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P.T. Jyothi Datta

"In the late-1999, 65 per cent of our business was made up of Indian and raw material business. But today, it is about 43 per cent."

NEW DELHI, June 30

RANBAXY Laboratories Ltd (RLL) is seeing "dramatic changes'' in its global business, says Dr Brian Tempest, President and Director, RLL.

Looks like it given the flurry of activities from Ranbaxy in the US and more recently, the German market. Highlighting this change, particularly over the last three years, Dr Tempest charts out the course Ranbaxy seeks to take in international waters, even as he defines specific plans for RLL's six key markets - "which may not be the biggest markets today, but will certainly be the biggest markets tomorrow''.

How "dramatic'' has the change been for Ranbaxy in the international arena?

There has been lots of change and it has been accelerating. In the late-1999, 65 per cent of our business was made up of Indian and raw material business. But today, it is about 43 per cent.

Three years ago, South America, the US and Europe were at 15 per cent. Today, they contribute about 49 per cent. Within this, the US has overtaken India at a growth of 70 to 80 per cent, Europe is growing at 50 per cent and South America is doubling. There is dramatic change.

Ranbaxy has identified global licensing as one of the key drivers of growth in its six key markets - the US, India, the UK, China, Brazil and Germany...

As we go forward, we expect to grow both organically and inorganically. Hence, we will, on one hand, look to acquire brands and companies, while on the other, we would look at business deals with other companies.

We have something like 150 bilateral company arrangements spread around the world. Hence, that networking enriches our business. We are still small in the US, but we have come to be noticed.

We have passed a milestone, and this year, we will sail past the $200-million in the US.

What are your plans for the markets you have identified, particularly Germany?

We have aggressive plans for all six markets. I try to use my management time between these six, even as we sell products across 200 countries.

If I get the six product flow right, then the others can pick from here and there won't be any incremental investments there. The thinking here is that work done in these six markets will flow to the other markets also.

We are actively looking for acquisition for products and companies in Germany and the strategy here is the same as in the UK. We buy a business and get a range of product licences.

Then we plug this onto our Ranbaxy product flow, given that we have a significant product base in India.

In terms of product approval, it takes time and is complicated in Europe, particularly in the generics segment, and here, acquisitions speed up the process. This contrasts with South America, where approval time is quick and we are moving quickly with organic products.

In Germany, we seek to grow both organically and inorganically. The model in Germany is two years behind the UK, because we had the same strategy in the UK, and now, we have a strong generics and branded business in the UK.

We are looking to catch up in Germany, because the potential there is bigger than in the UK, as the market is four times as big.

How is the UK subsidiary doing? In the past it has been hitting the headlines for all the wrong reasons...

We have co-operated with the police and given them the papers they wanted. We don't expect to hear anything on that for sometime.

But are there plans of overhauling the management in the UK, a second time around?

The person heading the team there for the last two years is doing a great job. He has moved the generics business on firmly, after we lost the old country manager. He has established a lot of in-licensed products in the generics business. The branded business, which started in September last year from nothing, is now approaching $2 million a year.

The UK is on a very strong footing and there will be several inorganic opportunities too. But business here is already approaching a sizeable position and is the sixth largest generic company in the UK. Germany is two years behind and I want them to catch up.

Brazil has been good for Ranbaxy; what about your plans for a plant there?

Brazil is a great success. We first shipped to Brazil in December 2000 and we are the 45th of 270 companies there. We expect to touch sales of $ 20 million this year. We are profitable there and expect to have 100 odd product licences approved and in the pipeline by the end of this year.

Brazil, as an opportunity, has been universally successful. There are attractive benefits to building a facility and it is one of the things we are looking at, but have not made any firm decision yet.

Besides, it is quite noticeable that four or five generic competitive companies are setting up plants. At the moment, we are evaluating the situation.

Ranbaxy has been getting into legal wrangles, whether it is with GlaxoSmithkline or more recently with Pfizer...

Litigation in the US is a way of life! But from an observer's point of view, you should see litigation as a consequence of us moving strongly into the international market, and particularly in the US.

You cannot operate in the US without being involved in litigation. As soon as you file any product where you believe that you are the first in the market, the reason you know it, is that they sue you.

There is a connection between litigation and business opportunities. But, then again, you need to have a track record of winning them too.

Is Ranbaxy planning to revisit its ADR plans?

We hope to do US-GAAP by the end of this year. We are seriously looking at the US-ADR, but we haven't made up our mind. The first step is US-GAAP and we'll have it this year.

What are your plans for the branded segment in India and abroad?

In the US, the generic segment in buoyant at the moment. The branded segment in India, the Blue R, is strong. Down the road, both will be buoyant.

How are you going to develop your herbal/ nutraceuticals business?

Herbal products could flow through OTC (over-the-counter) or the prescription route. Our herbal range will start from product licences and then our research and development (R&D) products. We will use the expertise of third parties, besides our own R&D.

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