Big plans ahead: Cipla looks for shot in the arm in niche areas

Open to licensing, collaboration in anti-diabetes space

Mumbai-based Cipla is evaluating acquisition in areas such as oncology, mental health, obesity, wellness, genomics, and diagnostic services, Umang Vohra, managing director and global chief executive officer, told Business Standard.

After tying up with Sanofi India on Tuesday to distribute its (Sanofi’s) central nervous system (CNS) products in the country, Cipla is open to licensing and collaboration deals with multinationals in the anti-diabetes space.

Tuesday’s deal is to distribute Sanofi India’s six CNS brands, including Frisium, a leading product in the anti-epileptic medication category.

Analysts say as Cipla aims to move from being a pharma company to being an integrated health care player, it is evaluating opportunities in these areas.

In a recent analysis, Nuvama Institutional Equities noted that while Cipla was not a top player in the CNS and diabetes segments in India, it aimed to grow in these chronic-disease therapies.

A focus on these areas is understandable because India is projected to have over 134 million diabetics by 2045 while cancer cases are expected to increase 12 per cent by 2025.

Obesity is expected to affect over 5 per cent of India’s adult population by 2025.

The company has a net cash balance of Rs 7,143 crore as of December 2023. It has an overall cash balance of Rs 7,591 crore, including cash and cash equivalents.

Nuvama analysts in a report said: “It is increasingly engaging with start-up ecosystems to invest in different areas of oncology, obesity, mental health, wellness, genomics, Diagnostic services, etc. The company sees significant growth opportunities and is thinking beyond the pill by working on various aspects i.e. pill, nutrition, clinics and digital. This is likely to provide a leg up to its consumer health business.”

Cipla has been beating domestic formulations consistently by 100-200 basis points in market growth. Nuvama analysts said in March Cipla could continue to outperform the Indian pharma market (IPM) and reach second spot.

The company’s last 12 months’ turnover (also called moving annual turnover) has clocked a 9.7 per cent growth rate as of February 2024, according to the IQVIA and Nuvama data.

Cipla is strong in the respiratory segment. Its respiratory product, Foracort, recently touched a Rs 100 crore per month run rate and comes on top in the prescription market.

Cipla’s growth in anti-diabetics (7.8 per cent) has picked up in the past three months.

“Due to its focus on the chronic therapies, EBITDA (earnings before interest, tax, depreciation, and amortisation) margins in the domestic business are likely to improve,” Nuvama added.

Chronic medicines are ringing up a steady growth rate even in small towns, driven by increased health care awareness, more private-sector investment, and government support.

Non-communicable diseases are responsible for around 63 per cent of deaths in India. 


Big plans ahead

Firm looking for acquisition opportunities in oncology, mental health, obesity, wellness, genomics and diagnostic services

Also eyeing licensing opportunities and collaborations with global multinationals in the diabetes space 

Had net cash balance of Rs 7,143 crore as of Dec 2023