Ranbaxy (SA) (Pty) Ltd: Delivering Quality medicines in a competitive market

Despite the economic meltdown of the last few years, one industry that will never lose its demand is the pharmaceutical sector. For South Africa’s market, the challenge in the first instance is to make healthcare more accessible to all South Africans, while remaining profitable, for whilst demand for medicines will not waiver, production costs continue to rise.

RANBAXY STAFF AND BUILDINGToday Ranbaxy is one of the prominent names in the South African pharmaceutical market. Listed on the Indian Stock Exchange, India’s largest pharmaceutical company, Ranbaxy Laboratories Ltd., was established in 1961. As the company grew, it expanded into South Africa through Ranbaxy (SA) (Pty) Ltd – South Africa, a wholly owned subsidiary of Ranbaxy, which was set up in 1996.

Today we have three entities in South Africa: Ranbaxy, Be-Tabs and Sonke Pharmaceuticals (Pty) Ltd, and across the whole of Africa, Ranbaxy has a presence in 44 of the 54 countries,” says Desmond Brothers, CEO, Ranbaxy South Africa. Whilst Ranbaxy is a manufacturer of generic medicines, it also markets innovator medicines of its parent company, Daiichi Sankyo of Japan, a top global innovator company.

Ranbaxy views R&D as a vital component of its business strategy and has a pool of highly qualified scientists with an extensive knowledge base and global exposure covering all areas of pharmaceutical research from Formulation Development to New Drug Discovery.

Most of the R&D work is carried out in India but we have the freedom to bring the molecules we require into our own portfolio in South Africa. We are able to source from India but we also liaise and collaborate with local and overseas pharmaceutical businesses,” states Brothers.

Ranbaxy employs 480 people in South Africa, with both Ranbaxy and Sonke having head offices in Centurion, Gauteng, whilst Be-Tabs is based just south of Johannesburg. Ranbaxy also operates regional offices around the country.

DSCN0275Most of our business relates to acute therapies and prescription medicines, with over the counter (OTC) medicines accounting for roughly another 25 per cent of our portfolio. Approximately 70 per cent of our prescription medicine’s manufacturing is for antibiotics, with the remainder comprising cardiovascular and remedies for the central nervous system,” Brothers explains. “In total we have 192 SKU’s between Ranbaxy and Be-Tabs, with an additional 16 marketed by Sonke,” he continues.

Brothers originally joined Ranbaxy’s South African operations way back in September 2001 and left the company in August 2009. He later joined back as the CEO in June 2012.

When I joined (as Commercial Director) in 2001 we were still to become a profitable business, with annual turnover of R28 million and just 22 employees. Back then our SKU’s were old and roughly half of the business was dependent on government tenders, while the remainder of our products were supplied to dispensing doctors with low-end prices – so we were operating with a high degree of risk.

Anti-infective products tend to be seasonal so we had the problem of seasonality which also affected our revenue streams. We also had the task cut out to establish Ranbaxy as a supplier of international quality medicines at affordable prices. The business was struggling and it was even considered winding up South African operations at that time.

From that point we embarked on a campaign to improve our image and rapidly grow our top line and bottom line. We added sales staff and became more focused in manufacturing medicine for chronic conditions, where, when the medicine proves effective, it becomes a repeat prescription for the patient.

We enlarged our portfolio and started to explore opportunities to introduce first to market generic medicines and 2002 proved to be a turnaround year,” Brothers recalls.

The successful recovery of Ranbaxy in South Africa also saw Brothers take up the role as CEO in 2003, and continue to grow the business, before he left in 2009.

In 2005 we launched Sonke as a vehicle for our HIV – ARV business. That business includes a 30 per cent black economic empowerment shareholder.

It took time to build the Ranbaxy business as we needed to improve our critical mass in South Africa building a decent portfolio of products and one of the options was acquisitions,” he recalls.

The decision was drawn-out, but resulted in the purchase, in May 2007, of Be-Tabs, a South African family-run company that was in the field of manufacturing medicines since 1974. The acquisition cost was R500 million and part of the deal required Ranbaxy to invest in upgrading Be-Tab’s existing manufacturing facility.

We spent an additional R340 million to upgrade Be-Tabs – and the machinery fully came on stream earlier in 2012,”states Brothers. “But the acquisition proved a success and catapulted us to the status of fifth biggest generic medicine manufacturer in the country.

At the time of Brothers’ departure in 2009, Ranbaxy had an annual turnover of R650 million. Now that Brothers is once again at the helm of South Africa Operations he has the challenge to put Ranbaxy South Africa back amongst the top five generic companies in South Africa from the current number six rank it has.

For me, psychologically you are either in the top five or in the top ten – and we want to be back in the top five companies by 2014.

The business dynamic is now changing and we have restructured our management to focus more on the commercial side. We have added sales staff to our roster to increase our share of voice and become more competitive.

We have carried out three local therapeutic equivalence clinical trials vs. the originator product to date, further demonstrating the efficacy of our products. We are the only generic company with an ongoing local program of this nature. We are currently running another two trials, both of which are injectable antibiotics.We hope to complete these trials early in the coming year. These products will improve our offering to the hospital sector.”

_EVO3673Quality remains one of the key drivers for any pharmaceutical business and Brothers acknowledges that the regulatory environment does put extra constraints on manufacturers, whilst affecting margins.

Our standards are in accordance with the Medicines Control Council and we employ very high level professionals who are involved in every production process. We use qualified pharmacists and every process is documented, every product is tested via stringent quality testing norms before it is released for sale to the market.

Amongst the many challenges to the industry, bringing high quality affordable generic medicines faster to South Africa is one of the key factors. By an industry estimate the current timeframe to bring a new generic product to the market is 41 months, Brothers says. However, an anticipated new body known as the South African Health Products Regulatory Authority (SAHPRA) is looking to greatly reduce registration time for generics to just 6 months.”

Operationally, there remains a shortage of qualified senior management within South Africa’s medicine manufacturing industry. Brothers says that Ranbaxy continues to train promising individuals and build local capabilities and capacities, but also recruits people from overseas from time to time. Recruitment and training also sees Ranbaxy help to convert retail pharmacists into production pharmacists.

Among the many challenges, he believes that stock supply is critical.

If one fails to carry enough stocks, particularly with chronic medicine/s, a doctor or pharmacist can switch a patient to another brand and once switched, it is very hard to then get that patient back. We believe that by expanding local manufacturing, nearer to the market in South Africa gives us greater flexibility and speed to service the market and therefore, we continuously work towards localizing the manufacturing of our products in our Be-Tabs facility.

We also see margins under pressure from the generic competition in the market and we are continuously looking at ways to improve our capacity and efficiency, in order to keep our product margins competitive.

We have invested significantly in new equipment, which will enable us to improve our output capability – and this is very much an ongoing process.

For the local business we are presently well equipped to supply to South Africa and our four neighbours (Botswana, Lesotho, Namibia and Swaziland). In future we will consider developing as a South African manufacturing hub to supply to Ranbaxy operations in sub-Saharan Africa.

We are looking at high volume movers across all therapeutic classes and will look to bring in the top new molecules in the prescription arena as well as to expand our existing OTC business,” he suggests, “for the larger chain pharmacies, the front shop has become so busy that it is important for us to add more products for improved brand equity.” So watch Ranbaxy in this space!