Cadila draws out six-point strategy

PHARMACEUTICALS - IV/ THE WTO IMPACT

Zydus Cadila Healthcare has shored up its organic growth plans in an effort to build up a critical mass to take on the challenges post January 1, 2005.

The company has identified six major growth drivers "" consolidating domestic business, leveraging API strength, encashing on global generics' opportunities, outsourcing, improving operating efficiencies, and research.

The Indian pharmaceutical industry is set to change with the product patents coming into force in 2005.

The group has also been looking at strategic acquisitions to add value to its operations.

"Zydus Cadila's success stems from the fact that its growth has been well integrated and balanced. 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. We consciously went about creating value drivers all across the value chain rather than just limiting ourselves to just one aspect," said Pankaj Patel, chairman and managing director, Zydus Cadila.

The company has recently signed a memorandum of understanding (MoU) with Australia's Mayane group for setting up a manufacturing joint venture to explore opportunities in anti-cancer products. "Over the last few years we have been exploring several opportunities to leverage our strengths and unleash value for the company. This new development (the JV) would lead us further on in this direction," Patel said after the deal was signed.

The company acquired the Bangalore based Recon Healthcare Ltd in May 2000. Recon has a strong portfolio of brands in the pain management, anti-infectives and cardiovascular segments and a strong presence in southern markets.

Zydus Cadila also acquired German Remedies in 2001. The acquisition presented the right strategic fit as German Remedies specialised in respiratory, women's healthcare and oncology segments.

Both Recon healthcare and German Remedies have now been merged with Cadila Healthcare.

The group has set its sights on France, Europe's fastest growing generic market. The French generic market, currently estimated at Euro 520 million, is expected to zoom to Euro 2.3 billion in 2005-6.

In 2003, the group acquired Alpharma France, the French affiliate of Alpharma, one of the world's leading generic companies. The acquisition made it one of the early entrants in the market and gave Cadila a ready distribution network to jumpstart its business in France.

Deciding to go in for a two-pronged effort, the group set up Zydus Healthcare LLC to market APIs and Zydus Pharmaceuticals (USA) Inc, to market formulation generics. Zydus Cadila has already filed 12 API Drug Master Files (DMFs). It has also filed 12 ANDAs with the US FDA, the largest number of filings by an Indian company in the very first year of filing.

In the $10 billion Latin American market, Zydus has set up base in Brazil with its subsidiary Brasil Healthcare Limitada.

The plans to tap the generic markets, is expected to gather speed as the group sets up bases in Spain, Italy and Germany.

An estimated $50 billion worth of molecules will go off patent over the next few years. There are abundant opportunities to 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, Indian pharma companies are best placed to grab a share of the generic pie. Zydus Cadila's plans for growth in the generic markets is well aligned to these emerging opportunities.

The company strategy focuses on creating value through research. A relative late starter on this front, Zydus Cadila has been making brisk progress wasting no time in setting up a state-of-the-art research centre on a sprawling 80,000 square yards of land.

Biotechnology is another area of promise 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. So far the group has filed 80 patents in India, 68 patents in foreign countries and 16 PCT applications.

The company has well integrated manufacturing capabilities across the value chain. The group today has eight state-of-the-art manufacturing plants spread across Gujarat, Maharashtra, Goa and Himachal Pradesh.

The group also added India's leading anti-hypertensive drug, Aten (Atenolol) to its product portfolio. This acquisition catapulted Zydus Cadila to the leader in the cardiovascular market.

In 2002, Zydus Cadila acquired Banyan Chemicals, a company manufacturing high value active pharmaceutical ingredients (API).

Zydus Cadila also manufactures intermediates and APIs leveraging strong capabilities in chemical synthesis.

With a USFDA approved API plant at Dhabasa near Vadodara, and plants at Ankleshwar and Patalganga, it is today the largest Indian manufacturer of Paroxetine, Famotidine, Atorvastatin and Lamivudine.