Soon after N Rajaram took over as Managing Director of global pharmaceutical major Sanofi's Indian arm on January 1, an MoU was signed between Tamil Nadu's Dr MGR Medical University and Sanofi Genzyme to build genetic diagnostic facility in the institution. In an interaction with Gireesh Babu, the new MD speaks about the challenges his company currently faces and those that lie ahead. Edited Excerpts:
How was the year 2017 for Sanofi India?
The year was a challenging one for all. But we continue to build our presence in areas that we are very serious about, such a diabetes, rare diseases, consumer healthcare and vaccines. We have had strong performances in all these areas. It is early to gauge the impact of factors like GST and demonetisation on us. While they have had some effect on the overall results of companies, the year 2018 should see more stable results. That would be a better assessment of performance, because there was far too much noise everywhere in 2017.
To what extent did GST implementation impact your business?
I won't be able to quantify that now. Our interest was to make that we were not out of stock as far as patients were concerned and we managed that very well. Of course, in the process, some of the inventory would have shrunk in the distribution channel, while some would have gone up. There was definitely some impact, but I think it is behind us and we are all back to regular business now.
What are your expectations in 2018?
I think we are seeing positive signs. We are very supportive of some of the initiatives taken by the government in terms of the focus on healthcare, whether it is insurance or access to medicines. The government is really committing itself to that and we would be very happy to be a partner in this initiative. I think that is a good sign.
What do you expect on the policy and regulation front?
Policy and regulations need to be predictable. I think healthcare is an important area where the government will always have to have a policy that is in the best interest of public. As companies, we have to participate in the national agenda, with the government. That is our job. What we expect is predictability of policies. The industry gets anxious when it is not predictive. But I think the government has now provided a fairly predictable and stable environment and we have to respond to it. The pricing regulation surprises are far less than they have been, but they continue to come. The government has a clear policy on pricing, the formula for amendment of prices is very clear. So we have to follow it.
It is reported that Shantha Biotechnics is planning to set up an insulin plant in Hyderabad. What is the status? What are your capacity expansion plans?
We are one of the few multinational companies that export out of India to developed markets. We have more than 5,000 people in India and we continue to grow. We continuously have capacity additions, both for domestic markets and exports. There is a scope for us to expand in Shantha and we are looking at ramping up other manufacturing operations such as insulin. We are building capacity. It is too early to say when we would start operations.
Are you open to further acquisitions in India? What kind of synergy are you looking for?
We are always looking for an appropriate opportunity. It has to be strategically and financially viable. Internationally, we are at the forefront of acquisitions. We look at it mainly from the areas we are working on strategically. As and when something is available and it is the right time and right fit for the business, we will be interested. Synergies come in many types, such as complimentary areas in therapy and go-to-market model, both of which interest to us. But they have to be strategically right and have to bring value to both partners. We have always been open to it.
Last year you swapped your animal health business with Boehringer Ingelheim's consumer healthcare. How is that helping you improve performance?
It was an incredibly smooth swap with integration on both sides. They bring the expertise that we may not have had, and that helps us more in our other businesses. The BI team was actually far more into consumer healthcare than we were. That is helping us market some of our own brands better. We are sure that it will deliver more growth than it would have been had we been separate.
How important is India for Sanofi's global operations?
Sanofi India is strategically very important for global Sanofi for two to three reasons. One, there is a large unmet need in cardiovascular, vaccines, diabetes, etc. Second, we believe India is a strong in manufacturing, and we are looking at it as a base. We also see India supporting some of our other functions, such as shared services. By shared service, I mean information technology, digital projects and such like. India can become a hub for many common commercial services for most global Sanofi opportunities.