Exploding generics market in the US and Europe is going to be the main engine for growth for large Indian pharmaceutical companies in the years to come. Top players like Ranbaxy, Dr Reddy's and Cipla are already having sizeable exports of generics to these markets. With the advantage of lower production costs and continuing rise in demand for low priced drugs in these developed countries, India stands to gain a major chunk of this market. A dozen medium scale pharma companies are all set to capture this market either by tying up with associates in these markets or by setting up bases there. Such strategies are critical to penetrate into this highly competitive market. One such corporate is Pankaj R Patel's Zydus Cadila Healthcare. Zydus has taken France as the first country to enter the generics market of Europe. In an exclusive interview with Pharmabiz.com, Pankaj R. Patel, chairman and managing director of Zydus explains his vision and strategy to achieve this goal.

What does the global generic market hold in store for the Indian pharma manufacturers?

Indian companies are increasingly looking at the global generic markets as it presents tremendous growth opportunity. With rising healthcare cost, governments in developed countries are coming out with regulations that increasingly favour generics. In France for instance the government has started encouraging prescription of generics due to which the market currently estimated at 520 million is expected to zoom to Euro 2.3 billion by 2005/06. Indian Manufacturers with the ability to produce quality medicines approved by some of the world's leading regulatory authorities are best placed to cater to this promising market.

Are there any specific reasons why you chose to make France as a base for your European operations?

Yes, there are two important points on why we are entering Europe through France. First of all we saw a lot of value in Alpharma SAS, France. The acquisition has given us a ready base in one of the fastest growing generics markets of Europe. Alpharma SAS France, with current revenue of Euro 5 mn coming from branded products and has 90 generic registrations. It also has a ready set up and distribution network, by which we can jumpstart our business operations in France. We plan to introduce a large number of products and grow the revenues rapidly. Secondly, as I mentioned before the French government is now actively promoting generics, and hence the generics market in France is poised for an attractive growth. Strategically, a base in Europe is crucial as it is the world's second largest generics market. Within Europe, France is the fastest growing generic market. This acquisition therefore unlocks great value for Zydus Cadila.

What are the specific initiatives undertaken by Zydus Cadila to tap the global generic market?

The thrust in our international operations over the last two years has been to enter the regulated markets. Making a foray in the world's largest generic market we have launched a subsidiary 'Zydus Healthcare (USA) LLC' to market APIs and set up an office to cater to the generic market in the U.S. Our goal is also to tap the opportunities for growth in the four major generic European markets of France, Spain, Italy and Germany. David Blanksby who was earlier the Managing Director of Ivax, one of the top three generic companies in U.K., will be spearheading operations as Vice President and General Manager - Europe. We have also set up a base in Brazil to spearhead operations in Latin America.

Back home we have built a strong team along with the physical infrastructure to file DMFs and ANDAs - the regulatory approvals necessary to enter the US market. As of now our DMF filings to the USFDA stands at nine of which three have been approved. Work on filing ANDA is progressing well and in 003- we should see some important developments on this front. All of this reinforces our strategic goal of transforming Zydus Cadila into a dominant healthcare player, globally.

Our manufacturing plant is the single largest plant of its kind at a single location in Asia and has been approved by the UK MCA, MCC of South Africa and other leading regulatory bodies. So we believe that we are best placed to leverage our strengths in terms of size and scale of operations.

What impact does research have on the future of the Indian pharma industry and what are the new developments at Zydus Cadila on this front?

One of the greatest challenges facing the Indian pharma industry is that of the Post 2005 era. Thrust on research plays a critical role in gearing up for this evolving landscape. I also believe that we are on the cutting edge with new branches such as Genomics throwing open a world of opportunities. There will be an explosion in therapeutic and diagnostic targets that could change the very premise of drug discovery. Consider this, if human genome offers around 25000 biological targets, a mind boggling number, and only 20% of them prove to be useful, it would still give researchers a 10 fold represent in the number of targets to explore.

At Zydus Cadila we have a 300 strong technical team treading the path of innovation through synthetic organic chemistry, process research, New Chemical Entities, New Drug Delivery Systems and Biotechnology. We now have a pipeline of 41 patents in India and 42 patents in foreign countries. Pre-clinical studies for advanced molecules are also on and I am optimistic of the results.

Your group had recently inked a pact with Schering AG of Germany. Could you tell us something more about this?

We recently signed an agreement by which Zydus Cadila becomes 'the Partner of Choice' for marketing existing and new products of Schering AG, Germany, a research based pharma major and one of the leading players in the field of Women's healthcare, Contrast Media and Oncology.

Schering AG, was one of the key collaborators in the erstwhile German Remedies Ltd., and had played a key role in promoting the growth of German Remedies in India. We value this relationship.

This agreement allows patented products of Schering AG to be marketed in India beyond 2005. A group of 8 products have been identified for launch in India, of which 5 products would be introduced for the first time. The strategic pact between the two companies also covers a landmark agreement on transfer of technology and manufacturing of Schering AG's products in India. These products fall in the women's healthcare segment and contrast media. Besides this, Zydus Cadila will manufacture select products of
Schering AG for a period of 10 years. This would be extendable by another five years. The products will be manufactured at Zydus Cadila's state-of-the-art manufacturing plant at Moraiya in Ahmedabad. I believe that this strategic agreement will be a far-reaching one in its impact, unlocking value for both Zydus Cadila and Schering AG. So this strategic agreement will really be far reaching in its impact, unlocking value for both Zydus Cadila and Schering AG.