Sure Kamhunga
7 July 2009
Johannesburg — AFTER rejecting an unsolicited bid from rival Adcock Ingram, generic drug maker Cipla Medpro SA (CMSA) is focusing efforts on further expanding its domestic market share supported by a pipeline of drugs to be supplied by strategic partner Cipla India.
The company hoped sales would be boosted by the increasing shift by consumers towards generic drugs, and would use aggressive trade and consumer marketing campaigns to achieve this, CEO Jerome Smith said yesterday.
But he said in the company's latest annual report that CMSA would not sacrifice margins for the sake of growing market share.
Smith said changing purchasing behaviour by consumers who are responding to tight economic conditions by opting for cheaper self-medication drugs also presented the firm with opportunities to grow its range for over-the-counter medicines, both locally and in various African countries.
Yesterday a spokesman said the company was not ready to discuss these opportunities.
Smith said CMSA would continue to benefit from its exclusive access to Cipla India's strong product range.
Through its association with the Indian firm, CMSA had already released several first-to-market drugs that helped it grow revenues.
CMSA's long-term supply agreement with Cipla India -- the largest stand-alone generics drugs firm in the world -- was one of the key reasons the company recently rejected a bid by Adcock to buy it in a deal valued at R2,13bn.
In dismissing the offer, the board of CMSA said the proposal lacked strategic and business logic, and said it would rather support management efforts to grow the company as a stand-alone entity and pursue its expansion strategy in SA and beyond.
"While there are a number of factors driving Cipla Medpro's growth, a key component is our exclusive access to Cipla India's strong pipeline of products and dossiers.
"In the pharmaceutical industry, growth can be sustained in a few ways, among others -- either by the research and development of new molecules in the case of innovator companies -- or in the case of generic companies, through a consistent flow of dossiers and registrations," Smith said.
"Over the years, our relationship with Cipla India has resulted in us releasing some extremely significant medicines locally, such as the first three-in-one antiretroviral , Triomune, to last year's generic escitalopram depressant, Lexamil."
The company had also recently launched an anti-flu medication, Cipla Oseltamivir, one of only two medicines that have been recommended by the World Health Organisation for the treatment of the swine flu outbreak.
Smith said CMSA's partnership with Cipla India was strong and it was already benefiting from favourable pricing which allowed the company to enjoy credit terms of as long as 180 days.
Smith said CMSA continued to expand its domestic market share as measured by revenue growth and units sold, with first quarter revenues excluding the animal health and manufacturing divisions rising 29% to R239,7m.
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