Come September, Nilesh Gupta will complete six years at the helm of drugmaker Lupin.

And much has changed in this time. The pharmaceutical landscape has become more competitive, with pricing and stringent regulatory requirements bearing down on companies. And governments across the world have become more inward-looking, as they support local industry while demanding more affordable drugs for citizens.

“I came in at completely the wrong time,”quips Nilesh, good-humouredly, referring to the “structural disruption” in the Indian market in recent years in terms of a fragmented but growing market and rising concerns on affordability, among other issues. But home turf has always held out optimism, he adds, as it has been “one market we have been able to bank on”.

Nilesh and his sister Vinita took charge in September 2013 as Lupin Managing Director and Chief Executive, respectively. The company has since climbed the charts from 9th to 4th largest in the Indian pharmaceutical market.

But that “audacious” target of becoming a $5-billion company by 2018 that their father and founder Dr DB Gupta (DBG) had set for Lupin seems to elude for now.

“Our first audacious target will always be to be a $5-billion company, because that was DBG’s vision,” says Nilesh. Resetting the goalpost, he says the aspiration now is to get there by 2023-24, even as the business model morphs to become more speciality products -driven and uncertainties continue to loom over the industry.

“Perfect storm”

Looking back five-plus years, he says, the first three benefited from the old traditional model of growth making generic drugs (medicines chemically similar to original drugs). Then came signs of faltering, with “core challenges emerging from the business model itself” in terms of competition, balance of power being with the customer and compliance challenges.

Together they created “a perfect storm for regular conventional generics”, he says.

DBG’s vision was to take a new therapy area each year, so there was dermatology, oral contraceptives, ophthalmics and inhalation and it took time to get right, explains Nilesh.

The intention was to differentiate and build unique capabilities to be competitive from anywhere in the world, he says, pointing to Lupin’s inhalation, complex injectibles and biosimilar segments that reflect this dedicated strategy. The Gavis acquisition in the US and the “bubble” of the dermatology segment proved to be expensive learning, but Lupin looks to build with more specialised products.

Push or give up

There is greater clarity in the company’s strategy “on what to push and what to give up”, he says. And that defines the company’s requirements in research, compliance and manufacturing. In fact, Lupin recently pruned its research operation in line with its strategy.

On the compliance front, with four of its plants in different stages of USFDA action, Nilesh says the company has embarked on a quality transformation initiative to get employees to take greater ownership of quality systems, specially on the shop floor, where it matters the most. Responding to criticism from some overseas quarters directed at the Indian pharmaceutical industry, Nilesh says, “The Indian industry has done a pretty crappy job of bringing out the benefits it has brought”, in terms of affordable and quality medicines. “I have always taken a lot of pride to be associated with the pharmaceutical industry,” he says, and not, for instance, the “tobacco industry”.

Dual quality benchmarks

Clarifying the perception that companies had dual quality benchmarks for the Indian and foreign markets, Nilesh says, “We (Lupin) have one quality. There is no separate quality system so if you could go to our Jammu plant, which supplies entirely for India, the quality standards are exactly the same. Whether it is the facility or how you accept batches, how you reject batches, the stability programme that you run, everything is the same — the make of equipment, instruments, is all the same,” he says.

“Obviously, different markets have different regulations,” he points out. So while Lupin has a USFDA warning letter on Goa and Pithampur plants, other regulators inspected these facilities and the company continued getting approvals and launching products for those markets, he explains.

“I don’t think companies can operate with two quality standards, those days are gone 15 odd years ago. Aurangabad (plant) is a perfect example, it supplies to the US, it supplies to the World Health Organization and to India. Ëxactly the same standard everywhere,” he says.

Lupin’s road ahead involves adding to its 32-plus marketing alliances and a couple of acquisitions in the US (possibly of specialty opportunities, like women’s health) and India. The first is “actionable”, the second is “ephemeral”, says Nilesh. But industry circles are already abuzz with possible target opportunities.