No plans to re-enter domestic formulations in current fiscal: Piramal V-C

Citing the price control regime as being detrimental to the pharmaceutical industry, Piramal Enterprises Vice-Chairperson Swati Piramal on Saturday said the group was not considering re-entry into the domestic formulations market this financial year. 

Last year, Ajay Piramal, chairman of Piramal Enterprises, had indicated that the firm was exploring a possible re-entry into the domestic formulations market, which it had exited after selling the business to Abbott for $3.7 billion in 2010.

"We would love to see a policy change. We saw an increase in price control from 77 products to over 200 products, which had not happened before we exited (domestic formulations business) but after it. Price control is detrimental to the growth of our industry," Swati Piramal told Business Standard on the sidelines of the eighth convocation of Indian Institute of Technology-Gandhinagar (IIT-Gn), where she was the chief guest.  

The National Pharmaceutical Pricing Authority (NPPA) fixes prices of drugs placed in the National List of Essential Medicines (NLEM) under the drug price control order (DPCO). Around 1,000 drugs have been brought under price control through that route. In fact, several non-scheduled anti-cancer drugs were brought under price control earlier this year, capping trade margins at 30 per cent and reducing retail prices by up to 85 per cent.

The pharma industry is of the view that excessive price control could lead to stunted growth in research and development.

"While we want to give affordable drugs, we also want to spend on research and innovation. If you make a particular drug for Rs 10 and charge Rs 12 for it, you can't fund R&D…,’’ Piramal said. India really needs its pharma to be affordable but one has to fund the research, she added. ‘’So until we release the policy of price control, it will become progressively worse." 

Pharma constitutes 36 per cent of Piramal Enterprises' annual revenues, with healthcare and analytics adding another 10 per cent, though financial services leads with a 54 per cent contribution. In FY19, Piramal Enterprises clocked a turnover of Rs 13,215 crore, of which Rs 4,786 crore came from pharma.

In India, the company has been growing rapidly in the over-the-counter (OTC) segment, on the back of key acquisitions such as from Pfizer and Cipla. The company now has six of its drugs in the top 100 OTC (over the counter) brands in India.

Piramal also operates in contract manufacturing and research and development for its overseas clients. It has two drug discovery and formulation development centres in Ahmedabad catering to overseas markets. "The work we are doing in Ahmedabad is not for India but for abroad. We are doing contract pharma for other countries as well. That is sad because we should really do research for our country as well. Who will do research for India specific diseases?," Piramal said. 

On the real esate side of the business, Piramal did not speak on its plans to reduce exposure in bigger accounts like Lodha Group, but expressed optimism about the sector.  Piramal Enterprises is engaged in lending to developers under its financial services business.

‘’Things will turn around in real estate and the NBFC sector,’’ she said, adding that green shoots are visible. The government, RBI and others agree that the growth needs to get going in NBFCs, Piramal said.