‘We expect this quarter to have a good uptick for our products’
GlaxoSmithKline (GSK) Pharmaceuticals suffered a 63 per cent decline in net profit in the last quarter as implementation of the goods and services tax (GST) led to de-stocking.
ANNASWAMY VAIDHEESH, managing director of the British drug maker’s India unit and vice-president of its operations in South Asia, spoke to Aneesh Phadnis & Abhineet Kumar on the company’s growth strategy in the near future. Edited excerpts: Is the impact of the GST over now?
We believe we will come out of the destocking situation through a re-stocking. This was a big event and expecting normalcy to happen in a couple of months is not practical. We believe it will take minimum one quarter to get full re-stocking. Or it may even flow into the next quarter. I would say it is more of an adjustment because you are talking of the entire supply chain — distributors, retailers, wholesalers. Many of them do not have a GST certification or registration. They are trying to figure how to make it happen. In a country of this size, we cover more than 200,000 outlets and a large number of doctors. But we clearly see a bounceback in this quarter as we are not only seeing restocking happening but also a positive impact on business due to monsoon. So, we expect this quarter to have a good uptick for our products.
What is your view for the long-term growth in India?
You have to remember that this industry has gone through a lot of changes, whether it is price control, expansion of products in NLEM (National List of Essential Medicines), there has been a control on fixed-dose combinations, and there is still a lot of discussion going on about how to regulate the industry. The industry is facing a lot of good and bad news at the same time. Against this backdrop, growth for the industry is likely to be lower than what it used to be in the recent past. But whatever policies that are being put, will eventually streamline the industry. As you know, products are being launched by many local manufacturers. So, the government is trying to put in more stringent controls. Now you are going to have reduced speed of launches of those products. Combinations are being challenged and now nobody can launch such a product that easily. You are going to see some slowdown but at the end of the day we need to recognise India’s population of over a billion. All of them require health care. Currently, not all of them have access to health-care facilities. With economic growth happening, more people will get access to health care. People will require medicines, whether generic or branded generic. I am still positive about the industry from an overall perspective, but in the short term you are seeing some headwinds in terms of growth.
So what is your company’s strategy to grow, given this background?
We have been operating in India for 93 years. We are reasonably well-represented in the Indian pharma industry. We are in the top 10, and, relative to our presence in various other countries, GSK India is seen as a reasonably performing company. From a long-term perspective, we still believe India is a place where we need to invest and grow. That’s why we took a decision to invest in our manufacturing and improve our self-sufficiency. But some dosage and forms will have to be manufactured through third-party to achieve economies of scale. The current headwinds are not going to deter us from participating actively in India.
Which therapies you would focus on to seek growth in India?
We will bring some innovative products as well as the new assets that are being developed in other parts of the world primarily in the area of vaccines and respiratory segments. With the good IP (intellectual property) regime happening in India, we are far more confident that we can bring those assets and serve patients of India. In India, there are a large number of people suffering from COPD (Chronic Obstructive Pulmonary Disease) and asthma. GSK is investing big in these areas on a global basis. So we are talking to our parent company to evaluate the possibilities of serving those patients in India. And also looking at ideas that are very relevant to India. Diabetes is an important therapy area where we are not present, because GSK does not have that kind of a pipeline globally. However, we do believe, with our structure, we have the opportunity to serve more patients with the molecules that we may not have in house. We may look at co-marketing/in-licensing.