The Hindu : Business : India's strengths to be a world player in pharmaceuticals

Online edition of India's National Newspaper
Monday, May 09, 2005

Business

Business

India's strengths to be a world player in pharmaceuticals

Small company culture, speed to market, recipes for success

David E. I. Pyott

"INDIA CAN emerge as a world force in pharmaceuticals," says David E. I. Pyott, Chairman, President and CEO of the $2 billion Allergan. The founder-chairman of one of the largest global companies in ophthalmology says, "My only advice is that if you are small like we are, then specialise fiercely where you have a focused area of technology and where you feel, over time, you can be world class."

Mr. Pyott told The Hindu in an interview that his recipe for success centres on `small company' culture, `speed to market', and `specialising fiercely'. A Scotsman by birth, who spent his pre-adolescent years in Aurangabad, he has since travelled the globe in several capacities in different pharmaceutical multinationals before setting up Allergan.

Globally, Allergan is a leader in ophthalmic pharmaceuticals with a 12 per cent market share. Through its joint venture with Nicholas Piramal India Ltd. (NPIL), it introduces its global products in India, enjoying a 20.6 per cent market share. The joint venture exports finished goods to Africa, Southeast Asia, Sri Lanka and Bangladesh.

Allergan also makes the highly lucrative neuromodulator, Botox, which is out of the scope of the joint venture, and dermatology and gynaecology products.

"The first two ingredients are here for India to be world power in pharmaceuticals — first is the migration of chemical manufacturers from the U.S. and Europe to India and China. The next step is generic pharmaceuticals with Indian companies creating their own single source drugs. India's adhering to TRIPS will be a great stepping-stone because in so many industries, having a good and strong position in a healthy domestic market is a key ingredient. In the long run, TRIPS will benefit Indian companies,'' said Mr. Pyott.

"The marginal, small scale firms will go out of business, which although does not feel good, is necessary for stronger players to emerge. In the west, more and more consolidation is taking place with the only alternative being be a specialised company like ours which addresses small groups or positions in a highly concentrated way.''

There are dangers in having an over-regulated industry, warns Mr. Pyott, as there are `horror' stories of drug price control in Europe over extended periods, which drove innovators out. Citing the example of the German pharma industry, which earlier had giants like Bayer, Hoechst, BASF and Schering, Mr. Pyott said that at present these companies are no longer significant forces even if they exist. The corollary of this is the U.S. market, which is free and has seen the percentage of new invented drugs go up from 40 between 1980-1994 to 60 over the last eight years. Correspondingly Europe's percentage has dipped from 40 to 30 and Japan's from 20 to 10. The scope of Allergan joint venture with NPIL has expanded from introducing Allergan's global products to exporting finished goods. "In the next stage, we will buy pharmaceutical ingredients from NPIL and at some point, consider expanding into the next therapeutic area together,'' said Mr. Pyott. Allergan is working on reducing product introduction time between U.S. and Indian markets from the current 12-18 months to 6-9 months. "That is because we have the largest product line in India — even larger than in the U.S. We are in fact, the WalMart of India for ophthalmology.''

RAMNATH SUBBU

in Mumbai

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