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10 May 2012

Cipla eyes price cuts on more cancer drugs

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By Kaustubh Kulkarni and Tony Munroe


Mumbai: Drugmaker Cipla (CIPL.NS), long a thorn in the side of big pharma, is looking at cutting the prices of more cancer drugs after it slashed the prices of three treatments last week by as much as 75 percent.


Y.K. Hamied, chairman and managing director of India's fourth-largest drugmaker by sales, said the unexpected response to the price cuts, including for its generic version of Bayer's (BAYGn.DE) kidney and liver cancer drug Nexavar, prompted Cipla to consider further moves.
"Our agents and partners in Africa and other countries have written to us: 'are you extending your price reductions to us?'" Hamied said in an interview.


Hamied and Cipla made headlines in 2001 by producing antiretroviral drugs to treat AIDS in Africa for under $1 per day. Hamied said Cipla was working out details of how to cut prices on more of the 23 cancer drugs it makes.


"I am now sitting with my boys to see what reductions we can make in the entire range of cancer drugs. We are making some calculations about pricing, costing and other aspects."
In March, India stripped Germany's Bayer of its exclusive rights to sell Nexavar, granting another Indian company, Natco Pharma (NATP.NS), a licence to sell the generic drug at 8,880 rupees for a monthly dose, over Bayer's objections.


That decision was seen as setting a precedent that could extend to other treatments, including modern HIV/AIDS drugs, in a blow to global pharmaceutical firms.


Bayer sells branded Nexavar at 284,428 rupees a month and has filed a legal challenge to India's decision.


Cipla now sells Nexavar at 6,840 rupees a month, undercutting Natco.


Business, Not Charity


Hamied, who is 76 and a pioneer in India's development as a force in generic drugs, bristles at the "pirate" label sometimes applied to him, noting that he abides by the laws of whatever country Cipla is operating in and that he respects innovation but has a problem with monopoly.
"If you look at the broad picture of multinationals, 95 percent of their profits are made in the regulated markets of Japan, Europe, America, Canada, Australia ... I am not wanting to encroach into their domain. I am not after Bayer in America or Bayer in Europe," he said.


"I want what is best for my country first, and second, what is best for the developing world and the third world," said Hamied, adding that he runs a business, not a charity.


"I have got 2,000 products in the room. If I don't make any profit on half a dozen, my life doesn't change ... the fortune of Cipla doesn't change," he said.


Born in Lithuania to a Jewish mother and Muslim Indian father, Hamied was raised in south Mumbai, known then as Bombay.


His father founded Cipla in 1935 as The Chemical, Industrial & Pharmaceutical Laboratories, and in its early days it supplied anti-malaria drugs to Indian soldiers in the second World War.
Pictures of nationalist leader Mahatma Gandhi, who visited the company in 1939, adorn Cipla's headquarters.


Patent Principles


Hamied said he did not enjoy a fight but would wage patent battles on principle, even when he knew the company was unlikely to recoup its costs in sales, taking issue with drugmakers that win patents by tweaking products.


Cipla, which is engaged in several long-running legal battles with foreign drugmakers, will mount a challenge to a rival's patent only if it believes its chances of winning are at least 75 percent, Hamied said.


Cipla is worth $4.9 billion and Hamied owns nearly 16 percent, Thomson Reuters data showed. Family members also own a significant stake.


Hamied is ranked 30th on the most recent Forbes list of rich Indians, with a fortune estimated at $1.75 billion.


Hamied, who has a doctorate in chemistry from Cambridge, has been chairman since 1989. He no longer does day-to-day work at Cipla, where his brother, niece and nephew all work, but dismisses questions of retirement or succession.


"I sincerely believe, if you can still add value to the company, you continue to work," said Hamied.


(Courtesy: Reuters)

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