One of the country's oldest and largest drugmaker Cipla has been often spoken as an acquisition target by MNCs wanting to expand in India. The company's CEO, Subhanu Saxena, in an exclusive conversation with CNBC-TV18's Archana Shukla however, denies any talks and says the focus is on building the company long term.
Below is the verbatim transcript of Subhanu Saxena's interview with Archana Shukla.
Q: You have worked with many multinational and innovator drug companies. Let me start by asking you how is the shift and the transition from working for an innovator company to one company which is called the generics power house?
A: It has been a wonderful experience. It is driven mainly by the people of Cipla. I tell everyone this and they find it hard to believe but my first day in the company felt like coming home. It was such a warm welcome, it was such a good fit for me and I have been very passionate about the mission of Cipla and I came for the mission- the chance to do something on a global stage and take Gandhi's message to the world is how it was described to me.
How can you turn that down and do something good for our country. So, I was energised when Dr Hamied asked me to come and join the company.
Cipla is full of innovation. One shouldn’t think that Cipla has no innovation. In fact our drug delivery and manufacturing platforms have many innovative technologies that we bring to the market. Many things I found very familiar. The most unfamiliar piece was the Mumbai traffic which I am still trying to get used to.
Q: What was the mandate that Dr Hamied give you when you took charge?
A: To take Cipla on to the global stage, be true to the mission and build a company for the next 80 years.
Q: Cipla has always for all its life been a very family driven and a family run business and now we see a big transition from that versus now when the external professionals are coming in and are managing. Dr Hamied now has moved out of the executive roles from the day to day activities of the company, what is his role now?
A: Dr and Mr Hamied continue to be great mentors and guides for me personally and for the leadership team. They both have non-executive roles. The board is one which would run any global multi-national and they play their role in the board as Chairman and Vice-Chairman. We ensure we get the guidance from them that we need particularly when it comes to issues of R&D strategy and our pipeline. So, we stay in regular touch particularly through the teams. I want the teams to interact with them, I want them to be inspired by their vision.
Q: The next agenda for the company is to have a big take on the global platform. Where are you positioning and your new team positioning Cipla on the global platform? What is the kind of strategy that you are looking for that will spin this growth in the coming term?
A: First you must remember that global also means India. So, by driving reach, by expanding our presence in key therapy areas. What we think we will actually do over the next 4 years or so is double our Indian business just by executing what is in our hand.
The other piece is people are realising that our formidable region presence make us a very attractive partner particularly when the mandate is access every patient that should get our therapy. So, we will do that and we will double our business over the next 4 years or so.
India today is around 45 percent of our total business. Now we will double it and it will be 30 percent of our future. So, that tells you a lot about what the potential is outside of India. If I have to summarise the strategy outside of India it is very simple it is to cut out the middle man and put Cipla's flag in a number of key strategic markets. So, what we have done there is that we have established teams in Europe and the US and you have seen that with Sri Lanka and Yemen that we have done recently. Last year we acquired Cipla Medpro the third largest company in South Africa in the pharma space and Africa is now 25 percent of Cipla's business. Probably in the next 3-4 years we will see Cipla's flag in over 20 markets around the world.
Q: Do you think Cipla is somewhere late in this game if you compete with your peers in India when we talk about the global strategy?
A: The best way to describe is that we are different. Competitors such as Sun, Lupin, Dr Reddy's entered the US market 10 years ago primarily through small molecule generic strategies and that is a 10 year lead in a particular segment. As we look at the US market in particular going forward once the small molecules go off patent from 2016 onwards then you will see much more focus on more differentiated products, speciality products and so we will come through a very differentiated portfolio that leverages our respiratory heritage and our expertise and secondly also our R&D platform to bring novel formulations, injectibles using our nano technologies to bring lower dose versions of existing drugs.
Q: Cipla is often spoken as an acquisition target by MNCs wanting to expand in India, your comments?
A: In these kind of roles, in these companies, I think you hear different rumours every three days in five different directions and you just learn to ignore them and stay focused on the mission. Dr Hamied has said three things to me when I came to the company, first was build the company for the next 80 years, don’t get distracted by all this noise, the second was don’t bet the house. No need to take crazy risks. Cipla is a company with very low levels of debt, we don’t need to take crazy risks, we have a lot already in our hands to execute and the third was focus on long-term decisions, don’t get sidetracked by quarterly numbers and make sure we make the right decisions that build a strong company for the long term. So, people always speak and speculate, I never react to those.
Q: You think all of this has been entirely speculation and rumours?
A: Absolutely.
Q: There have been suitors for Cipla you are saying?
A: What we have been discussing are partnerships. So, we have done in licensing deals. So, what we have been doing is working with multi-nationals where it makes sense to in licence the medicines for India. So, during my time I have received no formal offer. We know what we need to do and we are going to stay focused on our mission.
Q: No suitors for Cipla, but is Cipla eyeing some company, would that be on the radar to expand and grow from where you are?
A: As I said earlier, we don’t see the need to do any kind of mega transformational deal. If I am looking it will be for specific platforms or geographies that may complement what we are already doing but I have said already 70 percent of our growth is going to be organic, from what is in our hands today and the rest more what I call semi-inorganic through partnerships.
For entire interview watch accompanying videos
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