The country needs to produce select Active Pharmaceutical Ingredients notwithstanding its cost, Cipla doyen YK Hamied said responding to a query on India's dependance on raw materials from China and how that would be affected given the present stand-off between the two countries.
The Government needs to gear itself up, he said, referring to public sectors drugmakers like Hindustan Antibiotics Ltd and the role they can play in producing medicines that are critical to the country. In fact, he pointed out, if India and China combine and stop raw material supplies, it would affect the whole world. Over 40 percent of the generic drugs consumed in America have their origin in India, Hamied told mediapersons after the company's shareholder meeting.
Back on home ground, he said there was uncertainty in the industry given the multiple laws that are being discussed by Government. Having been in the industry for 57 years, “I dont know why they (the Government) don't take us into confidence,” he said.
As for the Rs 14,630 crore Cipla, he said, it was on the path of “strategic transformation”. The company was looking to “safeguard” its performance given the decline in active pharmaceutical ingredients and the tender-based business in AIDS and malaria drugs. Biotech, he said, would be “repositioned” to follow a broader licensing and partnership model.
Outlining details on the road ahead, Umang Vohra, Cipla Managing Director and Chief Executive said that Cipla would look to maximise its presence in core markets like India, the United States, South Africa and some emerging countries over the next two years. This period would also see research spends hover at about 8 percent of sales, he said, adding that a Rs 800 crore investment would be made this year in capacity expansion.
Q1 performance
Cipla reported quarterly revenues of Rs 3,525 crore for the three month period ended June 30, 2017, down three percent from total income of Rs 3650 crore in the same period last year. The India business took a 13 percent hit at Rs 1271 crore, due to GST implementation and channel destocking in its anticipation. The company was working with distribution channels to make products available, Vohra told shareholders.
Cipla's profit after tax for the quarter stood at Rs 409 crores, up 21 percent from last year's performance in the corresponding period. “Despite the impact of GST on India business, we had a very healthy quarter from an operational perspective. The quarter saw EBITDA margins expanding to over 18 percent driven by strong focus on enhancing operational efficiency and control on spends,” Vohra said in a company statement.