Going has Been Tough for MNC’s Pharma Operations

Two decades ago, British multinational pharmaceutical company GlaxoSmithKline (GSK) ruled the Indian market. It sat comfortably at the top while a line-up of domestic and MNC rivals vied for a piece of the pharma pie. However, over the past four years, GSK has slipped to the seventh position, and subsequently to the ninth. Ruling the sector are domestic companies such as Sun Pharma, Cipla, Zydus, Lupin, Mankind, Alkem and Torrent. The only exception is US-based Abbott Labs that occupies the second position after Sun Pharma.

So why has GSK Pharma lately taken a beating in India

One of the reasons is that over the past 18 months, its Neosporin anti-fungal cream, which had recorded sales of ₹100 crore and was a major contributor to the company’s topline, went out of stock, a senior official from GSK Pharma told BusinessLine. “We were refurbishing our Nashik manufacturing facility and were unable to fulfil orders. It is back on the counters now,” the official added. GSK Pharma largely produces anti-infection and dermatological drugs and vaccines; its presence in the chronic care space — such as diabetes and cardiovascular diseases — is limited. “The Indian disease pattern is changing and the incidence of chronic ailments is rising, but we are not in that space. So the position of the company also depends a lot on the product portfolio play,” said the official.

Big new plant

Despite headwinds, GSK Pharma had stated in its annual report that its Vemgal plant in Karnataka will open in mid-2019. On Monday, David Redfern, Chief Strategy Officer of the parent company GSK Plc, reiterated: “Next year, we start the formal production of our big new plant at Vemgal that can produce up to 8 billion tablets and 1 billion capsules a year.” According to GSK Pharma’s 2017 annual report, the company’s profits fell from ₹502 crore in 2013-14 to ₹337 crore in 2016-17, before rising to ₹352 crore in 2017-18. Lately, GSK Pharma has seen a reduction in number of employees. From 3722 in 2008, the staff numbers peaked at 5055 in 2011. In 2017, the number stood at 4620. However, the company says such attrition is routine and there have been no mass lay-offs ever in the company. – The Hindu BusinessLine