NURSING THE FAMILY LEGACY

COMPANY: Cipla Ltd DESIGNATION: Vice Chairman AGE: 41

Circa 2011. Samina Vaziralli, granddaughter of Cipla’s founder Dr Khwaja Abdul Hamied, had taken a break from her professional career as a banker. Cipla happened to be going through a major upheaval at the time. The then joint managing director Amar Lulla, close to the promoter family and instrumental in shaping Cipla’s fortunes for over a decade, fell seriously ill and passed away. The 80-year-old chairman Dr Y.K. Hamied and his younger brother and vice chairman M.K. Hamied, 76, had decided to move on to nonexecutive roles. But both brothers wanted the family legacy and values to continue moulding the company while creating a new Cipla run by professionals. It was the reason why Samina, M.K. Hamied’s daughter, was asked to join Cipla.

Samina was inducted into the board in July 2015 as Executive Director and the Global HeadStrategy, M&A and New Ventures, after shaping Cipla’s consumer healthcare business (part of Cipla New Ventures) for four years. She had prior professional experience, having worked with Goldman Sachs as an investment banker in London and the US after her masters in International Finance from the London School of Economics.

Today, she is the third-generation promoter face at Cipla, an 81-year-old legacy drug company known globally for offering reverse engineered life saving drugs at a fraction of the cost of patented drugs. Her younger brother, Kamil Hamied worked with Cipla for about eight years and rose to the position of Chief Strategy Officer, but decided to pursue his own business interests and left the company in 2015, when he was expected to succeed the senior Hamieds. As executive vice chairman since last September, Samina heads the company’s board, responsible for handling governance issues and chalking out strategic priorities through global partnerships, corporate branding and public advocacy. “The biggest challenge is to create a new and more future ready Cipla. We have put together an enviable management team and are building a strong organisation, strongly anchored on our OneCipla Credo, that we have just articulated. These are exciting times as we get ready for the next big leap,” says Samina, a mother of two. Her husband works for a multinational cosmetic company.

Cipla had brought in Subhanu Saxena, a former Novartis senior executive from London as CEO in February 2013 and he was heading the company as managing director and global CEO. But last August he had to leave the company to “attend to emergent family priorities ”. However, Cipla has built a fresh team. The company has hired Umang Vohra from Dr Reddy’s, who was entrusted the job of MD and Global CEO after Saxena's exit. Kedar Upadhye, another former Dr Reddy’s executive, has been brought in as global CFO. Today, Cipla is steered by a fivemember management council headed by Vohra and overseen by Samina. “We are delighted to see two young leaders – Umang and Samina – take on higher responsibilities within Cipla. Samina’s elevation also reinforces the long-term commitment of the promoter family to Cipla,” said Y.K. Hamied while announcing Samina as the Vice Chairman.

CHANGING TACK

Under the new leadership, Cipla has evolved a new blueprint for growth. From the earlier low-risk model of supplying key products to multinational companies and concentrating heavily on the domestic market, Cipla is in the midst of a major business model realignment with focus on chosen global markets and aggressive sales in the US. The results are also showing.

In 2015/16, Cipla’s revenues were `13, 678 crore, a growth of 20.6 per cent over the previous year. Profit After Tax ( PAT) also grew 27.5 per cent during the period to `1,506 crore. For the first nine months of 2016/17, revenues were `11,048 crore, a growth of 5 per cent compared to the corresponding period of last year. PAT in this period stood at `1,068 crore, down 27 per cent over the previous year, due to exceptional factors such as low margins and declining business from Europe. Analysts expect Cipla’s revenues to grow at over 15 per cent a year and earnings at over 32 per cent in the coming 2-3 years as it continues to push ahead with its new gameplan. “We believe Cipla is still in the process of revamping the US business,” noted

analysts with HDFC Securities.

The biggest shift has come in geography-based revenues. Earlier, Cipla was over dependent on domestic market revenues, which accounted for 70 per cent of its top line till about a decade ago. Now less than 40 per cent of its revenues are from the domestic market. Revenues from North America (18 per cent), emerging markets (21 per cent) and South Africa (12 per cent) are significant contributors to Cipla’s top line. In the first nine months of 2016/17, Cipla’s US business grew 28 per cent and it is one of the fastest growing generic companies in the US with about 41 products in the market and over half of them in leadership position. Cipla’s sudden entry into the US was made possible with the acquisition of two companies - InvaGen and Exelan Pharmaceuticals - for about $550 million, giving it a strong presence in the country. The acquisitions were done simultaneously and have interrelated businesses .

Cipla appears poised to grow steadily over the next few years with Samina at the helm.