Ci­pla Charts Plans to Build Pipeline of Spe­cialty Drugs to Give US Biz a Boost

Drug co to also scout for in-li­cens­ing op­por­tu­ni­ties to close the gap with lo­cal ri­vals

The Economic Times - - Companies - Vikas.Dan­dekar @times­group.com

Mum­bai: Ci­pla has set its sights on build­ing a pipeline of spe­cialty drugs in the United States. The com­pany, In­dia’s third-largest drugmaker, plans to de­ploy more funds for re­search and devel­op­ment in res­pi­ra­tory, der­ma­tol­ogy, neu­rol­ogy and on­col­ogy seg­ments and hopes for the first com­mer­cial launch in the US around 2020.

Scout­ing for in-li­cens­ing op­por­tu­ni­ties is also part of the plan to jump­start work, ac­cord­ing to the com­pany, which clocked over $2 bil­lion in global sales last year.

Ci­pla’s move is aimed at clos­ing the gap with fel­low drug­mak­ers such as Sun Phar­ma­ceu­ti­cal In­dus­tries, Dr Reddy’s and Lupin. The drugmaker, which is go­ing through an un­easy trans­for­ma­tion process to pro­fes­sional man­age­ment over the past four years, had part­nered lead­ing generic com­pa­nies such as Teva but re­mained on the side­lines in the world’s largest drug mar­ket.

Last year, it ac­quired US-based In­vagen in a deal worth $550 mil­lion. Its to­tal US sales added to abo-

re­vise US sales guid­ance to of to­tal sales by 2020

may cut ex­po­sure to less than 100 mar­kets from the present 130 ut $400 mil­lion last year, much lower than that of its In­dian peers that en­tered the gener­ics busi­ness early on and scaled up to a crit­i­cal mass, clock­ing sales of well over $1 bil­lion in the US. But Ci­pla’s global chief op­er­at­ing of­fi­cer Umang Vohra said there is enough scope for the com­pany to leapfrog and lever­age its in­her­ent tech­no­log­i­cal ca­pa­bil­i­ties with a thrust on the spe­cialty side to nar­row the gap with its lo­cal peers. “What we don’t want to hap­pen is to try to catch up on the US gener­ics piece now and then five years later, we again start to catch up on the spe­cialty side of the busi­ness. As we be­gin to catch up on the US gener­ics space, we are also en­sur­ing at­ten­tion to spe­cialty busi­ness,” said Vohra, who joined the com­pany in Septem­ber last year af­ter spear­head­ing a range of lead­er­ship roles at Dr Reddy’s for over 14 years.

Ci­pla’s re­search bud­get may spi­ral up to 8% of sales from 6% at present as it pre­pares for the new op­por­tu­ni­ties, he said. Vohra said that the com­pany may re­vise its forecast of achiev­ing 20% sales from the US mar­ket by 2020 to about 30% of sales by the end of this decade. He ad­mit­ted that the com­pany is a late starter in the US and that it could have gained sig­nif­i­cantly had it taken prod­ucts such as es­omepra­zole (where Teva sig­nif­i­cantly gained sales) or Dymista (for which Meda part­nered Ci­pla and got ac­quired ear­lier this year by My­lan for $7.2 bil­lion) on its own.

Ci­pla is now in the process of iden­ti­fy­ing prod­ucts that can cater to the fu­ture health­care needs such as long act­ing in­jecta­bles or that can help pa­tients with eas­ier dos­ing op­tions. “We will not be present in more than two ther­a­pies and it will be an in­cre­men­tally in­no­va­tive prod­uct with a 505(b2) route. It will be a well-known ac­tive (sub­stance or in­gre­di­ent) that is re­pur­posed,” Vohra said. He said der­ma­tol­ogy is an­other area that Ci­pla can also ex­plore, like many other com­pa­nies, as it is eas­ier to have an in­cre­men­tal in­no­va­tion in this seg­ment. The clin­i­cal end-points in some of such drugs are not dif­fi­cult to achieve, which may be com­pleted with as lit­tle spends as $20-30 mil­lion, he said. Sun Pharma and Dr Reddy’s have been ag­gres­sively ramp­ing up their in­no­va­tive drugs pipeline, par­tic­u­larly in der­ma­tol­ogy seg­ment, in the US. While US will be the key fo­cus for Ci­pla, Vohra is firm­ing up plans to cut ex­po­sure to more than 130 emerg­ing mar­kets where the com­pany cur­rently op­er­ates. The com­pany may con­sol­i­date fo­cus to less than 100 mar­kets. “If we are to de­ploy our as­sets and the best peo­ple, we have to make a choice and it is linked to rel­a­tive re­turns,” Vohra said.

All of the 30 mar­kets to­gether may not be con­tribut­ing more than 1% of the to­tal sales, he said. The mar­kets that Ci­pla may exit in­clude Azer­bai­jan, East Ti­mor, Cu­ru­cao and Paraguay. On the much-watched is­sue of US FDA’s ob­ser­va­tion for the firm’s In­dore site, Vohra said he ex­pects to hear from the reg­u­la­tory agency by May.

Ci­pla’s re­search bud­get may spi­ral up to 8% of sales from 6% at present as it pre­pares for new op­por­tu­ni­ties

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