Sun Pharma eyes China, Japan markets

Dilip Shanghvi, MD of India's most valuable drug firm Sun PharmaceuticalNSE 0.85 % Industries and one of the richest first-generation billionaires in the country with a net worth of $7.8 billion, is now looking at new markets to fire the company's growth engine. The Gujarati businessman started his entrepreneurial journey from Kolkata with about Rs 10,000 nearly four decades ago. Today, he runs the world's fourth-largest specialty generics maker, generating revenues of over Rs 30,000 crore. 

Shanghai now plans to steer the company into the specialty business (novel, innovative drugs), and towards expanding markets like China and Japan for growth, both through acquisitions and partnerships. Excerpts from an exclusive interview:

How is the economic slowdown affecting the sector in general, and Sun Pharma in particular?

The Indian pharma industry has registered good growth in the first half of the year, and Sun Pharma has also performed well. We have taken multiple initiatives to respond to the challenges being faced by the industry and continue to remain positive.

At a time when operating margins on generics have been impacted in the US due to increase in competition, what are the avenues identified for growth in the most lucrative market, which contributes around 35% to company's revenue?

We are continuing our focus on complex and value-added generics and expect to launch new products in areas with limited competition. At the same time, we have been making significant investments to build a portfolio of branded or specialty products for the US market. We are currently marketing eight specialty products (Ilumya, Absorica, Bromsite, Xelpros, Yonsa, Levulan Kerastick, Odomzo & Cequa) in the US with focus on dermatology, oncology and ophthalmology. In H1FY20, our global specialty business contributed around 8% to our consolidated revenues ($2.3 billion). It is currently a small part, but we expect it to scale up over three-five years.

Markets like China and Japan have witnessed keen interest from domestic companies recently for growth. What is the company's strategy for these markets?

We expect China and Japan to become an increasingly important part of our future business. We are looking at partnering with leading pharmaceutical companies in China to introduce our specialty, differentiated and generic products.Earlier in the year, we partnered with China Medical System Holdings for both our specialty (Ilumya, Cequa) and generic products. We have also recently signed an agreement with AstraZenecaNSE -2.86 % to introduce certain novel ready-to-use infusion oncology products in China.apan is the world's second-largest pharmaceutical market and there is a lot of potential in the branded segment. We have a good basket of branded specialty products that can be introduced in Japan in future.Our subsidiary Pola Pharma's strong front-end and manufacturing capabilities give us the confidence that we will be able to serve the Japanese pharmaceutical market better in the coming years.

Are you a proponent of investing in core business, or like most conglomerates make unrelated bets?

We are very much focused on investing and strengthening our core business of pharmaceuticals.

Can you give us an update on allegations of financial irregularities and corporate governance lapses raised by a whistleblower?

At Sun, we remain committed to follow the highest levels of corporate governance. There were some perception issues that have been addressed. Our board has taken necessary steps to strengthen governance standards further. On the whistleblower query, we have provided whatever information Sebi has asked for and there is no further update.

Innovation has been the biggest buzzword at global businesses and several companies have either incubated new ventures or acquired promising startups to give them edge. How has Sun Pharma addressed this?

Sun Pharma has picked up minority stakes of 18-20% in pharmaceutical research companies, Israeli-based Tarsius Pharma and US-based MedInstill in the past.

How are you addressing the key question of succession in the group? Will your children Aalok and Vidhi be assuming more responsibility in the company?

Sun Pharma is a professionally-run company managed by a world-class team. I don't plan to retire anytime soon. I am happy to see my children taking more responsibilities. Aalok is currently leading the emerging market business and is also responsible for generic R&D. Vidhi is currently managing India distribution and the OTC business.

How satisfied are you with the measures taken by the Modi government to address the slowdown and drive growth? What more needs to be done?

I can respond about the pharmaceutical sector only. The government is working with the industry to encourage innovation and also make Indian pharma more competitive globally.

Source:

https://economictimes.indiatimes.com/industry/healthcare/biotech/pharmaceuticals/sun-pharma-eyes-china-japan-mkts/articleshow/73150206.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst .