Sun Pharma sharpens digital focus to boost efficiency
Sun Pharma is adopting digital solutions in research and development (R&D) to boost efficiency as pricing pressure continues to hurt its US business.
The drugmaker is set to ramp up its R&D spend in 2018-19 as it builds a pipeline of specialty products.
Expenses will also see an increase this year as it plans three key launches in the US, including its psoriasis drug (Ilumya), eye drops (OTX-101) and anti-cancer drug (Yonsa). This will require upfront investments to build a field force and put pressure on margins. “We are building a digital collaborative platform that will help improve R&D productivity,” said a Sun Pharma spokesperson.
While Indian drugmakers have armed medical representatives with mobile apps and tablets, the use of digital tools for customer insight, disease management or R&D is limited.
According to a 2017 study by consultancy firm EY, less than 10 per cent of Indian pharmaceutical companies have a comprehensive digital strategy in place and Sun Pharma could be among the first ones to use digital tools for R&D.
“The project is still in the process of being implemented,” the spokesperson added without giving further details. Deloitte, which is working with Sun Pharma on the digital platform, did not respond to a query.
“R&D expenses in FY19 will increase (around 8-9 per cent of FY19 sales) due to clinical trials for a new indication of Ilumya and other specialty products. On the generics
side, we are critically evaluating many projects considering the changed business dynamics in the US and will be rationalising our generic R&D spend,” Sun Pharma said.
Rationalising R&D expenses along with cost control measures and selling high margin products are among the company’s strategy to protect its margins.
Sun Pharma's stock gained 16.7 per cent from the beginning of this month on the back of low double digit sales growth guidance and resolution of regulatory compliance issues at its Halol plant. On a year-to-date basis, the stock declined 1.9 per cent while the BSE Healthcare Index fell 3.9 per cent.
The Halol plant, a key facility of the drugmaker, has been under regulatory scanner since September 2014. It was served a warning letter by the US Food and Drug Administration (FDA) in December 2015.
The firm is also working to resolve regulatory issues at three of its plants which have an import alert from FDA and has started filing products from the Mohali plant which was cleared by the regulator last March.
“The Mohali facility continues to file products for the US market and will see a gradual ramp up. In terms of status of other plants, work is going on according to the requirements of the consent decree. We can’t share any timelines,” Sun Pharma said.
Sun Pharma acquired the Mohali plant as part of its $4.1 billion purchase of Ranbaxy in 2015. Two other erstwhile Ranbaxy plants at Paonta Sahib in Himachal Pradesh and Dewas in Madhya Pradesh remain under an FDA import alert issued in 2008, while a third plant at Toansa in Punjab was banned in 2014.