have delayed otherwise. For Cipla and the healthcare industry as a whole, these schemes encourage higher healthcare utilisation and treatment rates, especially in rural and semi-urban areas. The programmes’ ripple effects could significantly deepen healthcare access and affordability, fuelling pharmaceutical growth in India.

As Cipla moves forward, what are your strategic priorities in the US and India for the next few years?

In the US, expanding our product offerings and solidifying our supply chain will remain top priorities. FDA clearance for Goa was a major step and we plan to ramp up production from there over the next three-nine months, which should align with key product timelines.

In India, we are focused on scaling high-growth therapeutic areas and leveraging the growing healthcare infrastructure across Tier 2 and 3 cities. Additionally, government initiatives supporting healthcare access will provide tailwinds.

Ultimately, our strategy is about aligning our operations with these growth opportunities while being agile enough to adapt to any regulatory changes.

In the event of a geopolitical escalation, do you see raw materials as a concern?

Well, the current supply chain is heavily based in the East. The origins of the supply chain are mostly East-based, starting in China, moving into India for processing and then being shipped out to the West. So, yes, in the case of a geopolitical escalation involving China, there would be an impact.

Geopolitical tensions have already escalated in places like Russia and the Middle East, so China is a primary focus now.

The supply chain in China is quite extensive but if there is no escalation in the next two to three years, there will likely be a significant derisking of reliance on China's supply chain.

The government has also been incentivising domestic manufacturing for pharmaceutical ingredients. How do you see this playing out? Has it been successful so far?

There has been significant progress in India but it’s a challenging goal to achieve. Every time India starts setting up capacity, global players tend to drop prices, which can deter local investments. However, we’re seeing positive signs.

There's also movement from other companies, encouraged by initiatives like the Production-Linked Incentive (PLI) scheme.

Moreover, companies, including ours, are actively supporting domestic manufacturers by offering to purchase a portion of their output if they set up production facilities. This support is helping create a more robust local manufacturing base, and if this momentum continues over the next two to three years, we could see a reduced dependence on China.

Can you tell us about your product pipeline and any regulatory issues you’re facing, especially for products like Revlimid and Abraxane?

Abraxane, a cancer drug, was tied to our Goa facility, which is now in the three-to-nine-month window for clearance. We also have Revlimid, an exclusivity product set to lose exclusivity next year. With upcoming pipeline developments, we’re positioned to offset some of the revenue decline from Revlimid’s exclusivity loss. Additionally, we’re awaiting a reinspection for our Indore facility, which could further support product launches once cleared.

Are you looking at specific R&D strategies or inorganic opportunities?

We prioritise organic growth, carefully evaluating acquisition opportunities, particularly as valuations are quite high. In India, we are interested in acquiring brands in mental health and movement disorders, as well as areas like diabetes and dermatology. In the US, we aim to differentiate with a focussed, meaningful portfolio in areas like respiratory and complex injectables instead of filing a large number of products.

Could you elaborate on your partnerships in India?

In India, we aim to bring unique products to the market that are not widely launched by others. For example, we’re working on an inhaled drug for fungal infections in the lungs, which offers fast and targeted relief. Our partnership with Orchid Pharma is a result of our appreciation for their product offerings, which led us to partner with them.

What would be your biggest bet for the India pipeline?

We see a lot of promise in novel oncology products, such as antibody drug conjugates (ADCs) that target cancerous cells without affecting healthy ones. This innovation could revolutionise cancer treatment, making it less taxing on patients. While these treatments are currently costly, broader adoption could lower prices over time. We are also focussed on obesity and diabetes, which will remain significant markets in India.

Are you looking to enter oncology through acquisitions?

Acquisitions and partnerships are both options but partnerships are more feasible as oncology is a complex field requiring specialised expertise. Partnering allows us to bring these innovative drugs to market effectively while gaining experience in managing such products.

How do you plan to maintain your margins, currently around 26 percent, and control costs?

Margins might see slight pressure next year as Revlimid’s exclusivity expires but we hope to counterbalance this with our upcoming pipeline. We focus on cost control through a combination of operational efficiencies and a selective approach to product launches, aiming to maximise profitability with high-value products.