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Thanks to the burgeoning pressure on generics in the global drug market, players in the domain are always on their toes. A continuous hunt for opportunities to strengthen presence in the existing markets and make headway in the newer ones is the big challenge companies cannot escape. The pressure on prices is here to stay and companies like ours that draw about 80% revenues from overseas, have no option other than fighting it. It is a battle for survival. However, we are looking at various options to reduce the production costs including sourcing bulk drugs from countries with cheaper costs for active pharma ingredients (API) and reduced intellectual property expenses.
In the coming years, API procurement from China is going to be significantly higher. Mergers and acquisitions is also another option to strengthen the company's position. With US FDA approval pending for our Ponta Sahib facility in Himachal Pradesh, we expect to increase our exports to the US market. The facility, however, exports to all other markets across the globe.
Ranbaxy has aggressively pursued acquisitions and contributed to 7% of India 's total acquisitions (in value terms) during 2006. (Ranbaxy made eight acquisitions including a $324 million buyout of Terapia ( Romania ) and a $70 million acquisition of Be-Tabs in South Africa .)
Europe being one of the key markets for us, Romania is going to play significant role in the company's growth. Romania will become a part of European Union from January 1, 2007 giving RLL access to the huge market. Post acquisition, we have grown at 50% against the market growth rate of about 22%. We plan to introduce about 40 products in European markets through the consolidation.
Besides generics, we are also foraying into innovation as that is the area where opportunities rest. Currently, we are working on about 10 molecules, covering therapeutic areas such as oncology, metabolic disorders, inflammation and urology, at different stages of trials. We have partnered on two molecules, while on another eight we depend on our 300 plus workforce for the development of a new chemical entity.
Probably by 2010, we will have a NCE as it is nearing completion of Phase II clinical trials for our anti-malarial molecule RBx 11160. On the drivers of future growth in the high potential market such as the US, we have about 60 approvals in the pipeline and with the FDA expediting its review process products will hit the market sooner than later. Ranbaxy with its large product offering has been consistent in supplying and bringing down prices to competitive levels. The company recently announced distribution of pediatric dosage of HIV/AIDS drug in African countries with the Clinton Foundation. With about 45% reduction in the drug prices to be distributed in 62 developing countries, the company does not look for huge margins.
The company distributes the drugs on a wafer thin margin and would do so to ensure that treatment is also made available to people who can not afford it. On the new draft drug policy, we feel it has to be forward looking, remove price control and be supportive of the industry that is in the process of making its presence felt in the global market. Our mission statement remains to become a research-based international pharmaceutical company.
-The author is CEO, Ranbaxy Laboratories |
