The Menarini Group currently ranks 17th in Europe and 34th worldwide with annual revenues of $4.2 billion. What is the Group’s current ranking in the APAC region specifically? What percentage of revenues come from the APAC region? Which APAC countries currently make up the Group’s operations?
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Girdhar Balwani
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The Group’s ranking in the APAC region (Menarini APAC) is 73 among all pharma firms or 24 amongst MNCs. Close to six per cent of the revenues come from the APAC region. Menarini operations in the APAC region currently comprise 13 countries within Asia Pacific region – Singapore (HQ), Malaysia, Thailand, Vietnam, Indonesia, Hong Kong, China, Philippines, South Korea, Australia, New Zealand, Taiwan and India.
What are the company’s leading brands?
Dermatix is the No.1 brand for Menarini Asia-Pacific with an annual sales of $22 million.
How does India shape up as an investment destination compared to other APAC regions? (In terms of ease of doing business, FDI norms, etc.)
India is one of the focussed countries for Menarini in terms of investment. This is substantiated by the acquisition of the Shalaks portfolio. We continue to look at inorganic opportunities as well as entering into consumer health as investment areas to further accelerate the growth of Menarini in India.
In general, the environment to invest has its own challenges in terms of the government regulations, trade association, new product registrations etc. These challenges though surmountable involve increased timelines and the need for patience.
What was the strategy behind Menarini’s acquisition of Invida India?
Menarini acquired Invida Asia-Pacific on November 11, 2011 and due to that acquisition, Invida India became part of the Menarini group. While the acquisition of Invida Asia-Pacific helped Menarini to enter into the high growth Asia-Pacific market, for Invida this has offered access to the partnered products and to the R&D capabilities of Menarini. The Invida management has been retained at both the regional and country level. Before this acquisition, Menarini had a minor presence in India through a joint venture with the Raunaq group and the entity was called as Menarini Raunaq. Post Menarini acquiring Invida, Menarini Raunaq is in the processes of getting merged with Menarini India (erstwhile Invida India).
What was the cost of the acquisition?
These figures are not in the public domain therefore we are unable to share the same.
The Group has reportedly charted out an aggressive growth strategy in India. What kind of companies/tie ups/JVs/etc are in the pipeline and what is the timeline to these potential deals? Is the due diligence process on on any of these currently? Is the thrust on acquiring brands, physical manufacturing assets or other considerations?
We currently market two products of Sinclair Pharmaceuticals, Paris and further launches of their brands are planned including line extensions. We are currently assisting the clinical trials for registration of products of Actelion Pharmaceuticals, Switzerland and Ipsen, France and are also going to market a product of Meda from Q2 2014. We are in advanced stages of finalising with a North American company to register and launch a derma filler in India. While we are open to looking at various other inorganic opportunities (local acquisitions), there are no proposals active at this stage. Our sourcing strategy involves getting our brands manufactured at third party locations which meet our GMP standards. We have no intentions to setup / acquire a manufacturing location in India.
India is tipped to be one of the fastest growing pharmaceutical markets in the world but there could still be speed breakers. What growth challenges do you foresee and what are the risk management strategies to cope with these challenges?
While the Indian pharmaceutical market has been registering robust growths over the years, the recent past has seen a plateau. Price control, lower general economic growth (raising inflation), lack of confidence by innovators on existing patent protection are the growth challenges we foresee in this market. Our strategy is to focus on areas where we can have differentiated products in therapeutic segments which can offer profitable growth opportunities.
How will the country’s new drug pricing policy and intellectual property regime impact the company’s growth targets?
We are fortunately not significantly impacted due to this because of our strategy as mentioned above.
What is the Group’s future strategy in India and the APAC region for the next financial year?
The Group’s future strategy involves having a very robust range of products which are differentiated and offering profitable growth. The focus now is on sales force effectiveness through ethical marketing and training and development of the sale force
Looking ahead, what are the future investments/ growth plans for the next five years?
We plan to drive our existing portfolio through consolidation of our existing brands within the primary care and dermatology therapeutic categories. We also plan to launch new products thought partnerships with mid-sized international companies, while continuing to focus on sale and marketing effectiveness. We will explore acquisition opportunities in the Indian market as well as evaluate direct to consumer approach for select brands of the existing portfolio.
In terms of therapy/ treatment/R&D areas, which will be the focus areas in India?
Our current focus is into the primary care ( gastroenterology, antibiotic and pain management) and the dermatology therapy areas. We plan to enter into the consumer health segment in 2014. The R&D activities are championed from our R&D centers in Europe and there are no plans to shift those to India.
What percentage of the Group’s global revenues are ploughed back into R&D and will this be maintained for the India operations in India as well?
The R&D operations would continue to be from the centres we have in Europe and we have no plans to shift the same to Asia-Pacific. Within Asia-Pacific the major investments are for conducting clinical trials mainly to meet regulatory requirements. In 2013 we have invested $4.4 million for conducting clinical trials.
Besides investment in company’s growth, are there any other activities that the company plans to engage in?
We have initiated various patient / therapy related engagement activities to enhance the awareness or formulate treatment guidelines based on latest international guidelines / expert opinions. The two major initiatives are Aanchal and Scar Management Guideline. Aanchal is a platform initiated by Menarini to educate mothers of newly born children. There would be doctor – mother interactions facilitated during which various topics like, vaccination, breast feeding, massage etc would be discussed and queries of the mothers would be addressed by the doctors.
As part of the Scar Management Guideline, we have formed the ‘Indian Scar Forum’ wherein leading plastic surgeons, gynaecologists and dermatologists meet and discuss the latest developments in the management of Scars. We have formulated the Asia-Pacific guidelines on Scar management and the same was released in 2013. The Indian Scar Forum is in the process of formulating an Indian guidelines on scar management which is expected to be released by April 2014.