With Covid gone as a money spinner, what are companies like Cipla, Sun Pharma and Dr Reddy's looking at?

With the third quarter of the financial year ending and covid-19 led opportunities almost over, pharmaceutical companies are looking at strengthening their core businesses and exploring new areas.
While there has been a slide in demand for Covid-19 vaccines produced by companies like Serum Institute of India (SII) and Bharat Biotech, other drugs used in the management of mild, moderate and severe Covid-19 such as antipyretics, antibiotics and multivitamins still have a healthy market. There is also muted demand for the much-hyped anti-viral drug Molnupiravir, which at least 13 firms are manufacturing including Sun Pharma, Cipla, Dr. Reddy’s, and Aurobindo Pharma, among others.

Meanwhile, the growth in non-Covid categories is being driven by an underlying rise in the instances of other illnesses, which is what the companies are now focusing on.

With the demand scenario changing, Indian pharma majors are now scrambling to return to their areas of expertise. For instance, Dr Reddy’s Laboratories, the main distributor of the much-talked-about Russian Covid vaccine Sputnik, is now focusing on its core businesses of APIs or active pharmaceutical ingredients (a biologically active constituent of a drug), generics, branded generics, biosimilars, and over-the-counter (OTC) drugs. These constitute the company’s near-term growth drivers or what it calls its “Horizon 1” of growth. It has a plan for long-term growth (Horizon 2) as well. “As the pharmaceutical landscape evolves, we see intense competition in traditional generics, the disruption brought on by new players and new business models, and demand for holistic healthcare solutions,” says a company spokesperson, adding that the company plans to deepen its presence in nutraceuticals, discovery, and development of immuno-oncology NCEs (new chemical entities or new molecules) at subsidiary Aurigene Discovery Technologies, and strengthening its contract development and manufacturing company (CDMO) services. Dr Reddy’s is also exploring new spaces such as digital healthcare services, clinically differentiated assets, biologics and cell and gene therapy, and disease management.

Companies like Syngene are also heavily investing in their CDMO businesses. “Growing demand for biologics manufacturing has encouraged us to continue building capacity year on year,” said Jonathan Hunt, MD & CEO, Syngene International.

In 2021, Syngene set up and commissioned a new microbial cGMP facility and expanded the capacity of our mammalian cell manufacturing facility. Recently, the company signed a 10-year agreement with Zoetis for commercial manufacturing of their drug substance, Librela, which is used for treating osteoarthritis in dogs, This multi-year agreement marks an inflection point for Syngene’s Development and Manufacturing Services Division and will position Syngene as a leading Contract.
Analysts see many reasons for Indian companies to venture into pharma contract manufacturing and research. India is an alternate source to China. There is high competition in generics – which makes CDMO more attractive to produce. High margin nature of these products makes it more attractive,” said market watcher Rajesh Pherwani, Founder and Portfolio Manager, Valcreate Investment Managers.
“The cost of production, R&D for innovators is rising which makes them outsource from low cost countries. There is around a 100 bn$ opportunity in CDMO globally. There are more good manufacturing plants (GMP) plants in India, USFDA approvals, and strengthening of compliance at Indian facilities. With the availability of qualified manpower, there is a non–compete approach by Indian promoters, maintaining the secrecy of Intellectual property rights (IPR),” he said.

Pharma major Cipla indicates a focus on wellness and lung specialty businesses. “Today, we are witnessing a massive transition towards wellness and we aim to build a wellness-oriented business. We are also continuing our quest of attaining global lung leadership,” says Umang Vohra, Managing Director and Global CEO of Cipla. “On the innovation front, we are actively working on newer constructs like mRNA, stem cells, and biosimilars.”

Sun Pharmaceuticals, India’s largest pharma company, has also defined some growth drivers for itself. According to its 2021-22 annual report, changing lifestyles and food habits will continue to result in higher incidences of chronic diseases globally, driving growth for cardiovascular, anti-diabetic and other such segments. The company further affirms that oncology and immunology will continue to witness higher volume growth and will, therefore, require significant investments in developing new products. Medicine requirement is higher for an aging population and this is expected to be another growth driver for the industry, the report mentions.