Ranbaxy SA Pty Ltd: New challenges in the competitive life sciences market

The pharmaceutical industry remains a fiercely competitive environment with strict regulatory control and the challenge of obtaining clearance to market new drugs a constant challenge.

Within the South African 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.

It is almost 20 years since Indian-based Ranbaxy first entered South Africa (Ranbaxy (SA) (Pty) Ltd – South Africa, was established in 1996). Today the company is one of the prominent names in the South African pharmaceutical market but has been through a challenging couple of years.

Ranbaxy01 In December of 2014 India’s antitrust regulator Competition Commission of India (CCI) approved the merger of Sun Pharmaceutical Industries Ltd and Ranbaxy Laboratories Ltd provided the 2 entities sell some overlapping brands. The merger is set to create the world’s fifth largest global specialty generics company.

CCI ordered Sun and Ranbaxy to sell 7 brands in which the 2 merged companies would have “appreciable adverse effect” on competition in India as a result of their market share, it said in a statement on its website at the time.

This news came through after the proposed merger had undergone scrutiny amid concerns that the deal could harm national interest by resulting in significant market domination by the combined entity.

“The order of the CCI approving the deal is an important milestone for the transaction. It revalidates our view that the Sun Pharma and Ranbaxy businesses complement each other with limited product overlap, and will offer a comprehensive product basket to enable future growth. We are pleased with the open and transparent manner in which the matter has progressed,” Dilip Shanghvi, managing director of Sun Pharma, said in a statement.

Arun Sawhney, chief executive officer and managing director of Ranbaxy, said the approval by CCI is a significant step forward and his company is confident that after closure the combined entity will enable sustainable long term growth and deliver immense value for all stakeholders.

Sun Pharma will own nearly 54.7 per cent of the equity share capital in the new entity set to be created.

“One of the preconditions of the order is that parties divest 7 products. These products constitute less than 1 per cent of the combined entity’s revenues in India,” a Sun Pharma spokesperson added.

Of course the merger may have potential ramifications for Ranbaxy’s South African operations, where the company is a manufacturer of generic medicines.

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, Desmond Brothers, CEO for Ranbaxy’s South African operations told us in December 2012.

Most 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,” he explained.Ranbaxy02

At the end of 2014 news also came through from New Delhi that Ranbaxy Laboratories had received the regulatory go-ahead to launch its indigenously developed anti-malarial drug Synriam in 7 African countries: Nigeria, Uganda, Senegal, Cameroon, Guinea, Kenya and Ivory Coast, the company announced in a statement.

At the time the product had already been launched in Uganda and it was anticipated that roll out into the other 6 territories would be completed by the end of January.

Commenting on the development, Ranbaxy CEO and MD Arun Sawhney said: “Most malaria cases and deaths occur in sub- Saharan Africa… Synriam is among the best options available today as it is highly effective, affordable and a convenient therapy option, leading to better compliance.”

The new drug conforms to the recommendations of the World Health Organisation (WHO) for using combination therapy in malaria. Synriam provides quick relief from most malaria-related symptoms, including fever, and has a high cure rate of over 95 per cent, Ranbaxy said.

“Since Synriam has a synthetic source, unlike artemisinin based drugs, production can be scaled up whenever required and a consistent supply can be maintained at a low cost,” the company added.

It has been a hectic couple of years for Ranbaxy, but things look set to settle down now for a business providing health solutions to millions.