Cipla teams up with Gilead Lifesciences to make Hepatitis C drug under voluntary licence

MUMBAI: In an interview to ETin 2013, YK Hamied, the founder chairman of Cipla, and some say the scourge of multinational drug companies, prophesied that the Indian drug industry will witness a sea change around the year 2020. “The momentum of 1972 to 1995 (pre-patent era) can’t stop . It will last till 2015, but not after that. So to protect myself for 2020 I have to make radical changes.”

On Monday, the world got a glimpse of the kind of change that Hamied had in mind when Cipla teamed up with California-based Gilead Lifesciences to make and sell its path-breaking Hepatitis C drug Sofosbuvir under voluntary licence.

On the face of it, there is nothing wrong with this kind of a deal. Pharma companies ink many such pacts on a regular basis. But what has stunned the pharma industry is that Cipla and Gilead were once bitter rivals with the American pharmaceutical giant representing everything that Cipla opposed. “It is disappointing but the policy framework under which Cipla used to operate has changed,” said Leena Menghaney, an intellectual property (IP) expert and lawyer with Medicines Sans Frontier, an aid organisation. “Also for generic companies who want to challenge patents, the scenario has become a lot difficult.”

Cipla did not respond to the email query sent by ET. YK Hamied refused to comment, and Subhanu Saxena, CEO Cipla did not respond to a text message sent by ET.

When Hamied cut HIV drug prices to take on multinationals he created a revolution in the global pharma industry. Anti-HIV drugs by multinationals were being sold in many countries at exorbitant prices. Cipla, sensing a big opportunity to establish itself and unseat the hated multinationals, started selling its drugs at $350 per patient per annum. The MNCs, whose drugs were priced $10,000-$15,000 per patient, had no choice but to cut and cut big.

That was not all. Hamied’s long history of attacking multinational drug pricing both verbally and in the form of Cipla’s generics, and his passionate defence of India’s patent laws made him unpopular among global drug makers. Some even accused him of being a thief.

Battlefield Africa

This was the time when AIDS was assuming epidemic-like proportions in Africa and western drug firms and countries were universally upbraided for doing too little and too late.

Many companies, Indian and foreign, were still grappling with the power of the NGOs, not knowing what to make of it.

Some successfully avoided getting caught in battles but many were not so lucky. Cipla went one step ahead of its rivals by co-opting the activists and the health workers earning a David-like status for taking on the multinational Goliaths.

That reputation may now be at stake with this Gilead deal. Not only has the pharma major broken ranks and teamed up with multinationals, it has also forsaken its desire not to get sucked into doing the kind of deals like voluntary licencing.

In an interview to the popular pharma blog Apothcurry in February last year Hamied had said this: “Here is a licence for this drug for five years, we will supply you raw material, we will do this we will do that, this is only valid for India, it is not valid here, it’s not valid there.

Then they say you have to sell it under our brand name and that belongs to us. I want to market the product under my name. Otherwise, I am a distributor network. That’s what they want. I am not a distributor, I’m a manufacturer.”

New Leadership

The reason behind Cipla’s shift in focus is clear when you look at what has been happening in the company. Hamied is no longer as fully involved as he once was. He has left day-to-day operations and strategy to new chief executive officer Subhanu Saxena whose thinking is more closely aligned with the rest of the pharma industry. He aims to make Cipla a much bigger global drug maker with an acceptable face.

Since taking charge, Saxena has made a series of acquisitions in Africa, South East Asia hoping to use its skill in churning out low-cost drugs in fast-growing markets. Cipla aims to earn over 50% of its revenues from the international market, in line with other drug companies like Sun, Dr Reddy’s who have much bigger international operations. Cipla is largely a domestic player but expects to start selling drugs in the US by 2015.

“With times, one has to change, you cannot be static and Cipla is no exception,” says DG Shah, secretary general of the Indian Pharmaceutical Alliances, a lobby group of Indian drug makers.

“The confrontation between generic and innovator companies is not helping anybody, including consumers, and such collaboration opens up opportunities for all, so it is a win win situation,” he explains. Shah says that even Gilead has changed from its past rigid stand regarding technology transfer and geographical reach.

In business, like in politics, there are no permanent friends or enemies only permanent interests. The new Cipla, in search of growth and eager to shed its image as a disrupter, is aiming to create a bigger impact than the one unleashed by cheaper drugs in Africa more than 10 years ago.