Business Today

Sales are vanity, profit is sanity

Anusha Subramanian | Print Edition: July 24, 2011

Mehernosh B. Kapadia is soft-spoken, extremely patient and prudent - not exactly qualities that one would associate with the winner in the category of Best Transformation Agent.

But it is this combination - together with work practices such as an open door and aversion to micromanagement - that have helped him transform GlaxoSmithKline Pharmaceuticals, or GSK Pharma, and keep it at pole position.

WATCH:Kapadia talks about how he handles GSK's working capital tightly

After ambling along for five years, GSK Pharma stepped up the pace from 2008 (it follows the calendar year) to nine per cent per year. In 2010, net profit increased by 15 per cent to Rs 581.38 crore, net sales by nearly 13 per cent to Rs 2,112 crore.

Kapadia played a key role in allocating resources for promotion, expanding the field force and ensuring the right product mix. The company currently has Rs 2,000 crore in cash reserves.

Mehernosh Kapadia
56, Senior Executive Director
My best practice: I believe in integrity and trust. I focus on team work
What gets my goat: I like people to be quick. They should also be punctual
How I unwind: By spending time with family, listening to music and going for long walks
Global CFO/CEO I admire: Jack Welch. Our current CEO, Andrew Witty
"Almost 40 per cent of our growth comes from products introduced three to four years ago," says Kapadia. "New medicines form a larger part of the portfolio. This has helped us de-risk our business, reducing our dependence on older products, some of which have price controls." The company's transformation began after the merger of Glaxo India with SmithKline Beecham Pharmaceuticals (India) in 2000. It enabled the new entity to push the best products of both.

Kapadia helped the process by controlling expenses, generating enough cash and constantly looking at ways to deploy accumulated cash balances.

"Sales are vanity, profit is sanity and cash is king" is Kapadia's favourite aphorism. But he worries about talent retention. "How we manage our talent and look after our human capital will be key in the years to come," he says. What of the future? "We want to commercialise all our assets, especially the patented products, branded generics and vaccines, which currently contribute 11 per cent to our sales, but could contribute up to 20 per cent by 2015," says Kapadia.

Alongside there will be geographical expansion and in-licensing deals with companies that are not yet in India. "We will add branded generics in areas where we are not adequately represented," says Kapadia.

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