At the same time, Sobti has been forging new tie-ups to avoid a dry drug pipeline. And surprisingly, despite the cuts in R&D outlay, the truth is that Sobti remains bullish about his army of 1200-odd lab-scientists. He has however managed to greatly reduce the investment risks (both R&D and non-R&D related) through alliances with big names in the drug discovery arena. During just the past five months, Ranbaxy has signed accords with firms like AstraZeneca, to supply raw materials for anti-ulcer drug Nexium by January 2010, and Pfizer for manufacturing a licensed version of its $11 billion-a-year grossing Lipitor drug. Pumping more hope into the Ranbaxy drug pipeline are its first-to-file (FTF) authority (subject to FDA approvals) on GSK’s Valtrex (by Jan 2010; worth $1.3 billion annually) and Astellas Pharma’s Flomax (March 2010; annual sales capacity of $1.2 billion). The company could thus easily earn over $300 million from the two generic versions, during just the six-month exclusivity period... As company sources reveal, Ranbaxy also has an alliance going with Merck for drug discovery & clinical development, in the anti-infective field, which could provide payoffs of about $100 million to Ranbaxy.
In the past few weeks, great progress has been made on two research programs – one each in the anti-infective drug & respiratory drug platforms (both being pursued with GSK). The royalty rewards that this tie-up alone can possibly result in, as per market experts, is today valued at close to Rs.50 billion. The company is also working with Bayer on the Cipro OD technology and with PPD (a US-based company) on the Statin molecule. Ranbaxy has also signed many treaties with medical institutions in India, where work in the segments of medicinal plants and anti-respiratory disease is on. Surely, Sobti still hasn’t given up on his R&D dreams, in the light of the fact than many billion-dollar drugs will go off-patent by 2014, with brands like Flomax, Lipitor, Plavix, Avandia, et al going off-patent. Supporting Sobti’s optimism with logic, Adige of Ranbaxy says, “With over $80 billion worth of drugs going off-patent by 2012 and a higher generic penetration across developed and emerging markets, the generics market will continue to provide attractive growth opportunities in future. With our brand building capabilities in the emerging markets, strong FTF product pipeline in US & an increasing presence in the specialty products segment, Ranbaxy is well placed to capitalise on the generics growth opportunity!”
Agreeing with Sobti’s intentions to use R&D to take advantage of the generics market in the near future, Vijay Singla, VP, IOL Chemicals & Pharmaceuticals tells B&E, “There are a large number of blockbuster drugs coming off patent in the next two to four years. So drug companies can do a lot to maximise the value of their pipelines!” Of course, many like Anthony don’t advocate increased focus on generics for Ranbaxy as he argues that “Ranbaxy is going in the wrong direction by following Novartis and J&J. It can’t follow a dying strategy: generics are the K-Mart part of the Walmart curve.”
Then there is Sobti newfound penchant for biotech drugs and his aggressive inorganic growth strategies that deserve mention. The company recently entered into a strategic in-licensing agreement with biotech major Medy-Tox, for its cosmetic product, Neuronox, which alone could ring-in a good Rs.300 million on a yearly basis over the next five years (with only one more competitor in the same segment). If Sobti gets his biotech dreams going then Ranbaxy is in for a windfall of top & bottomline growth, as V. Dandekar, India Bureau Chief, Elsevier Business Intelligence opines, “Business opportunity in biosimlars will cross $10 billion in just EU & US by 2015. That figure will represent a big chunk of the total generics market and the price erosion will be far lesser in biosimilars than conventional products…” Then comes his public oath to make Ranbaxy a leader on home ground, with many acquisitions planned ahead. Clearly, Sobti, unlike his predecessor, does not plan to shell out millions of precious dollars on global assets, before he makes Ranbaxy a force at home. This became apparent when after three months of assuming the hot seat, he pocketed the New Delhi-based mid-sized Ochoa Labs, to make most of the country’s Rs.19.50 billion-a-year dermatology market. Adige accepts, there will be more mid-sized victims flaunting the Ranbaxy brand over the next year (“India will remain a key market. We will continue to scale up our presence in the country through a combination of organic & inorganic means”).
In the past few weeks, great progress has been made on two research programs – one each in the anti-infective drug & respiratory drug platforms (both being pursued with GSK). The royalty rewards that this tie-up alone can possibly result in, as per market experts, is today valued at close to Rs.50 billion. The company is also working with Bayer on the Cipro OD technology and with PPD (a US-based company) on the Statin molecule. Ranbaxy has also signed many treaties with medical institutions in India, where work in the segments of medicinal plants and anti-respiratory disease is on. Surely, Sobti still hasn’t given up on his R&D dreams, in the light of the fact than many billion-dollar drugs will go off-patent by 2014, with brands like Flomax, Lipitor, Plavix, Avandia, et al going off-patent. Supporting Sobti’s optimism with logic, Adige of Ranbaxy says, “With over $80 billion worth of drugs going off-patent by 2012 and a higher generic penetration across developed and emerging markets, the generics market will continue to provide attractive growth opportunities in future. With our brand building capabilities in the emerging markets, strong FTF product pipeline in US & an increasing presence in the specialty products segment, Ranbaxy is well placed to capitalise on the generics growth opportunity!”
Agreeing with Sobti’s intentions to use R&D to take advantage of the generics market in the near future, Vijay Singla, VP, IOL Chemicals & Pharmaceuticals tells B&E, “There are a large number of blockbuster drugs coming off patent in the next two to four years. So drug companies can do a lot to maximise the value of their pipelines!” Of course, many like Anthony don’t advocate increased focus on generics for Ranbaxy as he argues that “Ranbaxy is going in the wrong direction by following Novartis and J&J. It can’t follow a dying strategy: generics are the K-Mart part of the Walmart curve.”
Then there is Sobti newfound penchant for biotech drugs and his aggressive inorganic growth strategies that deserve mention. The company recently entered into a strategic in-licensing agreement with biotech major Medy-Tox, for its cosmetic product, Neuronox, which alone could ring-in a good Rs.300 million on a yearly basis over the next five years (with only one more competitor in the same segment). If Sobti gets his biotech dreams going then Ranbaxy is in for a windfall of top & bottomline growth, as V. Dandekar, India Bureau Chief, Elsevier Business Intelligence opines, “Business opportunity in biosimlars will cross $10 billion in just EU & US by 2015. That figure will represent a big chunk of the total generics market and the price erosion will be far lesser in biosimilars than conventional products…” Then comes his public oath to make Ranbaxy a leader on home ground, with many acquisitions planned ahead. Clearly, Sobti, unlike his predecessor, does not plan to shell out millions of precious dollars on global assets, before he makes Ranbaxy a force at home. This became apparent when after three months of assuming the hot seat, he pocketed the New Delhi-based mid-sized Ochoa Labs, to make most of the country’s Rs.19.50 billion-a-year dermatology market. Adige accepts, there will be more mid-sized victims flaunting the Ranbaxy brand over the next year (“India will remain a key market. We will continue to scale up our presence in the country through a combination of organic & inorganic means”).
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