Ajay Piramal's vision for India

Ajay Piramal's vision for India

"The next decade will see more global partnerships and a made in India drug making a debut on the world stage."

In February 2005, Piramal told Business Standard, "R&D in the Indian pharmaceutical industry is gaining momentum, as more and more innovator companies, in regulated markets such as the US and Europe are keen to tap Indian intellectual inputs in this respect, apart from availing our low cost production capabilities. This recent development has given a great fillip to Indian companies to strengthen their R&D facilities."

The critical question for Indian pharmaceutical companies will be not whether they will develop strategies for alliances with global pharmaceutical majors, but how strong and mature each player's alliance management capability is. This capability will ultimately deter-mine the success of an alliance strategy. As potential partners our alliance track record and skills are second to none."

"Most of the overseas acquisitions made by Indian pharmaceutical companies have been in the generic space. However, we have identified a niche that we will leverage to gain a presence in the regulated market."

Piramal believes that, "innovator companies are trying to concentrate more on the research side of the value chain or on the sales and marketing," thus manufacturing will be outsourced.

As he explains, "We have put into place a sustainable export strategy that capitalizes on our technology capabilities and is in consonance with our in-licensing strategy. We do not intend actively competing with the global pharmaceutical majors through patent challenges in the regulated markets. We will focus on partnering these companies and innovator companies through each step of the value chain from the custom chemical synthesis stage to the mature molecules stage across the regulated markets."

In February 2004 Piramal predicted to Rediff.com, "Custom manufacturing will be a major part of our exports and we expect that our exports would stand doubled next year. Over a period of five years, we expect our exports to be 50% of our total revenue."

Smart Achievements

Strategic alliances with Advanced Micro Optics, Biogen Idec, US based Minrad; in-licensing agreement with Ethypharm France, Genzyme Corporation USA and Pierre Fabre; takeover of Dobutrex Brand for the Indian market from Eli Lily
Inorganic growth: Acquired ICI pharmaceutical to become the leading played in the cardiovascular section; bought out partners 50% stake in Sarabhai Piramal; hiked stake in the JV with boots by 9% to 49%
Investment: Invested around Rs200mn in actively creating sales force automation; invested Rs 750 mn and Rs 400 mn per annum for the R&D center; invested about Rs 400 mn to upgrade Pithampur manufacturing facility
Restructured the product portfolio helped create power brands that are now growing above industry growth rates. Has sixteen brands among the top 300 in the Indian pharma industry
Exports thrust: sourced global outsourcing market for new growth opportunities and has set landmark of Rs 1 bn in export sales in two years
Focused on in licensing: domestic formulations business outperformed the market for the eighth consecutive quarter and delivered an organic growth of 13% during 2004 against an industry growth rate of 7.3%

Summary

World class practices and an innovative approach have placed Ajay Piramal in an enviable position, forcing competitors to rethink their strategies. His secret: think different and follow through.

The Indian market is expected to grow to $25 bn by the year 2010. To target this Piramal has developed a strategy of alliances and in-licensing to give him unique access to products and brands.
Piramal realizes that research will be a major growth driver for NPIL in the future. With this goal in mind, back in 2003, he decided to initiate a more focused thrust in R&D. He envisioned a centralized research facility for 400 scientists. An investment of Rs 750 mn and Rs 400 mn was scheduled for the next two years. Within two years the 300,000 square feet, Nicholas Piramal Research Centre (NPRC) was set up for discovery research and drug development.

According to Piramal many medium sized international companies looking to enter India could see NPIL as a potential marketing and distribution alliance partner. For this, he initiated a sharp focus on sales and marketing. He invested around Rs 200 mn in sales force automation. This automation once completed would give every NIPL medical representative a hand-held device linked to a central database in the head office.
NPIL has strategic alliances with Advanced Micro Optics, Biogen Idec, US based Minrad; in-licensing agreement with Ethypharm France, Genzyme Corporation USA and Pierre Fabre; takeover of Dobutrex Brand for the Indian market from Eli Lily In an effort to become more streamlined, Piramal also focused on broadening the brand portfolio. He restructured the domestic business by dividing his operations into fourteen strategic divisions from around eight business units and pushed more products into the primary brands basket which now accounts for 75% of sales.
Piramal's export strategy is markedly different from the rest in the industry. He does not intend to challenge patents across any part of the globe. He believes that challenging legal patents and regulations can create high, even punitive, risk levels and incumbent costs in the pharmaceutical business. Instead he plans to partner with global majors in order to maximize each other's opportunities.