Zydus Cadila to launch Lipaglyn in other mkts in 3-5 yrs

Pharma major Zydus Cadila is registering Lipaglyn in other markets and will launch the drug there in 3-5 years, a top company official said on Friday.

Global market size for Lipaglyn type of drug is USD 29 billion and its peak potential will be seen in 7 years from now, Pankaj Patel, CMD, told CNBC-TV18.

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Lipaglyn, to be used to treat a type of diabetes, is the first New Chemical Entity discovered and developed indigenously by an Indian Pharma company. It is expected to be launched in the third quarter of the current financial year, Patel had told reporters earlier this week. 

Meanwhile, Patel said that most pharma companies' sales in the domestic market will be impacted this quarter (April-June) due to the Drug price control policy.

Below is the verbatim transcript of Pankaj Patel's interview on CNBC-TV18

Q: What could be the potential with this Lipaglyn drug in terms of bringing in sales? In Q3 FY14, it could be launched in the Indian markets but in terms of putting value on your books in terms of a sales run rate what could it look like?

A: This drug has a unique dual action of working on both glycemic control and the lipid controls and the market size globally of this kind of drug is approximately USD 29 billion. We have a very good data on file which indicates that this drug has a potential to become a blockbuster drug. So when we launch it globally, this will become a blockbuster drug. In India we plan to launch this drug in Q3 of this year. We will be among the top 50 products in India and would have sales in excess of Rs 100 crore in the next three years. The global launches will be done subsequently.

Q: When is the global launch scheduled for and by which financial year, whether through the middle of FY14 or 15, do you think the full impact of sales of this product will show through?

A: We are also registering the product in other markets and over the next three-five years we will have approval in 15 emerging markets and key developed market. We expect this product to be launched in different markets three-five years from now. So, the peak potential of this drug will be seen between five-seven years from now and we expect the potential to be about a billion dollar.

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Q: Would sales revenues hit somewhere near that figure for Lipaglyn? What kind of sales optic you might see from FY15 onwards?

A: Within three-five years, the product will be launched in different markets and seven years from now, we will see the peak potential of the product.

Q: Are you looking to change your guidance for the company given the product and the kind of markets you are talking about?

A: No we don't plant to change any guidance.

Q: Your domestic business was up about 15-16 percent in the quarter gone by but there are some concerns about how the new pricing policy may impact the growth for many companies like yourselves in the quarters to come. Would you worry about that and do you think you can continue to maintain that 15-16 percent growth in the domestic business itself?

A: There will be some short time glitch because there will be some price reduction announced by government. As a result, the sales might show some reduction in the growth rate but it is going to be a momentary fact.

Generally, we have seen in Indian market that when price is reduced the volume picks up and so some of this reduction would be taken care of by the volume growth. However, due to the new provision on the drug price control order that the new prices have to be implemented within 45 days, there is currently a destocking at the stockiest level and the chemist level for the drugs which are coming under drug price control order. So, we expect this quarter the sales of all pharma companies will be impacted.

We believe our company will continue growing but our growth will be muted for this quarter, but next quarter onwards again we will bounce back to the growth rate that we have.

Q: On the margin front you have seen some price erosion in your US business as well and even in this quarter gone by your margins have dipped from 17 percent that you used to enjoy to about 15 percent now. What kind of margin pressures will you see in FY14 and what would be a sustainable run rate in terms of margins?

A: We have reached to the bottom of the margin reduction. Now onwards, we will see margins becoming better. This is driven by two facts, one, we have new products getting approved in key markets where we would have better margins. Second, we have seen the worst of the margin reduction happening in the market. So, going forward we would have opportunity to improve the margins so we would not see margin going down from here but we would see improvement on margin over the next quarters.

Q: What kind of product launches have you penciled for FY14 with specific reference to some of your nasal spray products as also your transthermals?

A: We plan to launch at least one nasal spray product during this financial year and we also plan to launch another nine products in the key market. That would help us to improve the margin.

Q: Any concerns on what has so far been a prickly kind of relationship between the US FDA and many Indian pharmaceutical companies? One of your facilities was examined last year and one this year as well. Are things all clear with regard to your relationship with the US FDA?

A: Yes, absolutely.