Can you remind our readers of Alembic’s role within India’s pharmaceutical industry?

Alembic was formed in 1907. In the 1980s, we expanded our antibiotic range and geographic footprint. Initially, we partnered with large pharma companies and distributors to sell in the US, but in 2015 Alembic set up an office in New Jersey to strengthen its footprint here. To do so required significant investment, which is consistent with the company’s tendency to spend nearly 12-13% of its top line on R&D. As a result, Alembic has become one of the largest filers of ANDAs – we file close to 25-30 ANDAs and 7-8 DMFs per year. This has helped the company go from very modest sales in 2015 to US$300 million in the US today. Simultaneously, Alembic has invested into ROW markets, which currently account for 15% plus of the company’s sales.

How does Alembic evolve its product lines in accordance with macro market trends?

Our presence in the American markets was originally only in oral solid dosages, meaning tablets and capsules. We figured that to be a full-fledged player, we needed to invest in other therapeutic lines. Around 2016, we began investing into dermatology, oncology and ophthalmologic. We build capabilities and capacities with injectables and derm plants. Of late, the generics business has become less rewarding in terms of profits on account of increase in input and freight costs. Also, the cost of running operations in America continues to rise with rise in inflation. Multi-year high inventory levels in US have led to a frenzy amongst pharma companies to liquidate their products in the US market at any given price again adding to earnings. There has been consistent price erosion in the American market over the past two years. To mitigate the effects of this on Alembic, we continue to launch new products because this provides traction in the market. We are spending a disproportionate amount on R&D to get as many filing and approvals as possible.

What is your assessment of the level of enthusiasm for R&D in India today?

Many Indian companies have focused on R&D as an area of cost reduction over the past 12-18 months because they are not getting commensurate revenue for their investments in innovation. That said, there are very exciting opportunities ahead in India’s pharma sector. Looking at the patent cliff, there are wonderful molecules that will be genericized towards the end of this decade, and many Indian companies have their eyes on these future blockbuster drugs. Today, management should strategically decide which molecules to work on because current revenue streams do not support magnitude of investment in R&D as it used to be.

Why do MNCs in India remain limited in their presence within the country?

The companies experiencing formidable growth in the domestic branded business are the Indian companies, not foreign entities. Foreign companies did not invest as much as they should have in creating a strong presence on the ground in terms of product offerings and manpower, and it is too late to do this now. To succeed in India, a company needs an entire product range instead of just their own line of researched products. For example, GSK will not sell Novartis researched products in India, but Indian companies can very well do so. From Alembic’s perspective, a generic is a generic. Once it is off patent, it does not matter who originally formulated it. Multinationals do not come with that mindset, and that is why they are unable to capture the kind of market share as top Indian players like Sun Pharma, Glenmark or Lupin.

Can you share Alembic’s key goals for the next year?

Alembic is in the process of commissioning two large plants. One is for general injectables and opthal, and the other is for oncology. From the oncology plant, we are launching our first product in January 2023. We plan to be formidable player in oncology and injectables in years to come. Nearly 80% of our capital allocation has gone into these lines of business over the past few years, and now that we see the light at the end of the tunnel, we are excited to commercialize these products in US and rest of world.