As going gets tough, pharma firms revisit past decisions

To forge growth in the current challenging times, pharma companies in India are undoing what they did some years ago. Selling non-core businesses, rationalising expenditure on R&D and changing their CXOs are some of the measures taken by pharma companies to yield improved results.

Sun Pharma has reduced its R&D spend guidance from 8-9 per cent in FY19 to 7-7.5 per cent now. If acquiring, companies are buying small & strategic targets. In a bid to deleverage itself, Strides Pharma is selling off its Australian business and acquiring generic businesses in the US and Canada and increasing its stake to 100 per cent in its JV with Vivimed Labs. Lupin conceded that its 2016 acquisition of Gavis – the biggest overseas buyout by an Indian pharma company — has been short of expectations. Following its acquisition of Ranbaxy, Sun Pharma has made a series of small and strategic acquisitions to bolster its specialty products portfolio. In a bid to streamline its operations and optimise costs, Dr Reddys Labs (DRL) proposed to sell off its antibiotic manufacturing facility and API manufacturing plant last year.

Aurobindo Pharma and Cadila Healthcare are among the few pharma companies to have made big acquisitions in the recent months. While the former bought some of the units of the generics business of Novartis, the latter acquired Heinz brands in India through its subsidiary Zydus Wellness.


With pressure on pricing in the US and domestic market, cost curtailment is a key agenda for the companies. Companies have rationalised field force and restructured product portfolio to improve productivity of their operations.

Companies have also made changes at the managerial level. Lupin’s vice-chairman Kamal Sharma moved into a non-executive role last September and its CFO Ramesh Swaminathan quit in last December. DRL recently appointed a new CEO of North American business and had a new COO in April last year. Last year, Sun Pharma had a change in its CFO as well as the CEO of its North American business.

Amidst headwinds, the focus seems to have become sharper. The cumulative impact of these measures is likely to be seen in the forthcoming quarters as pharma companies work on increasing their profitability, improving their product mix and deleverage themselves.