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All Depends on What I Can Handle: YK Hamied

He may be an NRI who spends half the year abroad, but Cipla's Chairman Yusuf Khwaja Hamied, 74, tracks developments in India and in his company every minute, while also keeping himself abreast of global scientific developments and market trends. He spoke to BT from Spain on his vision for Cipla. Edited excerpts:

twitter-logoE Kumar Sharma | August 8, 2011 | Updated 21:52 IST

He may be an NRI who spends half the year abroad, but Cipla's Chairman Yusuf Khwaja Hamied, 74, tracks developments in India and in his company every minute, while also keeping himself abreast of global scientific developments and market trends. Born in Lithuania and raised in Mumbai, Hamied, a Ph.D. in Chemistry from Christ College, Cambridge, who has donated liberally to his alma mater, spoke to BT from Spain on his vision for Cipla. Edited excerpts:


You were the leader in the Indian pharma retail market till Abbott struck its deal with Piramal, which made them number one....
We are the leaders in the Indian retail market as a standalone and totally independent company. We have neither acquired nor merged.

You are a dominant player in India, which contributes 50 per cent to your Rs  6,300 crore revenues. However, many say that if only you had a front end in foreign countries instead of a partner, you would extract much more value. Will you always continue with this partnership model?
I do not like to dilute effort by getting into too many areas. It depends on what you are looking for. What you are saying is correct and there is a good chance that we may take the route that you are suggesting, but growth is a process of evolution and it has to be based on your size because your coat has to fit you.

You have the size needed to wear a decent sized coat overseas. So when will you have a direct presence in markets there?
Let me put it this way: I prefer to share my revenues and profits with my partners, because if I have my own establishment, you will just see an increase in the top line and not in the bottom line, because my marketing, establishment and infrastructure costs will eat up everything. So I would prefer to work with a partner. Plus, remember, if a partner is strong in a particular area, he will sell more than I can.

 
But Cipla is seen as a developer and manufacturer with good technology, but without any direct physical presence abroad. Is this how it will remain always?
In India, alone I have 7,000 medical representatives. The India establishment alone is 20,000 people. I cannot load myself with another 20,000 worldwide. For Rs 3,000 crore business (half the revenues) I have got 20,000 people directly and indirectly involved across 30 factories. Why don't you look at it this way: If you look at Cipla's volume of production and multiply it by the prices [at which the drugs we make are available] in America, it will show you Cipla as a $40 billion to $50 billion company.

What will be Cipla's strategy now?
We are not only in business. We also have a social obligation and have a humanitarian approach to business. We are supplying drugs all over the world at affordable prices. Affordable price has been our motto all along.

What are the options before Cipla today to spur growth?
We are looking at all options but ultimately all depends on what I can handle. Why should I dabble in things I can't handle? For instance, one option for Cipla could be to look at in-licencing of products. Given our field force and the way we are, we would like to market good products by other international companies here. We would love to market their products in India.

Much like the way you have partners in other countries, you could become their partner here in India?
That is right. That is what we are looking to do. Our antennae are up for that.

Where do you see Cipla five to seven years from now?
It is very difficult to answer. We have a population of 1.2 billion. I have said this time and time again, my obligation is to my countrymen. They are at the top of the list. So, if monopoly products are introduced in India at high prices it does not help India in the long run. Today, slowly you are seeing products coming into India under monopoly by the multinationals. I cannot reproduce them (because of the patent law) so what the government should do is have a compulsory licensing system whereby we can copy a product we want and pay a royalty to the innovator.

You have said this for a long time. Apparently no one is listening...
I have been saying it again and again because what you will see after 2015  is more and more monopoly drugs will come into play into India at very high prices. Even people like you and me will not be able to afford them. Please do not forget, patent laws were changed only in 2005 and it will take another 10 years for this effect to kick in.

Which are the new therapeutic areas that are engaging Cipla's attention now?
Anti-cancer, cardiac, malaria, AIDS. What I am also looking for are drugs for paediatric use because I am a great believer in children and am on a look out for what drugs I can make to meet their needs.

What is your vision for Cipla?
What was our vision 10 years ago? At that point in time, our sales locally were 90 per cent and exports were 10 per cent. Now, it is 50:50. Maybe in another five years, it will be 80:20, that is, 80 per cent revenues from exports - because with exports you get better prices - and 20 per cent locally. So, the vision would be to do what is best for India, but our focus in turnover will be overseas.

So, the focus is to make it a global player with increased turnover contribution from exports and yet be firmly rooted in India?
That is the trend as of today.

Finally, besides you, Amar Lulla earlier, and now S. Radhakrishnan, who are the new leaders, and what is the thinking on leadership?
We have 20,000 people. Do individuals really matter? ... We are working as a team. But I must tell you that I will be answering some of these questions at our next agm, on August 25.

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