Big pharma firms to rejig US portfolio

Cipla, Glenmark, Lupin to focus on complex products as price erosion hurts profits

Facing pricing pressure, large Indian pharmaceutical companies are focusing on select product launches in the US. The move comes amid increasing competition in the generic drug-space and customer consolidation, which have been affecting companies’ profits.

“I do not think we are going to file more than 20 products in a year, but we will choose them well. Nowadays in the US you think you have a very good product, but there are eight companies filing the product on day one and another five after that. We are running our R&D machinery really hard and the outcome may not be what we want. We will try and file less, but will do the ones that are a lot more complex,” Cipla Managing Director Umang Vohra said.

Cipla is a late entrant in the US market and earns around 20 per cent of its revenue from there. However, established players such as Lupin and

Sun Pharma, too, are optimising their drug pipeline in the US on the back of customer consolidation.

In a post-results conference call earlier this month, Lupin Chief Executive Officer Vinita Gupta said given the structural change in the US market it no longer made sense to invest in products where the company was the sixth or seventh player. “We have the potential and the opportunity to prune our pipeline, to focus on products where we can be among the first 2-3 players in the market and can get a return on our investment,” she said. “Our focus is on products that have strong entry barriers, including biosimilars, inhalation and complex injectables. We believe this focus will help us overcome structural changes in key markets like the US,” Lupin's Managing Director Nilesh Gupta said. Focusing on specialty portfolios is likely to provide Indian drug makers a competitive edge in the US market. Multinational pharmaceutical companies, including Novartis and Teva, are resetting their business as challenges mount in the US. While Novartis is planning to sell its generic drugs business in the US, Teva is implementing a $3 billion cost-saving plan.

“We are relooking a part of our generic R&D,” Sun Pharma Managing Director Dilip Shanghvi told analysts in a post-results conference call last week. The company, which is building a pipeline of speciality products in the ophthalmic, oncology and dermatology categories in the US, also withdrew over 15 products filings in the last six months due to changed market conditions.

“Glenmark is focusing on limited launches and limited competition products,” a company spokesperson said. “Our strategy has always been on filing 15-20 products every year. This will remain unchanged. However, the nature of the filings will be very different from what we have done in the past,” the spokesperson added.

Glenmark last year spent around ~12.62 billion on R&D, which was 14-15 per cent of its sales, excluding cholesterol drug Zetia. R&D spending in absolute terms would be significantly lower in 2017-18, the firm said.

Ahmedabad-based Cadila Healthcare's product pipeline for the US market would include a mix of volume generic drugs and speciality products, Managing Director Sharvil Patel said. The company believes there is an opportunity in developing high-volume drugs, given the periodic supply disruptions in the market.

“I believe in having large volume products and obviously differentiated niche products. We have a development pipeline of around 150 products, including complex products. We are putting a lot of effort in developing speciality products and we will launch one this year. That will be a key focus. We are also looking for partners for in-licensing technologies,” Patel said.

The outlier in the pack is Aurobindo Pharmaceuticals, which is building a large basket of drugs with multiple dosage forms. Sources familiar with the company’s strategy said it was not reducing its plain vanilla generic drug filings, but would focus more on complex products such as injectables, peptides, and hormones in the US market. Aurobindo does not sell finished dosages in India and earns over 70 per cent of its sales in the US and Europe, which is one of the main reasons for the large number of filings in those markets.