In the fast lane
A little high a little low. Zydus Cadila is a company that was born from a split and yet has had an eventful past spread over half a century. Today, it is ranked the fifth largest pharmaceutical company in India. Sushmi Dey takes a look
Cadila was set up in 1952, a time when venturing into pharmaceuticals was considered foolhardy. Yet, the company had a meteoric rise, which saw fortunes soar. But after being ranked second largest in the industry in the early 1990s, the company developed leaden feet with diversifications in unrelated areas, which consequently slowed down its growth.
In 1995, while most Indian pharmaceutical companies were busy strengthening their global presence and research competencies, Cadila Health-care was left grappling with problems following a vertical split. The split led to two entities sharing the Cadila name—Cadila Pharmaceuticals belonging to the Modi group and Cadila Healthcare headed by the Patel group. The split led the company to problems like, shared equity, depleted product basket, low employee morale, no infrastructure and a turnover of just Rs 250 crore. There were also other concerns like a fast eroding market share and the immediate challenge on hand was to consolidate operations. The path they chose was focussing on domestic operations to build a strong platform of growth for the future.
Best laid plans
The second innings for Cadila Healthcare had been cautiously crafted. While the company began to pull its act together under the leadership of Pankaj R Patel, the Chairman and Managing Director, the immediate task was to build a new identity for the company and remove the ambiguity and confusion that surrounded the two Cadila splinter groups. Hence, Cadila Healthcare emerged under the aegis of the Zydus group. The focus shifted to formulations, APIs, diagnostics, herbals, animal healthcare and cosmeceuticals. “In 1995, when we were starting out all over again, we knew that we had a definite advantage in the domestic market in terms of formulation sales. While we went about consolidating this area in our operations, we also looked at all the other aspects and consciously went about creating value drivers all across the value chain, rather than just limiting ourselves to one aspect,” says Pankaj R Patel.
Today, the company identifies domestic dosage forms, high-end APIs and intermediates, semi and non-regulated markets, international generics-regulated markets, alliances and contract manufacturing and research driven innovations as its core business areas. It is due to this well-balanced and integrated growth that from a turnover of Rs 2.5 billion in 1995, the group today stands with a turnover exceeding Rs 13 billion.
Products and services
Soon after restructuring, the priority of the company was to consolidate the business and put operations back on track. It launched almost 23 new products in the very first year after the split. The group also narrowed down its focus to fast growing therapeutic segments like cardiovascular, gastrointestinal, pain management, preventives and anti-infective. No wonder, today the company boasts of 14 brands in its product portfolio that features amongst the top 300 pharmaceutical brands in India.
The company is also foraying in the chronic care segment and the market share has been stepping up constantly which is contributing to half of the formulation revenue. The company has to its credit several key brands like Aten (Atenolol), which is the largest selling cardiovascular brand in India and Nucoxia, which was declared “Best Launch of 2004” from amongst 2,100 brands. It also has Ocid (Omeprazole), Pantodac (Pantoprazole), Mifegest (Mifeperistone) and Atorva (Atorvastatin) in its product portfolio.
Strong formulations and development skills compliment its manufacturing expertise. Today, the group boasts of manufacturing a range of traditional and novel dosage forms. It is also the only company in India to develop soft gel caps for iron supplements and has developed a complex typhoid vaccine indigenously. The ability to develop wide ranging dosage forms and unprecedented scalability, reinforce Zydus’ positioning as a key outsourcing partner. Besides, the company is the largest Indian manufacturer of Paroxetine, Famotidine, Atorvastatin and Lamivudine. Zydus Cadila also ensures prevention of pollution, occupational health and safety risks at its manufacturing premises. Its environment, health and safety management system also conforms to global standards.
With nine state-of-the-art manufacturing plants spread across four states of Gujarat, Maharashtra, Goa and Himachal Pradesh, the group is the largest suppository manufacturer in India. The USFDA approved formulations manufacturing plant at Moraiya is the largest of its kind in Asia. The group’s oncology plant and agiolax plant at Goa and formulations manufacturing facility at Baddi (Himachal Pradesh) mainly cater to the domestic market.
After acquiring size and scale to beef up its domestic operations, it was time to look ahead. Zydus Cadila set its eyes on France, Europe’s fastest growing generic market. While Europe provided the right valuation for an acquisition, the group considered it more prudent to set up operations in USA, the world’s largest generic market.
Zydus Cadila markets APIs through its subsidiary Zydus Healthcare and formulation generics through Zydus Pharmaceuticals (USA). It has entered into strategic alliance with Mallinckrodt, one of the top ten generics companies in the US for marketing generic products manufactured by Zydus Cadila under a joint label. The group has filed 36 ANDAs and 39 DMFs so far and received 11 product approvals.
According to company officials, with an estimated $50 billion worth of molecules going off patent over the next few years and there are abundant opportunities for market formulation generics, APIs and intermediates. With distinct advantage of proven chemistry capabilities, world class manufacturing facilities and ability to deliver products at highly competitive prices, the Indian pharma companies are best placed to grab a share of the generic pie. There are also new avenues for growth by aligning with innovator companies for outsourcing of API or intermediates, formulations or R&D related services. Zydus Cadila’s plans for growth in the generic markets is well aligned to these emerging opportunities.
And what is marketing without brand management. It has always been the group’s muscle and has been reinforced with therapy management. According to company officials, it also helped the cause. Today, Zydus Cadila has one of the strongest distribution networks in the industry. The company has also strengthened its presence in the healthy dietary supplement segment by acquiring a 14.9 percent stake in Carnation Nutra-Analogue Foods, the manufacturers of Nutralite, branded margarine that currently enjoys a market share close to 60 percent. The company officials explain that the acquisition is a result of the company’s long term market leadership in the sweetener segment through its brand, Sugar Free.
Every move of the company was well planned. So the question now is-what is in store for the future? Well, it has some heavy-duty plans. The company aims to be a global research driven healthcare company by 2020 and plans to lodge itself among the top ten global generic companies with a strong R&D pipeline.
A relatively late starter on the research front, Zydus Cadila has been making brisk progress. “In the long term, we aim to be an innovative research-driven global pharma company,” says Patel. The group has a dedicated research team, spearheaded by 550 professionals with 230 scientists, dedicated to NCE research alone. Now, it has one NME-ZYH1, which has entered Phase II clinical trials and have filed two other INDs- ZYI1 and ZYH2. The Zydus Research Centre is also working in the areas of New Drug Delivery Systems and biotechnology. The company, among its recent plans also wishes to focus on sales and aims to achieve sales of $400 million by 2006 and excess of $1 billion by 2010.
“The global generic market is also a growth driver and we will be looking at strengthening operations in USA, Europe, Brazil and South Africa,” Patel said.
According to Patel, the company is also looking at opportunities for in-licensing and out-licensing and contract manufacturing, in-sourcing and leveraging on alliances to step up growth. Biotechnology is yet another promising area, which the group is exploring. It is working in the areas of biogenerics, proteomics and receptor binding studies and also plans to launch novel r-DNA based therapeutic proteins. Looks like they will not stop until the goal is reached.