When Yusuf Hamied, 76, took over as the head of Cipla after his father’s death in 1972, the company’s revenues were just Rs 1.66 crore. When he gave up the MD’s position last week, those had crossed Rs 8,000 crore. But more than the balance sheet, his biggest achievement was lowering the cost of life-saving medicines for millions across the world. In an interview with Dev Chatterjee & Reghu Balakrishnan, Hamied talks about his expectations from the next generation, Cipla’s big push abroad and why he will keep fighting the multinationals. Excerpts:
Cipla and you are known for the anti-Aids drug sold to the poor at a fraction of the price that MNCs charge. Do you think this was Cipla’s biggest achievement?
Of course. When I was asked whether I can provide the generic anti-Aids cocktail drug for $1 a day, I immediately said yes. This changed the world and Cipla. We brought down the price of a medicine that was being sold for $24,000 a year in the US by MNCs to just $365 for the Africans.
We are fighting numerous patent cases. But the world has now recognised us for making medicines affordable for the poor. Today, more than eight million Africans are treated with our drug. We are also selling a stomach cancer drug in India for Rs 6,500 for 30 tablets, against the Rs 2,80,000 MNC charge.
The new generation has now joined the management. Where do you see Cipla in the next few years?
We have invested in biotech and stem cell, which are related to our core business. We are also forming equity alliances and setting up offices abroad. I have given the new management a target of $5-billion revenues by 2020. However, as long as I am around, we will have to balance the business with a humanitarian view. I will continue to work here as chairman till my health permits.
After remaining India-focused for so long, Cipla is now looking abroad for growth. Why this change in strategy?
In 1995, 10 per cent of our revenue came from overseas markets. Today, it has risen to 55 per cent. In the next two-three years, it will go up to 70-80 per cent. The tax policies and lack of basic infrastructure are huge problems in India. Because of lack of prudent tax and stable policies, all big Indian companies are going abroad. The time has now come for us to say goodbye to India.
Why are you so angry with the government?
The industry is not getting any support from the government. Instead, it is making doing business in India difficult. We are uncertain of the taxes or the policies that can be announced on any day of the year. In other countries, governments are more worried about their companies.
'In the last 20 years, none from the govt ever asked me on pharma policy'
Is your entry into the US market being delayed? Which are the other markets Cipla is looking at?
The world pharmaceuticals market is worth $900 billion and half of that is in the US. Of the US market, $60-70 billion is of generic sales. We are targeting the US market in a big way, having opened an office there. We are also setting up facilities in Turkey, Latin America and Australia. We have bought a minority stake in three companies in China. We are looking at Japan, the second largest pharmaceutical market in the world, and entering into an alliance with a Japanese player to sell our drugs. We are in the process of registering the drugs.
Cipla said it was taking over its distributor, Cipla Medpro, in South Africa for $200 million. We understand it isn’t through.
Our offer is still on the table. But after our announcement, there were a number of developments. To begin with, the company is under investigation by the South African authorities, as its share price shot up before the takeover announcement. The South African currency, the rand, has moved against us. There was a leadership exit in the company and the government has also changed the rules on tender businesses, the mainstay of Cipla Medpro. We want this company to be our beachhead in the entire African market and we are still pursuing the acquisition.
The Indian government is getting ready with a new pharmaceutical policy. What’s your take on it?
As the chairman of Cipla, I was never asked for any inputs by the government. I don’t know what’s in the policy. No one in the government has ever asked me in the last 20 years on pharmaceutical policy. I think India should have a pharma policy in the interest of Indians and not for increasing the profitability of multinationals. Look at China.
The country is doing everything possible which is in the interest of the Chinese, whether on patents or setting up plants in China. We have been asked to set up plants in China and we are. Infrastructure in China is world class. Shenzen was just like Dharavi but one cannot recognise the city today. Just look at any Indian government hospital and you can see what kind of health care Indians are getting. A benevolent dictatorship is better than our kind of democracy.
India is facing a new health crisis every year…the country is known as the Aids capital of the world and cases of multi-drug resistant TB are rising fast. Is your company doing enough research on inventing new drugs?
We are investing close to five per cent of net sales in research on new drugs and have received patents on incremental innovations like Dymista. We are actively working on nano particles, which will bring down the cost of anti-Aids drugs substantially. As for a multi-drug resistant TB drug, I understand an MNC is already working on one, to be marketed in India shortly.
We asked it to join hands with us to market the drug in India but it rejected the offer. That brings me to the same issue. If we are ready to pay royalty to the innovator, we should be allowed to make the drug to help the poor in India. Let India declare multi-drug resistant TB a national crisis.
But the argument by multinational companies is that they are spending billions of dollars in R&D and, hence, they should be allowed returns on investments. Even they have shareholders to answer to.
I am not against MNCs or returns to shareholders. What I am against is the monopoly we are offering to MNCs in India. When the US was facing anthrax and the bird flu crisis, they were ready to break any patents. That was in their national interest. The innovator should get a fair return. We are ready to offer four per cent of net sales as royalty.
India is in a perennial heath crisis. The largest numbers of Aids patients, diabetes, TB, malaria are in India. Our policies should be suitable for Indians and Indian companies should have the automatic right to break patents in the case of a national emergency.
US drug lobbies have always complained against compulsory licences and talk about the huge R&D cost for drug discoveries.
About 70 per cent of the patented drugs sold worldwide are not invented by the owning companies. There is no point in the hue and cry they make against the compulsory licences issued to launch generic versions. However, most companies prefer not to join the patent challenges cases due to the high cost of litigation. For example, we have to pay about Rs 20 lakh (Rs 2 million) a day for the entire court proceedings. The MNCs kill competition with expensive litigation in India and abroad.