Cadila Healthcare to focus on innovation and IP creation: Sharvil Patel – Moneycontrol.com
Cadila Healthcare, part of the Zydus Group, wants to focus on innovation to drive future growth.
“The way we as a company or any Indian pharmaceutical company was set up was based on two principles – access and affordability. That means the ability to developy formulations quickly and bring them to market at affordable prices. I think that will help us to sustain. Our next strategy is that we want to be IP (intellectual property) driven company and our strong belief has always been that we have to make efforts in research because that’s the true disrupter for us,” Sharvil Patel, Managing Director, Cadila Healthcare told Moneycontrol.
Bet on R&D
The company spends about 7-8 percent of its revenues on research and development (R&D). The Zydus Research Centre in Ahmedabad is a 475,000-square feet facility that employs over 400 scientists. Cadila’s revenues stood at Rs 13,367 crore in FY19 while the company had revenues of Rs 10,571 crore for the nine-month period ended December FY20.
After years of efforts, Cadila tasted some success. In 2013, the company announced the launch of Lipaglyn (Saroglitazar) – India’s first NCE. Lipaglyn is a once-a-day pill that can simultaneously control cholesterol and glucose levels, a first of its kind drug for treating hypertriglycerdemia (elevated triglyceride levels) and diabetic dyslipidemia (high cholesterol in diabetic patients not controlled by statin drugs).
This year, the drug got approvals from Indian drug regulator DCGI for additional indications such as type-2 diabetes and non-alcoholic steato-hepatitis (NASH) or fatty liver caused by insulin resistance. The drug is now getting tested for lipodystrophy – or a problem with the way the body produces, uses and stores fat.
Lipaglyn is already a Rs 50 crore drug in India market, growing at 30 percent. With approvals for new indication, the sales are expected to gain traction. Lipaglyn has completed phase-2 or proof of concept clinical study in US where it is tested on patients for safety and efficacy.
Patel said the company plans to initiate phase-3 trials in the next two quarters. In US, the drug will be targeting NASH patients.
Its other molecule Desidustat, which is meant for treating anemia in non-dialysis dependent Chronic Kidney Disease, is undergoing phase-3 clinical trials in India.
In collaboration with the World Health Organisation (WHO), Cadila is working on the development of a cocktail monoclonal antibodies (MABs) for the treatment of rabies, through the use of monoclonal antibodies (MAbs). The RabiMAbs, the novel biologic to treat rabies has completed Phase III clinical trials in India and got a orphan drug status in US, that makes it eligible for fast track clinical development. Patel said another four biologic drugs targeting cancers, autoimmune disorders and congenital muscular dystrophy (a rare muscle weakness disorder) are in various stages of development.
Patel says that the company always done end to end development of its innovation programme within the budgetary constraints.
“We control the whole chain, which has helped us on two things. One is we build capabilities within be able to do it faster, and we are able to do it in a cost that we feel we can manage to do effectively up to phase 2 and 3 clinical trials in India,” Patel said.
Patel said they are still waiting for the right time to do licensing deals to take the NCE and biologics pipeline into late stage clinical trials.
“We have not done anything because we want to move the clinical programme further. The value for any partner is how late you licence, the earlier you licence it, the risk for each partner is high. So while you hear big numbers, you see very little getting passed through. So, we believe that with right proof of concept, right clinical outcomes, we will look at partnerhips because obviously we doesn’t have access to all markets directly. So, there is no question that we will partner, it is the matter of right time,” Patel said.
Moraiya remediation & derisking strategy
Around 46 percent of Cadila’s sales come from the US market. The USFDA’s warning letter against company’s crucial manufacturing plant at Moraiya near Ahmedabad has been a cause of concern.
“We have other new sites to derisk, but Moraiya is still an important site. The site doesn’t have any major filings. We will finish our remediation for Moraiya by May-June this year, then we will request for a re-inspection,” Patel said.
Currently, Cadila has 110 abbreviated new drug applications (ANDAs) pending approval, of which 34 are from Moraiya.
Debt reduction
Patel said the company is looking at reducing debt to the tune of Rs 500 crore – Rs 1000 crore through internal cash flows in FY21. Patel also said the company keeps looking at value unlocking opportunities like licensing deals.
Cadila has a net debt of Rs 6530 crore as December 31, 2020 with a net debt-equity ratio at 0.7.
The higher net debt-equity ratio is on account of part utilization of surplus funds and also funds borrowed to finance acquisition of Heinz India for Rs 4,595-crore in 2018. The acquisition got Zydus group strong footing in consumer wellness business, which includes popular brands Complan and Glucon-D.