(1) Dr. Reddy’s Q1 FY12 Earnings Call Transcript, July 20, 2011

 

 

(3) Press Release, “Dr. Reddy’s announces the launch of Gemcitabine for Injection,” July 27, 2011

 

I have a question on the domestic market because towards the mid of the last quarter, we were expecting that the growth will revive after a muted Q4. But that hasn’t happened. So can you throw some more light, as to why the growth has been sluggish in India? What steps are we taking? And how do you see growth reviving from a 1 to 2 year perspective?

 

Okay the growth has been disappointing, yes. We did indicate that things should improve from this financial year onwards, but quarter 1 results have not certainly reflected that, so we do express a sense of disappointment over that. So looking to the some of the reasons why and what do we expect going forward, if you look at this there is some initiatives we have undertaken about, say, 2 years back. One was field force expansion. We also wanted to redeploy some of the field force. But I think the deployment as well as the expansion have not yielded the sales increases that we expected it would, right, so that’s one issue which needs to be still tackled. And we’re still working on it, right, so that’s one. As far as the other initiative goes, the expansion to rural markets, while it has started off well, there was a good scale-up in the previous year. There’s been some issues with that in terms of field force attrition and things like that, which was somewhat beyond our control, right, but that’s something we also had to anticipate. So I mean, these are two primary reasons we have seen, the first quarter was also hit with somewhat a lower growth in some of the top brands, so that’s another issue. So these are broadly what I see as the issues for the first quarter compared to, say, what we anticipated in the previous quarter. Now while it’s work-in progress in terms of trying to sort out the execution issues, I would expect that things to start looking up in the second half of the year, right, so this will be based on some of the interventions, which we have started plugging in early enough this quarter. But again, I would still like to see the performance of the second quarter. Once that improves, I would be able to comment more on that. I will be able to say with much more confidence on what happens in the second half, which I am sure, will definitely start recovering.

 

And just one more question, have you seen an authorized generic in fonda yet?

 

Not yet, but we heard of a possible authorized generic.

 

Have you seen any pricing pressure in the domestic market? Because for one of your products like rabeprazole, Pfizer has come out with almost little like 50% of your pricing. So do you see that MNCs coming out with a very aggressive pricing and it’s affecting the overall pricing strategy in the Indian market?

 

It’s not just MNCs, I think, even among the Indian companies and overall if you see the industry itself there is intense pricing pressures happening to various products. So obviously, it does affect the market share, and that’s something we all seen, yes.

 

And have you also taken some like price corrections in rabeprazole?

It is one of the leading products for us. We have not done anything.

 

And what could be the adverse impact of nimesulide because there was some confusion in the market and, well, it might have impacted growth in the market.

 

Nimesulide, I think from the time EMEA had put in some restrictions in the past, especially the issues on the pediatric suspension, which we had withdrawn quite some time back. I think the recent EMEA report also has clarified in terms of the benefits of nimesulide, except for chronic usage of that, which is something which we had already implemented quite some time in the past. But I think the whole activity, especially by competition, by also putting in false propaganda — in one case, actually we had successfully gone to court to restrain them. So this is something which has also seen de-growth in this molecule compared to the past. That’s something we have definitely seen in this molecule.

 

What could be the depreciation and amortization impact because of the Bristol facility in the U.S. for this quarter?

 

It’d be about $1 million to $1.5 million.

 

My question relates to the domestic market. If you can throw some light on the sales force? And how much of sales force was added in the last year? And any change in the guidance for FY 12?

 

First of all we have not guided for FY 12, right?

 

Sorry FY13 of $2.7 billion guidance, whether it has changed or that you are revising...

 

That still remains. There’s no change because of what you have seen, just because of the Indian market growth in the first quarter. That’s no indication of any revision or any change. We still stick to the guidance, what we have indicated. In terms of the field force that you are asking, I think, last year, we added quite significantly to the field force, and it was about 500.

 

And what is the current strength now?

 

The total will be about 3,800.

 

When do you feel that the full potential of this 500 people will be available to us?

 

I think it’s difficult to comment, saying that just because we added field force, overnight sales are going to increase. That’s not what I was intending to say. So it is about field force which has been added in different marketing divisions and also the field force strategies that we employ and the execution that happens after that. So it’s a combination of various things, which I said that, on execution, we have not performed up to expectations.

 

And what is the attrition rate in the field force currently?

Across the division it varies but overall, it’s about 25%.

 

First thing is what will be sales contribution and how much is the cost of the new GSK facility, penicillin facility?

 

The sales are about $4 million, and the cost of the facility, because we haven’t yet scaled up, is about $5 million.

 

And how much sort of peak sales, are you expecting from this?

 

This will peak in quarter 3, and I think it could go at an average run rate of almost about $8 million to $10 million. But this is a seasonal product, so you will begin to see the variations between quarter 1 and quarter 3 at a full year average, and a good rate would be about $5-million-odd per month.

 

What’s your view on the German pharma market? Even after we have started AOK supply do you expect sales growth this year?

 

Sales will definitely not grow because we have already indicated in the last year itself that the price declines will continue for this year. So what you’re seeing in the first quarter is generally the trend even for the rest of the year because the view on the market is that while AOK tender have good products with increasing volumes, as an outcome of that, because of the pricing pressures, that’s why you see the decline.

 

And what would be your market share in lansoprazole, tacrolimus, fexofenadine and omeprazole?

 

We will share these numbers offline with you.

 

Just one question in terms of the housekeeping, I suppose the $3 million of the VRS has been in the SG&A costs. And interest on bonus-debentures is clubbed in the financial expenses. That would be right?

 

I will just clarify: The VRS, it is split 70% in the manufacturing cost and 30% in the SG&A. And the interest is in the interest line, the bonus debenture interest is in finance income.

 

When you said that fonda will be launched in a phased manner over the quarters, can we go a little deeper into that? Why is it phased? And what is the time period in which you expect to achieve the best market share?

 

So part of the reason, this is going to be a slow phasing is because of the complexity of manufacturing of this product. So it involves nearly 60 steps of manufacturing, and hence, while we launch the product, I think we’ll be able to fully exploit the market share of the product in about 3 months from now.

 

Just today, there was a FDA release that you got an approval for palonosetron hydrochloride.

 

It’s a tentative approval.

Allegra — D 24. Did I hear that you said you already got the approval?

 

Yes, we have received the approval. We are hoping to launch.

 

In the calculation of EBITDA, you have added back interest of about Rs. 22 crores in your press release, whereas the interest in your P&L is only about Rs. 4 crores or Rs. 5 crores. So what is the disconnect there?

 

So, Bino, the interest in the P&L is actually the net finance expense, so that includes forex gain also. You can see the last page of the press release; it will give you all the components adding up to the EBITDA and finance expenses.

 

Bino, we had 16 crores of forex gain this quarter.

 

So EBITDA number you have given out, includes that forex?

 

That’s right.

 

Just wanted to get a sense on; we are seeing a weak trend in terms of growth in our other CIS markets, other than Russia and also in the ROW markets. I think we are seeing it sort of weaker even over the last couple of quarters so, I just wanted to get a sense on what’s happening there?

 

Couple of markets had devaluation right. So Venezuela was one and also Belarus. We are talking about steep devaluation of the currency so, that’s one impact of what has happened and that’s the issue.

 

Other than that I don’t think there is too much that we are concerned about right now.

 

Just on fondaparinux, I wanted to understand, basically if there are different channels where fonda is probably more taken like it is probably a hospital based channel which takes the product more, just a little more colour on that.

 

Fonda is split about 60% in hospitals and 40% in retail and wholesale.

 

The US launch is pretty much a priority right now but any update on the EU filing, where there is a stand right now.

 

We are not providing an update on that as yet.

 

Well the data exclusivity runs till next year Girish.

 

I understand data exclusivity is still 2012 but filing would of course be in preparation right.

 

Yeah so we are not commenting on that right now but it is our plan to try to monetize fondaparinux as much as we can across the world.

Just wanted some more color on the US, it is of course pretty strong and the OTC launch has been there but how have been the launches in Lotrel higher strength and levocetirizine in some of the launches which were pretty recent, how has been the market share there and what is the colour on where the base sales might go to by the end of the year. I mean excluding some of the exclusive launches which may be coming in the latter half of the year.

 

So these products are highly competitive because of a very large number of players launching the product so, I don’t think they form a significant portion of our sales.

 

Taking this question forward on fondaparinux, you said 60% is hospitals and 40% is wholesale retail. Right now in the press release, you were indicating that we would be targeting wholesale retail. Is that what you will start off right now, targeting 40% of the market?

 

Yeah that’s right.

 

And say in three months time you would then target a balance to the market. In terms of hospital distribution because you don’t really have too many injectables in place so, what sort of market tie up you would have to take this product forward?

 

So, this one is a little different from the rest of the products that sell in the hospitals so it doesn’t require that kind of a special GPO type of an organization.

 

And what sort of market share can we presume by March-April of next year can we assume it at 30-35% market share build up over April, May, June next year or will it take longer to reach market shares like that?

 

Abhay we are not commenting on that as yet.

 

The last one was on Russia. You indicated 30% is OTC now, how much is hospitals as a percentage of your Russia revenues?

 

Less than 5% would be hospitals and we have plans to see what products we could pick and choose, to increase that portfolio and prepare it for the biosimilars and the other oncology products that we will be launching in the near future.

 

Any outlook on the Russian pricing, is there any transition, is there any expectation of any price change or structural change from the Russian market?

 

We haven’t heard anything in this quarter which is significantly different from the previous quarters. However, we will continue to maintain the stand that we don’t see anything drastic happening in Russia, except that the long term trend of that market would be to probably correct a bit in terms of pricing.

Just a question on the GSK penicillin facility. If I got Umang right, he was mentioning 5 million on a monthly basis as a regular trend?

 

There are two things that are indicated, 5 million was the cost that we had in this quarter and the average sales that I mentioned on the subsequent question were 5 million per month.

 

So, average sales on a steady state base can be around 5 million.

 

Can be 5 million but it would spread between 2 million and 8 million depending on the season but the cost is 5 million roughly per quarter so, what we have shown in this quarter is 5 million cost.

 

Just going on in the question on the penicillin facility. I do believe one of the reasons for acquiring the facility was also to take part in the tender businesses which come up in the US. Any thoughts you want to share, about whether it could actually see some upside in terms of revenues from tenders in that facility for this year.

 

I think we should go over to 60 million on an annualized basis. Let us see what upside comes.

 

The second question was on the ROW markets and the growth of around 6%. When do we actually see the benefits from the GSK alliance from the emerging markets, actually begin to flow-in in terms of some of the numbers for ROW markets so, we had some sales coming from some markets last year.

 

Meaningful numbers post 2014.

 

I just want to understand the SG&A part slightly better. When you say for the Bristol facility the cost is $5 million. Is that all the fixed cost which is included in SG&A?

 

No SG&A has about $2 million.

 

Okay, if we just look at SG&A sequentially excluding the amortization part, it has just increased by roughly around $10 million. So $2 million is for the Bristol facility. So, when you ramp up, let’s say for the full year sales of $60 million from the Bristol facility, what could the SG&A component look like?

 

I don’t think the SG&A will change too much.

 

It’s fully factored in there. Should we consider this as true base to go forward for the SG&A part, or are there the some more costs other than factoring the normal increase in personnel cost every year.

 

This could be considered as base except, where except the quarters where we might have to spend on OTC in Russia and other onetime expenses.

 

So, that incremental spend on the OTC in Russia would be for the future products but for the current products that you have in the market, the expense is very much there in the numbers would that be fair.

Even for the existing products, the timing of various campaigns might be spread across various quarters.

 

Just to understand this slightly better, is the first quarter on a higher side or a much lower side in terms of OTC expense and for example if I look at SG&A number, it is 631 crores for this quarter excluding SG&A and the impact on VRS, what is an OTC expenditure part of this.

 

We are not guiding to that level of granularity but if you were to look at maybe a quarter 3 or quarter 4 and our quarter 1, quarter 3 of last year, quarter 4 of last year and quarter 1 of this year, you will come to a rough average around the level that you are talking about.

 

The next question was just on the India business. You did mention about several products but on therapy basis can you just guide, which therapies are you facing the maximum pricing pressure? Is it like more within the acute side, is it like anti-infective or GI, can you help with that kind of slightly broader outlook?

 

It is more on the acute and the cardio side.

 

Okay and not much of pressure on the anti-infective and GI so those....

 

So anti-infective doesn’t really affect us too much because we don’t have too big a portfolio on that.

 

Okay and just one more question on the gross margin on the PSAI segment, like sequentially they were down something from 27% to 24% level. Was it only the import alert because import alert essentially for you guys, came in at the fag end of the quarter right? What was the essential reason, was it just the problem on the service business?

 

Yeah it was the service business problem and it was slightly higher input costs, which after the crude is corrected a bit, have began to even out.

 

Just a last question here on the tax rate, the true tax rates for this quarter is something like 17.5%?

 

Well that’s right 16% is a true tax rate for this quarter.

 

For the total business you have guided to 21% but for the base business its 16%, is it more representative number or something higher is a more representative number?

 

16% is the more representative for base case.

 

Can you update us on the two industrial accidents that had happened in December and then one after that in which we had two deaths each? Specifically, have regulators visited your Bolarum facility after that and could this culminate in to something more serious like a warning letter or import alert or something like that?

The accidents took place in our API facilities. One was a fire accident and another one was nitrogen caused asphyxiation in a confined space. In both these cases, investigations are going on. In one case, we have replied to a showcase notice, in another one the proceedings are going on. We expect some investigation and some regulatory action on this but nothing which should stop manufacturing or rather financial impact as such but there could be some action by the department.

 

Which department is it, a local authority or is it?

 

Local AP state authority. Director of Factories, which comes under the Ministry of Labour.

 

Okay but ever since then did you have regulators from foreign countries visiting in?

 

No this has no implication on foreign regulators. They have no jurisdiction on this.

 

Would FDA not at some point in time come over here and do inspection?

 

There is nothing to do with the quality of the product because there was an industrial accident involving people and equipments, so there was no product involvement.

 

Just update us on the Shreveport facility ramp up that you have mentioned on your previous call has that started or when should we expect that?

 

Part of the shift of manufacturing from here to there has slowed down because we have got additional business at Shreveport directly from our customers for some of the products that existed, when we purchased the facility and so hence you know the shift from India is slowing down. So the facility is fully utilized now and we are actually expanding the facility.

 

Sameer, quarter 2 we should see some revenues on account of that.

 

And I assume that you had a good fexo-plain OTC launch, has this been good enough to make up for what you have lost in the RX setting on a value basis?

 

Yeah it would be Sameer, on a full year basis it could be.

 

Okay and just one final question on fonda pricing, is it something that is more or less in line with what happens with a one player market dynamics, plus authorized generic which is 20%, 30% erosion or is it something different than that.

 

We hope it will be like that.

 

One is on the biosimilars front, you know even in the annual report we stressed quite a bit upon our capabilities in biosimilars and that being our medium term growth driver. So beyond the launches that you have done in India, how do you see the biosimilar road map really playing out for us over the next 2-3 years?

We have started registering the products in markets, which will allow us to register products on basis of the clinical trials we have done in India and some marginal additional trials. So that revenue, I think will become significant by 2014 or so. But the real value unlocking will happen when the products are launched in the US and European markets. So for these, we have to do much bigger trials and our plan is to partner with somebody who has the expertise to do large scale clinical trials as well as detail and market the product in these geographies. So, in the meanwhile we are progressing the product and we had EMEA meetings. We have requested a meeting with the US FDA and the process of registering and doing the clinical trial will continue, we will not wait for a partner. But we believe that the full potential of the first few biosimilars from Dr. Reddy’s portfolio will be unlocked only with a strong partner. So but you know these patents have to expire, we have to do the trials, we have to file. So they are a little bit away 2015-16 onwards.

 

How material could the Rest of World opportunity is for you for these products?

 

I hate to put numbers but they will be significant.

 

Okay and secondly in terms of India, how many new products in this biosimilars front you are looking to launch, we have already launched four, so how do you see that playing out in India per se.

 

I think we should launch another product by next 12 months and repeat that every 12 months.

 

Okay and on the US business side we have got about $129 million sales for the current quarter. So barring the launches that will come incrementally for the existing bunch of products, is it like a base that is pretty much safe to assume that?

 

Yeah pretty much safe to assume that is the base.

 

And in terms of the pace of the market share addition, which is there on lanso and tacro and is it still significant upside left in terms of more market share gains or we are kind of maxing out on market share gains that you can have on these products.

 

Some products there is headroom left but not all.

 

Lastly how many products are we looking to launch during the year going forward.

 

I think something like 10-12 products.

 

Yeah about 10 in the US.

And barring the 2 or 3 that we have talked about in terms of niche opportunity, all of them are going to be plain vanilla or they are going to be some interesting launches even in the ones that we have not really specifically mentioned.

 

I wish I could predict that with great accuracy because sometimes what we think is plain vanilla turns out to be big winner and sometimes what we thing is big one, turns out to be a very competitive product. But I do think there is a significant possibility there.

 

Just one question on the Mexico facility and the impact of import alert, given that now we are allowed to market naproxen. What is overall yearly impact that you see because of the import alert?

 

See roughly from the Mexico facility, we had a sale of on an average of about $60 million a year. So you are looking at naproxen, which is half that and you know there are some other products also, that is the extent of the hit, if you should take it based on what you have just said.

 

Around $30 millions.

 

30 is full year by the way.

 

On the R&D cost, Prasad you mentioned about, you know increased or a step-up in R&D spent because of the complex filing of biosimilars and proprietary products. What is the level of R&D spend that we could expect. What is the level of step up that you are kind of looking at in absolute level?

 

Yeah I think in the past we used to be around 6% of the sale. Even in the first quarter, we are roughly around that. I think what we have generally guided is that we should be about 7-7.5% of sales. That is what we expect it to be, which is quite significant as a step up because by looking at sales increasing and then we are saying of a percentage and half increase on top of that.

 

So basically you know if you are talking about 2.7 billion in FY13, so we could expect around 7% of that to be the R&D spends?

 

That is right 7-7.5% Saion, on some of the biosimilars trials as well.

 

As you say, you will be targeting 40% of the fonda market in US, which is mainly retail and wholesale and 60% hospital and since it is an injectable product. So I was thinking, that since there is talk about AG and if AG is given to any established hospital generic guys like without mentioning any name, like those who are already available in US. Do you think that will have a dent on the potential revenue for your product?

 

We don’t think so for several reasons because like I mentioned before this is not a complete GPO type of a product and we are vertical on this product and we have the best cost position on it.

So you believe any established guy in the top three hospital distributors in US, if they get the AG it will not impact your potential as you know even in hospitals segment.

 

See any AG will impact our potential revenue but we are quite confident of retaining relatively large market share over time.

 

Another point is that, as you were saying is that you are also putting money on proprietary technology through R&D expenditure and going by the kind of niche product as fonda has. Are you planning or do you have in your pipeline any similar carbohydrates synthesis based products which are pretty complex in nature and your team has done a fantastic job by scaling up of a successful doing. So do you have any product in pipeline or any expectation in say next two years time?

 

We have products in our pipeline which are very complicated and require characterization like fonda required and we have got a nice emerging pipeline of that.

 

Just one question on the gross margin side if you look at Q1 2012 and Q1 2011, not much of an improvement in spite of few large high value-high margin products being there for the last two-three quarters. So any particular reason or is it because of the lower domestic business growth which is again a high margin product for you.

 

You know it is function of variety of factors. You know partly the cost of the new facility in US; you know that portion has come in the cost of goods sold, that is one factor. Secondly what you rightly mentioned is that, the proportion of India is a bit lower this quarter. So it is result of a number of several factors like this.

 

And just going to Russia, I mean we all are aware of this Pharma 20/20 which is spread across 3-4 step functions, specially talking about 2013-2017 where it aims to replace 50% of the imported generic drugs with locally produced products. Is there a strategy which we have in terms of buying out a local body or setting up our own facility because what I understand is that, we are currently a marketing company in Russia?

 

I mean we still have to wait to see how it actually plays out, it is not as simple as just stating that this is what the government wants to do and then it will just happen overnight . So there will be a lead time by the time it will happen and then I think each company will formulate its own strategy. So currently, we don’t have any immediate plans to acquire anything local or any such thing. There are several options to it, which we are still evaluating. As things keep progressing, we will take a stance on that but there is no tearing hurry to get into any one of this concern.

 

Okay and on the tax rate, I think I missed something what Umang said was 15% on an annualized basis or 21% given the olanzapine being on the second half.

 

So let’s say without olanzapine we are at 16% or with olanzapine we are at 21%.

 

On a full year basis?

 

That is right and that is why this quarter, what we normalized to 16.

 

Okay so going forward, we would see a much higher tax rate than the annualized 16%.

 

You would see higher than the 16 in the quarters where we have the exclusivity and around 16 in the quarters that we don’t have.

 

Perfect and any more colour you could give on Lipitor. I mean last we heard that you had a 30-month stay around May or something can you throw some more light there?

 

We cannot comment on that right now. We choose not to comment on that please.

 

But we are definitely there in that product, that is what I wanted to understand.

 

Yes, we are on that product but I can’t comment on the exact dynamics of it right now.

 

I actually missed the number that you mentioned from the penicillin facility. How much sales have you booked for this quarter if you can just repeat that.

 

We have booked $4 million.

 

Indian companies were very high in quality but recently we have seen many Indian companies in general getting FDA warnings, so have FDA regulations become more stringent?

 

I would just say Ashwin that FDA scrutiny generally has increased for the past couple of years which was a stated intent. I don’t think it targeted just at Indian companies, generally for all the companies it has happened. So we have seen multinational companies, we have seen large generic international companies, a lot of Indian companies with those issues.

 

Right one more observation I have seen, the time gap between a warning letter and an import alert has reduced significantly. Any reason that they don’t want companies to fill the pipeline in the US which you can market or what has been the reason?

 

I mean I don’t know particularly why that is; it is something that the regulator should answer.

 

If you look at your annual report for FY11, then the DEPB credits and other related credits have gone up materially as a percentage of sales, almost doubled or more than doubled. How should we look at it going forward, if that goes down could we see it hurting your margins for say FY12 and FY13, how should we look at it?

 

It should not impact the margins materially because I think the government will also announce a separate scheme or extend the DBK scheme with possibly a higher rate. So we don’t expect too much of an impact on margins. However, the numbers that you are seeing in our annual report also is an outcome of what we sold in terms of Fexo-Pseudo into the market. So for the jump that you are seeing includes that.

Okay fine and one question, could you update us on how the business has evolved for Promius Pharma as a whole and how do you see that going forward and some update on your terbinafine product for which you had phase three already enrolled?

 

Though the terbinafine trials are ongoing, we have not got an early read kind of a methodology for that trial and we hope to receive data from that over the next one year. On proprietary products our business is approximately $20 million in size and we are hoping to add more from our pipeline to take that higher as we go along.

 

I mean you acquired Cloderm, so how should we see the potential of that product in terms of peak sales going forward.

 

We aren’t guiding to that as yet Chirag, we are not guiding by each product sale but the rationale for that acquisition was to enable us to be a little bit more critically sized on the Promius space.

 

Yeah okay thanks that answer my question. Thank you.

 

Yeah just on the margins, as you said from June onwards you have actually started supplying for the AOK tenders. How much was an erosion you are seeing going forward, or are the margins made this time sustainable what is your take on it sir?

 

Vidhya, we don’t want to comment on the specific margins related to the AOK tender but what we said is, for the overall Germany business that shows from the year-on-year price compression, we could see some margins dip. Although at an overall consolidated financials, we don’t see there would be any noticeable impact.

 

On the annual average figure, you said around 5 million for the GSK penicillin facility, does that include the one you told you will launch now from quarter 3, and does 60 million odd annual figure includes that?

 

Yeah so it might be phased in the respective quarter in which the launch happens. So what we say is that the monthly range could vary and on an average basis it could settle down to about $5 million or so, again this is a forward looking statement.

 

Okay on the R&D focus, if you could just re-emphasize on your focused therapy areas you were looking at going forward because you said your filings are going to come down and it could be more on a complex product based filings, so if you could re-emphasize where you are focused right now?

It will be from the US side, it will more dictated by the patent expiries and as of now we don’t have any therapy bias in the portfolio. But from a complexity perspective you know we would like to increase the proportion of characterization led new products because that is where our strength lies.

 

On the devaluation of currency which happened in RoW markets you mentioned are, you actually changing the strategy towards your hedging policy or will this impact flow through other quarters also how will that play out.

 

To the specific markets in which we faced this devaluation challenge were Venezuela and Belarus and we don’t believe a cost effective hedging solution is available for these markets and given that devaluation has already happened, obviously the effect will flow through in the coming quarters.

 

Okay thank you so much sir that is all from my side.

 

We thank all for joining Dr. Reddy’s Senior Management for the earnings conference call for Q1 FY12. In case you need any additional clarification, please feel free to get in touch with Raghav, Milan or myself. Thank you and good evening to all of you.

Press Release

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Low penetration with only about 23% of Japanese prescription drug sales (by volume) contributed by Generics as compared to 70% by volume in the US

Wide ranging government initiatives to reduce health care spending. The Japanese government is actively promoting use of generics to alleviate patients’ expense and reduce the national medical expenditure under the goal of “increasing the market share of generic drugs by sales volume to at least 30% by FY2012”.

Medical institutions and patients should have assurance and trust that products are of high quality and be assured of a stable supply.

A rapidly ageing demographic profile

Comparatively high reimbursement prices — In the 1^st year of listing, price of generic drugs are set at 70% of the innovator price. The price of the generic drugs does decline faster than for innovator products, but not as fast as in other countries such as US