‘When India’s pharma biz grows, FDA oversight will also grow’

K. Giriprakash Bangalore | Updated on December 06, 2013


US-based drug-maker Mylan Inc has since 2007 made a series of acquisitions to grow its presence in India. The latest was its purchase of Agila Specialties, the injectable drugs unit of Strides Arcolab, for $1.75 billion.

In an interview with Business Line, Robert Coury, Chairman of the board of Mylan, and Rajiv Malik, President of the company, talk about the drug-maker’s strategy for India and the future of the pharmaceutical industry here.

Mylan has made a spate of acquisitions in India since it set up operations here in 2007. Will inorganic growth continue to be your strategy in the country?

Robert Coury: We have grown as much inorganically as we have grown organically. While other multinationals may have focused more on transactions and return on investments, we have focused most on people. If you can get the right people, then financials will take care of itself. This is the reason we are an employer of choice down here. While we may have invested to acquire companies, there is another three-quarter of a billion which has been invested in R&D and to grow organically. Our strategy has never been external activity-dependent.

How have acquisitions benefited you?

Rajiv Malik: If one looks at our acquisitions, there have been just two big ones: Matrix and now Agila. In between, there are five, but all of them have been those where businesses were yet to be carried out. So, you can call it as brownfield or acquisitions. They are half way and you pick them up and invest more in them. It is a combination of both.

Coury: Our strategy has also created more jobs here. We started with 2,200 employees and now there are 12,000 employees. There could be commercial companies which have had large sales force, but in this space, we are the largest employer down here.

Malik: We also employ the largest scientists in India in our R&D facility. There are about 1,400 of them now. We will continue to invest in Indian R&D. Annually, we invest more than $100 million in R&D alone.

The first acquisition you made was in 2007, but during the last two years or so, there have been several. Is it because you saw big opportunities come your way now than before?

Coury: You are right in the opportunities’ front. What is important here to know is how do you want to get from point A to point B. We can either do it brick by brick, or strike on the opportunities as they come up. Brick by brick has its pros and cons. It might be less dollars out of your pocket, but it will take a while to get there. It might cost you more when you acquire. But one has to strike the right balance. The strategic acquisitions we made have been just that.

What plans you have for India. How does India figure in the bigger scheme of things for Mylan?

Malik: We have 20 sites now and I think it is the largest for any pharma company here. We want to be a major player in India commercially. We got into the HIV space, and then women healthcare, then into oncology, followed by critical care. Every year, we will get into at least two new therapeutic verticals.

Coury: India will be an additional hub for emerging markets for Asia-Pacific. India can play a vital role in servicing these markets.

There have been issues concerning violation of FDA regulations including the Agila one…

Coury: I have to be honest on this. I really think lots of Indian issues are self-inflicted. They are totally overblown from an Indian perspective. You can’t be the hub of the entire global pharma market, rather great majority comes from India and how could you not expect when FDA to come calling.

Malik: Indian entrepreneurs have made it as if there is an onslaught from FDA. Yes, there is the stepped-up activity because of FDA getting the resources and doing what they are supposed to do and perhaps not doing it earlier. When the Indian companies are saying we are three-quarters of the entire world’s pharma suppliers here, so, you are going to get three-quarters of the inspections.

FDA has issued a warning letter to Agila. How do you view this situation?

Coury: There are problems and issues. Problem is something you may not be able to solve. For us, this is the nature of the beast in the business we are in.

Malik: We have been working closely with Agila for the last few months and we have been working with FDA as well. That’s why we are confident that we will expeditiously put this issue behind us. But this experience will help us become stronger. It will take us to the next level.

How do you see the Indian pharmaceutical industry five years from now?

India is very, very ripe and the market is screaming for a mass of consolidation. I really believe India needs to consolidate in the next seven to eight years to bring stabilisation and more efficiencies to the overall healthcare system. This is because the government has been the initiator with its pricing policies, which are going to force consolidation.

Published on December 06, 2013

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