Fresenius SE, the $17-billion German healthcare major that acquired India's leading cancer drug maker Dabur Pharma in April this year, is in the process of turning Dabur into its global production hub for oncology medicines. The acquisition, carried out through its 100 per cent subsidiary Fresenius Kabi, got completed yesterday.
In an exclusive interview, Fresenius' chief executive officer and president Ulf Mark Schneider speaks to Joe C Mathew on the global business interests of Fresenius with specific focus on India and Dabur acquisition. Excerpts:
Now that the acquisition is complete, could you spell out your plans for Dabur Pharma? Will it continue to be listed? Any plans to dilute Fresenius' stake in the company?
We had announced the acquisition of 73.3 per cent stake in Dabur Pharma followed by a public offer to acquire another 20 per cent.
At the end of the open offer we have got more than 17 per cent thereby taking the percentage of our share in the company to over 90 per cent. Yesterday we closed the transaction and the shares were transferred.
We have not taken any decisions on the percentage of stake we should maintain in the company. We keep all options open and much depends upon factors such as stock performance and regulatory requirement. So nothing is finalised yet.
You have announced a new CEO. Does it signal more changes in the management team?
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Let me stress that it is not a new management team. All we have is a new CEO. We are impressed with the quality of the existing team and their motivation. So we will try to make as little changes as possible. Even the CEO change happened as we had to agree to Vij's (Dabur Pharma CEO Ajay Kumar Vij) request to leave.
After having been with the company and its promoters for long, he wanted to take up other roles with the Burman family. And we had to make that change. However, in Satish Kulkarni (new CEO) we have somebody who knows our company well. He has been with us for over 10 years. Are employees getting any special offers?
Frankly one of our objectives is to minimise the effects of transition in either direction. Over a time they (the employees) have built a close relationship with Burman family.
That is why we have Anand Burman as our additional (independent) director on board. No, there will not be any special packages for the employees. We would like to motivate them with the opportunities before them.
Why did you pick up an oncology company?
Oncology is one segment which we want to capture from all business areas. All our business arms (hospital, generics, medical devices) will have oncology divisions. To me oncology today is what cardiology was 30 or 40 years ago. With the acquisition of Dabur, we have expanded our portfolio of generic medicines.
How does Dabur Pharma fit in Fresenius' overall business interest?
Dabur has research capability, efficient production facilities and product registrations abroad. They are just about to leave the home market and expand in the US and Europe.
On the other hand, Fresenius has a leading presence in Europe and the just announced acquisition of APP Pharmaceuticals in the US will bring a strong sales and distribution network in the US. Together we could explore the both of these worlds.
What about your Indian subsidiary (Fresenius Kabi India) and Dabur? Will they also function separately?
Indian Fresenius has great manufacturing capabilities in infusion solutions in Pune. And we have sales and marketing team for products like medical nutrition products and medical devices. So whoever in India needs Dabur oncology products are very likely to need Kabi products and vice versa.
How long will you continue to be associated with Dabur brand?
We have discussed this with Dabur group and clearly this is their name. They have graciously offered us the right to use the brand during an extended transition period. Ultimately, the company will be known as Fresenius Kabi Oncology. It could happen in about a year.
What kind of capital investments are you planning for Dabur Pharma?
We will do whatever investment is necessary to expand the manufacturing capacities of Dabur.
Dabur had always stood against patent litigations. It has pursued a risk-free generic business route. Will Fresenius also follow the same model?
We are focused, just like Dabur, on generic business. Having said that I believe, between generic products and fully patented products, there will be a third teir that has some additional benefits.
Just like the nano particle that Dabur has. Here you are improving the delivery mechanism of the same drug. Another example is a technology called Hesylation that Kabi has. Hesylation constructs a molecule around the active pharmaceutical ingredient.
This means it takes longer time for the medicine to break down and gives a lasting effect in the body. Here again, you use the technology to construct molecules around the normal generic medicines. Such third teir products enhance the quality of generic products. Dabur will be making such value added products.
What is the kind of growth you are looking at?
We have stayed away from giving sales projections. What I can say is that we intend to integrate our team first and then look at figures.
Do you foresee Fersenius entering into Indian hospital business?
That is one business where we have not gone global. Our entire attention is on hospital projects in Germany.