Preparing for GST implementation for past few months: DRL's Chakraborty

Q: Any jitters for pharma companies with regards to implementation of pharma companies?

A: We have been preparing for GST for the past few months. The impact is there in the industry, most of the stockiest have not been buying as much as they would normally would have bought. Also if there would have been any sales return that would have maximise during this period, so everything comes back.

So for the overall industry in the month of June there would be an impact due to de-stocking and after July 1, it will start normalising. Maybe it will take a quarter or so, for normalizing before it stabilises, so Q3 could be the period post GST implementation, I hope things will stabilise.

Q: Do consumers have to fear about lack of availability of drugs because some stockiest haven’t been able to adjust to GST or execute it?

A: If availability would have been a concern that would have played out now, but after July 1, all the stockiest can buy, so I don’t think availability would be a concern now.

Q: Do you expect short-term supply challenge? All India Organisation of Chemists & Druggists (AIOCD) has said they do not expect a supply shortage?

A: Even I believe there should not be supply shortage but there is some confusion, so let things stablise, people have to get accustomed to that. It will take its own time and hopefully, it will not lead to a situation where there is shortage.

Whatever sales which have been lost by the industry, whether that is total loss and cannot be recovered has to be seen.

Q: When you talk about loss, when you talk about Q1 of FY18 how much do you expect sales to be impacted in percentage terms when it comes to domestic growth because of GST?

A: It depends because different stockiest must have been stocking for specific number of days of sales now that has been brought down to minimum, so that it could be even more than 50  percent of the month’s sale which could get impacted.

Q:  So you expect flat growth?

A: There could be decline

Q:  Your June presentation has some data slides about optimistic outlook on the overall performance of the company? Can you take us through what all the triggers you expect in your overall performance?

A: From FY08 to FY16 we have been growing   although growth has not been consistent, sometimes we have growth well, sometimes in low single digit but we have been growing. In Fy17 after quite some time it’s the first year there has been a decline, so based on FY17 performance, we definitely hope that FY18 will we can come out with a better performance.

However, it is for the whole year –in specific quarters there could be different problems, like in Q1 India for instance -- that is an industrywide phenomenon obviously our company is also going to get impacted, so that extent it may be difficult.

In US it all depends on product launch, so we have been able to get along 4 product launch during the quarter  but it takes time to pick up, so hopefully Q2 will be better than Q1. End of this year we are expecting even a bigger product launch particularly the acquisition we did of Teva portfolio and significant products out of them and one of them got launched in Q1 but if significant ones gets launched either but end of this year and even if it gets delayed then we hope early FY19 it gets launched then it picks up.

In emerging markets we have been bullish because we haven’t seen much of adverse movement because lot of countries are crude oil price dependent and that has impact on currency. As constant currency we have been able to growth and we have be opening up more markets. Some of the entry to our first sales have been very fast for example Columbia, we entered and in very quick period we got product registration and we started selling.

In Brazil although it was not the first time we tried to enter but this time the whole focus has been on emerging markets for specific kind of products, which we are more confident of making success out of that. So, for emerging markets we hope FY18 would be better than FY17.

Q: With regards to domestic market how keenly are you looking at this whole generic  prescription bit which could be a reality or become more firm and what kind of work have you done when it comes to impacting your sales or some amount of mitigation of risk as well?

A: One will have to wait and see how things will pan out for example in Russia there was a specific Act which came in favour of  international non-proprietary name (INN) prescription but in terms of the brand sales it still continued because there would be familiarity with specific brand -- the perceptions of brand which gets into consumers mind for a very long period and the doctors were prescribing even though they are supposed to write an  international non-proprietary name (INN) prescription there will always verbal communication in terms of quality to be assure by specific brand and that is why brand sales remained intact.

The only think wherever it is government kind of sales that has much higher risk if when there is a complete change backed up by regulation.

So India will have to see in which direction it moves. But if the entire thing happens with a good quality that means instead of huge number of players in the market only those specific manufactures who have a very sound quality only they are able to sell in the market with generics prescription – if there had been requirement for passing through some kind of an approval process to get them, then there could be a level playing field where companies like us can hope to compete and perform. So at this point of time I don’t want to make any preemptive statements in terms of what will happen and how we are going to react.

Q: Could we see a decline in India this year? You grew at 9% - so will it be as good as that or decline or be flat?

A: We hope to do better in India but we have to find out the GST impact, if you take away that impact, we were expecting to grow in teens in India.

For full discussion, watch video.