Boehringer Ingelheim India: Revving up

While other MNC pharma companies have long histories in India, Boehringer Ingelheim’s India story has just begun. As BI India completes a decade of operations in India, Sharad Tyagi, chairman and managing director, BI India gives details of the company’s high-growth strategy to Viveka Roychowdhury

“From a perspective of strategy, BI entered India at the right time …the company is planning to launch at least one new molecule / indication every year for the next several years … a real cause for concern is the uncertainty and lack of transparency concerning regulatory changes.” Sharad Tyagi CMD, Boehringer-Ingelheim India

Globally Boehringer Ingelheim (BI) is a 128-year-old company but is only a decade old in India. Since its registration in 2003, the company spent the first few years laying the ground work in the country and studying the market, as well as developing channel partners and building a base for clinical operations.

Inspite of not having a direct base in the geography, the company has had a presence in the India market for the past 30 years, thanks to two brands: Dulcolax and Buscopan, two of what the company designates as its flagship international core brands (ICBs).

Seven years after its late entry, the pace of growth at BI India picked up with the launch of Pradaxa (dabigatran) and Trajenta (linagliptin) in 2012. In fact, chairman and managing director Sharad Tyagi indicates that the company is planning to launch at least one new molecule/ indication every year for the next several years.

Thus he feels that from a perspective of strategy, BI entered India at the right time. In retrospect, 2012 was a landmark year for BI in India as it marked a transition from building the base to launching into a growth phase.

Tyagi, who joined BI less than three years ago, has been tasked with executing BI’s high-growth strategy for the country. He says that BI’s strategy is to focus on their core research molecules.

The two major product launches of 2012 typify BI’s research-driven product portfolio and their tagline: Value through Innovation. Pradaxa, an oral anti-coagulant which came 54 years after the last breakthrough in this class of products, is touted to provide superior stroke reduction for atrial fibrillation patients.

Similarly Trajenta, is a unique ‘one-dose-fits-all’ solution: an oral anti-diabetic that effectively brings about glycaemic control with enhanced safety and less complexity in Type 2 diabetes patients.

Globally, BI’s four key therapeutic focus areas are diabetes, respiratory, neurology and oncology. In India, the first three are the present focus areas while 2014 will see BI’s first step into the oncology segment in India.

BI India has four business areas: prescription medicine, consumer health care, animal health and clinical operations. Under Rx medicine, the product portfolio spans cardiovascular and hypertension, diabetes, oncology, CNS conditions like Parkinson’s Disease.

Tyagi indicates that BI India plans to grow its consumer healthcare (CHC) division by launching some of its global brands in India. He indicated that the gastrointestinal and pain segments could see CHC/over the counter ( OTC) launches from BI India in the near future. BI’s global annual report states that CHC expanded in 2012 as well, mainly in emerging markets and achieved worldwide sales of EUR 1,505 million, corresponding to growth of + 7.8 per cent compared to the previous year. Thus for BI India, the launch of its CHC brands will be closely watched as emerging markets like India will be a major growth driver for BI’s CHC portfolio.

Fact sheet

BI was founded in 1885 by Albert Boehringer in Ingelheim am Rheinm with a staff of 28 people. Today, as per the company’s annual report for business year 2012, the company has more than 46,000 employees in 140 affiliated companies worldwide, R&D facilities at six sites worldwide and 20 production plants in 13 countries. R&D expenditure in prescription medicines corresponded to 23.5 per cent of its net sales. The company had an operating profit of EUR 1,853 million, corresponding to an operating margin of 12.6 per cent. The outlook for 2013 is positive as the management expects to maintain growth and anticipates a mid-single digit increase in sales compared to FY2012. Europe sales made up 29 per cent in 2012, down from 31 per cent in the past year while the Americas contributed 47 per cent (up one per cent from 2011) and while the third region, (Asia, Australasia, Africa) clocked 24 per cent, up one per cent over the last year. As part of R&D activities for innovative drugs, the company focuses primarily on the therapeutic areas of cardiovascular disease, respiratory diseases, diseases of the central nervous system, metabolic diseases, hepatitis C and oncology. The company has 94 products in its research pipeline, under its six disease focus areas. It has 31 molecules under research in the cardiometabolic area, followed by 24 in oncology, 17 in respiratory, 10 in CNS, nine in immunology and the remaining three in infectious diseases. The company entered the diabetes market in 2011 and expects to enter the oncology market in 2013 as well as extending their respiratory portfolio. The substances from the advanced pipeline, foremost afatinib in lung cancer and tiotropium or olodaterol in respiratory diseases, have the potential to be ready for the market as early as in 2013 as well as in the next few years, according to the 2012 annual report.

Challenges

So how does the global BI management see the Indian market? Tyagi feels that India is unique as almost 80 per cent of medical expenses is out of pocket whereas most countries have some healthcare reimbursement systems in place. Therefore product pricing becomes very important. He says BI believes in pricing considering the local market conditions, pointing out that major BI India brands are priced at close to 1/3rd to 1/5th of US prices. For example, Trajenta in India is priced at six per cent of its US price and Tyagi believes this is an affordable price point for India.

Tyagi indicates that the CHC/OTC range will be much more wide spread and mass market. The strategy is to tap India’s smaller villages and towns through the CHC/OTC range which need such products even more as they don’t have access to the healthcare facilities in urban areas.

But the push for affordable medicines is not unique to India alone. Tyagi says that different countries have different ways of dealing with these priorities. What he flags off as a real cause for concern is the uncertainty and lack of transparency concerning regulatory changes.

Having worked with Indian pharma for the past few years (his last stint was with Dr Reddy’s Laboratories), Tyagi feels that the fact that BI has been family-controlled for the past century and will continue to be so for this century as well, is a good sign because it conveys the message that there will be no change in its commitment to research. Twenty-three per cent of BI’s turnover is invested in R&D and this makes for a very high focus on its research pipeline. This abiding long-term vision and strategy adds stability to the company. There is also an emphasis on building consensus during the decision making process.

For the mother company, India still classifies as a new operative unit and as such at a growth stage so it does make sense to look at it from a perspective of share in global BI revenues.

According to the 2012 annual report, Europe sales made up 29 per cent in 2012, down from 31 per cent in the past year while the Americas contributed 47 per cent (up one per cent from 2011) and while the third region, (Asia, Australasia, Africa) clocked 24 per cent, up one per cent over the last year.

Tyagi indicates that the company is in an investment phase in India and BI is certainly excited about the prospects in the medium and long term.

BI India’s share in the global BI revenues may not be great at this point of time but the company does seem to view the India operations as a vital part of its overall strategy. As BI India enters its second decade in India, we can only wait and watch.

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