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NEW DELHI : A major change forced by covid-19 on pharmaceutical companies was in their interaction with doctors, and Lupin Ltd has now slashed its sales force to conduct its operations digitally, managing director Nilesh Gupta said. Gupta also spoke about other changes like greater demand for active pharmaceutical ingredients (API) as formulation manufacturers globally try to reduce dependence on China, as well as the US government order favouring domestic essential drug supplies. Edited excerpts from an interview in Mint’s Pivot or Perish series:

In your April-June earnings, there was an improvement in margins, even though sales were down. What was the reason?

The margins were a function of the savings that we were able to make in the quarter and it’s something that we are going to work hard to sustain even as business picks up.

Will these savings become a trend beyond the pandemic?

I think the biggest savings would come in areas like SG&A (selling, general and administrative expenses), in how we promote to doctors, and the kind of advisers we have. We plan to adopt a more digital approach. Nobody has travelled in the last few months. We are now looking at how much of that travel is discretionary. How much can be held off longer. The truth lies somewhere in between what was before and what is now. We have started it as a stream within Lupin to look at embracing this new way of working. We also did it as an industry, along with Indian Pharmaceutical Alliance. We are looking to embrace this opportunity for the long term, so that we don’t need to have the same cost base we had in the past.

Does this pandemic delay your plans for speciality generics and biosimilars?

In specialty, Solosec (an anti-infective) was definitely impacted. We had to cut down our sales force to a third. It has reduced our cash burn significantly. We are now optimizing by doing as many virtual calls as possible with a smaller sales force. We are basically living to fight another day. Other specialty products like NaMuscla and biosimilars like Eternacept will not get impacted the same way and we are continuing with our plans.

In your earnings, APIs was the only business to report a rise in sales. Are you getting more enquiries for API supplies as companies plan to reduce their dependence on China?

One of the reasons for outperformance of APIs was we were able to pass on input price increases to customers. The move away from China also opened opportunities for people from other geographies, including Lupin. I think it has been some time coming. Even covid notwithstanding, the last two or three years has seen a resurgence of API. This is a great opportunity, especially with some government backing, to ramp up.

Will Lupin invest in API plants under the production-linked incentive scheme?

The policy is a step in the right direction, but I think the incentives are still light. We will definitely need additional incentives and more investment than what is being discussed. I think that the government will be willing to consider further amendments to make sure that it really works.

The US is your largest market. How does the US government’s order affect your business?

This is obviously limited to essential medicines and government buying. But it is a step in the wrong direction. Once it goes in that direction, what stops it from becoming a longer list?

Large global generic players like Lupin will capitalize on the opportunity. Lupin has manufacturing in the US and can set up plants anywhere in the world.

This order is not an issue for individual companies, but for India. India was a reliable partner even in the covid-19 pandemic, ensuring supplies to the US on time.

I think the Indian government has to step up advocacy to ensure we are recognized as a preferred supplier even in such an order.

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