CASE 5

Glenmark’s Unique R&D Strategy

This case study is based on our video interview of Glenn Saldanha, Co-founder, Chairman and Managing Director, Glenmark Pharmaceutical Ltd

SYNOPSIS

Glenmark ranks as one of the top ten companies with a turnover between $200 million to $1 billion. Gracious Saldanha started Glenmark in a very small way in 1977. In 1998, Glenn Saldanha son of Gracious Saldanha took over the helms of the organization and steered the company on an uncharted course. His basic aim was to concentrate on Research and Development in the two lines of business namely Speciality Business i.e. Drug Discovery and Speciality Business i.e. Formulation Business. The third area was the Generics area. Glenn Saldanha also set up manufacturing units not only in India but also in Latin America and the rest of the world. The company grew from strength to strength. From a turnover of ₹6120.53 million and profits of ₹1071.41 million respectively in 2004, it increased its turnover to over ₹50188.27 million and profits of ₹6230 million in 2013 respectively. However, it was affected by a downturn due to the global slowdown in financial year 2009 when the turnover came down to $455 million and the profits to $41 million. However with its strong human resources and CSR strategies, Glenmark is now poised for an impressive growth and is looking forward towards development of its first molecule of the blockbuster billion-dollar drug.

VISION

‘While we continue to grow, stretching the horizons of innovation and raising the bar of excellence, we also have equal focus on strengthening our roots, the critical drivers for our sustained growth. We are taking the path less travelled. Our effort is to create a new way for a new world.’

In order to emerge as a leading integrated research-based global pharmaceutical company, Glenmark stresses on three important values:

• Achievement: ‘We value achievement of objectives and consistently strive towards our Vision, with perseverance.’
• Respect: ‘We respect all our stakeholders.’
• Knowledge: ‘We value knowledge such that it empowers our people to find innovative solutions to manage change.’

The Pharmaceutical Industry: A Global Perspective

The global pharmaceutical industry was founded in the late nineteenth century and early twentieth century and differentiated between prescription and non-prescription drugs as the industry matured. One of the features of this industry was the conducting of the clinical trials before the marketing of any drugs and came to be regulated by the US FDA.

In terms of the growth of the industry, the 1970s involved the production of cancer drugs; the 80s featured drugs for heart disease and AIDS. The 90’s involved dramatic changes in the marketing of drugs made possible by the internet and involved the direct purchase of medicines from drug consumers and of raw materials by drug producers thus changing the nature of how business was done.

Further, the maturing of the pharmaceutical industry involved a greater focus on research and development involving drug discovery and drug development. Both these concepts, which are the outcome of research and development, resulted in the development of innovative products as a means to cure old and new diseases caused by changes in the human body and the environment. Drug discovery and development is a very costly affair and takes about seven to ten years to fructify and that to after a host of clinical trials. A drug company for its survival has to discover blockbuster (billion-dollar drug) every few years for its survival. The estimated cost for development of a successful NCE (new chemical entity) and cost of failed drugs and marketing expenses over a five-year period came to $1.7 billion. Most of the top pharmaceutical companies in the world with turnovers ranging from $14 billion to $43 billion spend a good amount in research and development. Pfizer, the largest pharmaceutical company, spends an amount more than the combined turnovers of the top pharmaceutical companies in India.

The Indian pharmaceutical industry really came into being in 1970 and it is currently a prominent provider of health care products and meeting almost 95 percent of the country’s pharmaceutical needs. The industry produces medicines from simple headache pills to sophisticated antibiotics and complex cardiac compounds. The industry has put India on the pharmaceutical map of the world. The industry consists of 250 large units and about 8000 small units together with five Central Public Sector units.

The units produce a complete range of pharmaceutical formulations. The total Indian production constitutes 13 percent of the world market in value terms and 8 percent in volume terms. But India is amongst the lowest per capita consumer of drugs amounting to $3 a year as compared to around $200 in developed countries, such as USA, Germany and Japan.

Glenmark: The Beginning

Mumbai-based Glenmark Pharmaceuticals is an integrated pharmaceutical company whose operations span the gamut of research, manufacturing and marketing of pharmaceuticals. Incorporated in 1977 by Gracias Saldanha, the company was listed on the Indian bourses in 1999. The formulations and bulk drug business contributed the major portion (78.5 per cent and 10.5 per cent, respectively) of the company’s revenues in 2006–07 with the remainder being income from licensing deals for new chemical entities. The share of revenues from licensing deals increased from 3.5 percent in 2005–06 to 11.1 per cent in 2006–07.

The company’s formulations segment includes dermatology, respiratory gynaecology, pain management, diabetes, cardio-vascular, paediatrics, internal medicine etc. Apart from India, the company markets its formulations in various countries in Asia, Africa, CIS/Russia, Latin America/ Brazil and North America. On 7 November 2007, the company announced its intention to reorganize its businesses into Specialty and Generics. The new Generic entity will be called Glenmark Generics and will be a wholly owned subsidiary of Glenmark Pharmaceuticals. It will house the development, manufacture and marketing of generic formulation and API businesses

Glenmark Pharmaceuticals will continue to manage the novel R&D and branded formulation business of the Glenmark group including its operations in India, Brazil, Rest of Latin America (excluding Argentina), Russia/CIS, Africa and Asia. It owns three formulation-manufacturing plants in India. They are located at Goa, Nasik (Maharashtra) and Baddi (Himachal Pradesh). In 2004, Glenmark acquired a formulation facility located at Sao Paolo, Brazil. In 2006–07, the company acquired Medicamenta: a marketing and manufacturing company in the Czech Republic. The company acquired cGMP (current good manufacturing practice) and WHO compliant API plant in Ankleshwar (Gujarat) from GSK in 2002 and obtained US FDA approval for it in 2004. The other API facilities are located at Kurkumbh and Mohol (both in Maharashtra).

Glenmark’s formulation development laboratory in Sinnar develops and enhances products for the company’s Indian, Latin American and semi–regulated markets. Its second formulations development laboratory at Mahape (Navi Mumbai) develops products for the regulated markets of US and Europe. Mahape also houses its research centre for the development of its New Chemical Entities (NCE) programmes. As on 7 November 2007, it had 11 research programs namely six NCE’s and five NBE’s (new biological entities) in various stages of development. The company’s new chemical entity (NCE) research is focused towards diabetes (type II), obesity, asthma and pain. Lead molecules (GRC 3886— Oglemilast, GRC 8200 and GRC 6211) are in Phase II of clinical trials.

Glenmark out-licensed its molecule Oglemilast (GRC 3886) to Forest Laboratories for the North American market. For the Japanese market, Oglemilast has been out licensed to Teijin Pharma. Glenmark entered into an agreement with Germany based Merck KgaA to develop, register and commercialize GRC 8200 for markets of North America, Europe and Japan. In 2007, Glenmark outlicensed its third NCE under development–GRC 6211 for pain management to US drug Major Eli Lilly. The deal size could potentially workout to $350 million.

In 2006–07, it set up a biologic research centre in Switzerland through its wholly owned subsidiary Glenmark Pharmaceuticals S.A. with main focus on oncology and inflammation. To identify new biological entities at this centre, Glenmark tied up with US based Dyax in March 2007. Glenmark is a leading player in the discovery of new molecules both NCEs (new chemical entity) and NBEs with eight molecules in various stages of clinical development. The company has a significant presence in branded generics markets across emerging economies including India. Its subsidiary, Glenmark Generics Limited has a fast growing and robust US generics business. The subsidiary also markets APIs to regulated and semi-regulated countries. Glenmark employs nearly 6000 people in over 80 countries. It has twelve manufacturing facilities in four countries and has five R&D centers.

The company was chosen as the ‘Best Pharma Company in the World: SME’ and ‘Best Company Across Emerging Markets’ in 2008 and the ‘Best Overall Pipeline’ at SCRIP Awards 2011 by SCRIP, the largest selling and most respected pharmaceutical magazine in the world. Forbes, another leading international publication, recognized Glenmark as the ‘Best under a Billion Dollar Company in Asia’ in 2008.

Recently, the company also received recognition for being the ‘Indian Innovator Pharmaceutical Company of the Year’ and a Silver Patent Award in the ‘NCE / Drug Discovery Patent Category’ by Frost and Sullivan and Pharmexcil respectively.

Speciality Business: Drug Discovery

Glenmark’s groundbreaking drug discovery effort is primarily focused in the areas of inflammation (asthma/COPD, rheumatoid arthritis, etc.,), metabolic disorders (diabetes, obesity, etc.,) and pain ( neuropathic pain and inflammatory pain). Glenmark has a robust pipeline of 13 molecules in various stages of preclinical and clinical development. Of these, eight molecules are in clinical trials. The molecules in clinical development are focusing on advanced treatments for chronic/debilitating diseases and are potential blockbusters with potential peak sales opportunity in the range of $1 billion to $3 billion.

Simultaneously, Glenmark has actively followed the strategy of out-licensing its molecules in clinical development to large multinational pharmaceutical organizations. This out licensing strategy has been successful so far with four deals struck by the organization in the last five years collecting $115 mn (around ₹5,000 million) as upfront and milestone payments.

This business has three dedicated R&D centers. Discovery research for NCEs is carried out at its stateof- the-art research centre in Navi Mumbai, India. Over 200 scientists are employed at this research centre. It is a complete end- to-end setup with expertise in all areas of NCE discovery and development ranging from target selection to clinical development. Glenmark’s biopharmaceutical research is carried out at its R&D facility in Switzerland. The centre is dedicated to the discovery and development of novel monoclonal antibodies (mAbs). The R&D centre has capabilities to develop mAbs from inception through to preclinical and clinical studies. Glenmark has also invested in another state-of-the-art R&D facility in Oxford, England for molecules in clinical development. The R&D facility will serve as Glenmark’s global centre for clinical development for both small molecules (NCEs) and biologics (NBEs).

Speciality Business: Formulation Business

Glenmark’s formulations business is currently organized around four regions: India, Latin America, Central Eastern Europe and semi-regulated markets of Africa/Asia/CIS.

The formulations business focuses on therapeutic areas through dermatology, anti-infectives, respiratory, cardiac, diabetes, gynecology, CNS, and oncology. India is the largest market in terms of revenue for the organization.

The formulations business has five manufacturing facilities; three in India and two overseas. Several regulatory bodies approve these facilities. The facility at Baddi, Himachal Pradesh, India is also approved by MHRA and USFDA for semi-solids.

The overseas facilities are situated in Brazil and the Czech Republic. While the manufacturing facility in Brazil services requirements of the Latin American region, the Czech facility services requirements of the Central Eastern Europe region. Glenmark has also invested in a dedicated R&D facility for formulations development. This R&D centre, situated near Nashik, India is engaged in developing specialty/ branded formulations for global markets.

Glenmark Generics Limited: An Introduction

Glenmark Generics Limited (GGL) is a subsidiary of Glenmark Pharmaceuticals Limited and aims to become a leading integrated global generics organization. The business comprises US Generics, Europe Generics, the API business and the Oncology business. GGL focus on developing, manufacturing, selling, and distribution of generics products through wholesalers, retailers and pharmacy chains etc. GGL focuses on key niche segments including Dermatology, Hormones, Controlled Substances, Oncology, and Modified Release Products.

GGL has an established presence in North America, European Union(EU) and Argentina and maintains marketing front-ends in these countries. The company has a strong base in formulations development with teams operating out of laboratories in India and Latin America. The company has a state-of-the-art manufacturing plant at Goa, India that is approved by FDA(US), TPD(Canada), MHRA(UK) and many other overseas regulatory authorities. Glenmark Generics Inc. (US) has a portfolio of over 45 generic products in the US market which includes a mix of oral solids, oral liquids and semi-solids.

GGL has established its presence in the UK generic market and has begun to expand to other markets in the EU region. The business model for the EU business is based on a mix of out-licensing and Glenmark’s own sales across these markets with products chosen to reflect niche opportunities or competitiveness through vertical integration. The business has a portfolio of solid orals and semi-solids differentiated on the basis of difficult to develop/formulate products and high entry barrier products.

GGL also develops, manufactures, markets and distributes active pharmaceutical ingredients (APIs) to other pharmaceutical companies. It markets around 65 APIs globally in approximately 65 countries, including the US, various countries in the EU, South America and India. GGL has so far filed 41 DMFs (Drug Master Files) with the US-FDA.

 

From the SWOT Analysis (see Table 5.1), it is evident that the company has strengths and opportunities not only in India but has great potential abroad also.

However, it needs to take some steps in improving its relationship with both partners and investors and other stakeholders. The pharmaceutical market is a highly competitive one and for making headway, Glenmark needs to further concentrate on its Drug Discovery program and come out with its first molecule.

The graph (see Figure 5.1) depicts the progress of the company over a five year period from 2007–08 to 2011–12. The turnover has been steadily increasing from ₹2055 Crores to ₹4030 Crore. The profit was ₹632 crores in 2007–08 and has fallen to 193 crores in 2008–09 and has been increasing marginally during the year 2008–09 to 2011–12.

The company was apparently affected in 2008–09 on account of the global slowdown. Glenmark has not reached the profitability of 2007–08, although the turnover has grown steadily. Moreover, besides the global slowdown, the company has been spending large amounts on drug discovery and development which is eating into its profits (see Figure 5.2).

Glenmark needs to come out with its first molecule as soon as possible so as to bring the company back on its growth and profitability path.

HUMAN CAPITAL: NUMBER AND DEVELOPMENT

Over the years, Glenmark’s success has been driven by its most valuable resource, its people. Through a consistent focus on acquiring the right talent for the job and holistic development of the entire talent pool, Glenmark has created a diverse and highly motivated team of over 7500 employees comprising 2500 employees from India and over 5000 employees across 95 countries. Glenmark strives towards continuous improvement of all human resource processes, thereby creating an enriched environment for every employee to provide effective and efficient results.

Development based Human Architectural Design: Glenmark has continued with its development based approach to its design for human architecture, focusing on the three key avenues of intervention:

Individual oriented or Micro Development: Gaps in individual skill inventory are identified for each role. Based on these gaps, design and delivery of learning and development is carried out.

• The focus on people development remains paramount, with specific focus on technical, functional, managerial and leadership programs, across all units of the business.
• In the year, a competency framework was introduced successfully throughout the European Specialty business. Subsequently, development centres were introduced for successful career management and focusing on individual development.

Team/Organization Oriented or Macro Development: A collection of people does not constitute a team till they share a common goal. The achievement of this common or shared goal requires skills that many times transcends the collective skill inventory of these individuals

• Cohesively designed programs on Cultural Diversity were conducted at the manufacturing locations and the corporate office
• Team development initiatives were carried out in all business verticals for creating efficiency and team dynamics

Process oriented or People-Systems Development: People-Systems are processes that help channelize both individual and group capability towards achievement of organizational goals.

• The Performance Management System has been launched on the company’s virtual platform.
• Investments were made in designing a state-of-the art Learning and Development System which will be fully operational in a year.
• Conducted and participated in various climate and internal satisfaction studies, to ensure prudent design of policies, as well as to ascertain future focus areas.

Recruitment continues to be the primary task for the human resources team as the organization continues to expand and develop on all fronts. The commencement of Respiratory Division for India catering to respiratory disorders saw the formation of a completely new and dedicated team, which underwent rigorous classroom and on-the-field training before launch.

Employee Engagement: The company saw a major impetus in Employee engagement activities, with various SBU’s actively initiating and participating in them. Some of these were

Imbibing Innovation I4C: The i4C is a 24/7 online platform on the Glenmark intranet for sharing, discussing and implementing innovative ideas for improvement in all aspects of the business, generated by Glenmarkians all over the world.

Knowledge sharing:

• Ask Glenmark: Ask Glenmark is a feature present on the Glenmark intranet for employees to seek information related to the company, various departments within it and any other areas related to the Pharma industry,
• PRISM: PRISM is a platform to facilitate sharing of knowledge and best practices in marketing across all its operating geographies. The initiative aims to encourage teams to participate and share best practices through the means of a blog and quarterly review meets, as well as to put forth unique creative ideas for future development.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Glenmark has very specific programs to assist the community with the objective of enriching lives Keeping with the company’s overall vision of ‘enriching lives’ the organization launched a series of CSR initiatives in FY 11 for the community with a clear objective of making an impact in the identified areas. Glenmark’s CSR activities are clustered primarily around three areas.

• Sustainable Livelihoods
• Child Health
• Employee Volunteering

Sustainable Livelihoods

India’s huge population of 1.2 billion has an unemployment rate of around 11 percent, majority of whom are youth. To address the same, Glenmark has identified four models that promise to create sustainable source of livelihood and initiated work on three aspects, as detailed below:

• Identify skills gaps as per the industry requirements in a particular area/city and customize skill development courses: This model has been launched in Nasik city through a partnership with an NGO, Kherwari Social Welfare Association (KWSA). The company identified the skill gaps faced by industries surrounding Nasik and has decided to address those shortages. Through its vocational training centre, skills are provided to around 600 school dropouts in the city, of which nearly 80 percent got employment.
• Providing opportunity to the physically challenged: Glenmark believes in inclusive development of the whole society, with each member having an equal opportunity to lead a productive life. Keeping this in mind, the company collaborated with Bhagvan Mahaveer Viklang Sahayata Samiti (BMVSS), better known as the ‘Jaipur Foot’ to rehabilitate the individuals who have lost their limbs. Through this association, it supported the rehabilitation of around 3500 individuals who were able to walk once again and thereby lead a productive life.
• Creating sustainable livelihoods among the poorest of the poor: Glenmark initiated Jode (the connect) with an organization called PRADAN that aims to work for the generation of sustainable livelihoods for select tribal communities in India. The project aims to generate sustainable livelihood and income for three villages covering 2000 families of Kolnara block tribal people in Orissa, India through improvement of existing land and water resources in an integrated way.
• ITI (Industrial Training Institute) Development: The ITIs established by the Government of India are in a position to meet the talent requirement of Industry provided they meet the need. Glenmark is the first Pharmaceutical Company to adopt an ITI in the state.

Child Health: More than half a million women die in pregnancy or childbirth and almost 11 million children die before they reach the age of five. Glenmark has decided to take up the cause of child health as its core CSR area, aiming to reduce the Infant Mortality Rate and Child Mortality Rate, thereby addressing the most important and sensitive indicator of community health. This Flagship program would be called ‘Project Kavach (the shield): Healthier Children Healthier World’, where it will look at children from the age of 0 to 5 and address the issue of malnutrition, immunization and sanitation. Employee Volunteering: Glenmark began the sensitization of its employees to their social responsibility via its program Project Sambandh to ignite interest towards social welfare and began with the introduction of Employee Volunteering Program on the eve on International Volunteering Day. This year nearly 500 employees participated in the programme.

Environment:

• Energy and Water Conservation: It has undertaken an energy conservation drive across all its plants and aims for significant reduction in energy consumption levels in the coming years. Various water conservation measures were also implemented across all plants. In its water conservation drives last year a saving of 32000KL of water resulted.
• Solvent Recovery: Glenmark has made significant investments in solvent recovery systems and aims to achieve more than 95 percent solvent recovery rates for its key plants
• Employee Sensitization: There is regular drive for enhancing the awareness amongst all employees, contractors and visitors about its safe practices to protect the environment

Glenmark also finished the implementation of its Environmental Management System and received ISO 14001:2004 certification for the formulations plant at Goa, India. The various programs undertaken as a part of the certification were improvement in green belt, power and water conservation, waste minimization and employee training.

The measures above are just the beginning. In the coming years, the company shall put in motion multiple initiatives across geographies and functions, to further minimize its negative impact on the environment, while instilling higher efficiencies.

Glenmark also distributes free medicines and provides medical help and attention to people in remote urban and rural areas through mobile hospitals thereby covering over 25000 patients annually.

BUSINESS STRATEGIES: DRIVING SUSTAINED GROWTH

At Glenmark, success is not an event. It is a process built into all facets of the business by design. It is not an isolated incident, but the outcome of the network of interaction between various forces driving the organization.

Glenmark’s innovative structuring of its speciality and INN generics businesses into Glenmark Pharmaceuticals Limited (GPL) and Glenmark Generics Limited (GGL) has allowed it to focus on two distinct strategies and value spectrums, while ensuring synergies beneficial to both the organizations.

Innovation: The Glenmark Way

Innovation has always been at the core of Glenmark’s growth philosophy. Through its sustained efforts, it has developed a culture where innovation is imbibed in every aspect of the business. At Glenmark, the entire organization acts as one big innovation engine. It strives to develop an environment that encourages its employees to shed all apprehensions and think of the most unorthodox ways to shape their, and the company’s future.

Through its constant endeavours over the past 11 years, the company is at the forefront of discovery research, with a rich pipeline of five in-house NMEs and 1 in-licensed New Chemical Entity (NCE), Crofelemer, in clinics. It has always focused on path-breaking innovation, exemplified by the fact that three of its in-house NMEs are potential ‘first-in-class’ molecules globally, that promise to address high value targets with large unmet needs. Crofelemer has already completed Phase III trials in USA for HIV related diarrhea and Phase II trials in India for acute adult diarrhea, and could potentially be the first NCE launch by Glenmark. Its keen focus on high value innovation also pans out to its New Drug Delivery Systems (NDDS) projects as well, with the formulations research team churning out highly specialized formulations for the benefit of its consumers.

Over the last few years, Glenmark have become increasingly selective about the targets it pursues. Its systems, aided with the vast experience in the R&D space, ensure it pursues only the high potential path-breaking targets for future development. This increased focus on the development of high return on investment (ROI) assets also encompasses its formulations and NDDS development efforts. The Glenmark team develops products that have global relevance, better efficacy and higher quality embedded within them by design.

People: Glenmark’s unwavering focus on the development of a culture of innovation has managed to attract the best talent across the spectrum of R&D functions, globally. Its R&D team is an amalgam of the brightest people in the field that complement each other’s talents and work synergistically towards a unified goal of research excellence.

Glenmark’s NCE research team comprises 350 qualified scientific staff at the Small Molecule Research Centre at Mahape, India. Over the last decade, the team has discovered and developed an impressive pipeline of novel molecules, out of which 8 have reached the clinics. Its Biologics Research Center at Switzerland houses 55 scientists, with expertise in the entire spectrum of biologics research and product development processes. Glenmark’s NDDS research effort is driven by a team of over 80 highly motivated scientists at the Formulation Development R&D facility at Sinnar, India.

The R&D efforts for the generics business, both in terms of development of niche APIs and formulations is lead by a group of over 100 scientists at the Taloja R&D facility in India. Glenmark’s Global Clinical Team is coordinated out of Oxford facility (UK), working closely with the dedicated and experienced clinical team in Mumbai.

Processes: Glenmark believes it is not enough to develop an intellectual pool to succeed. It is equally necessary to enable it with the right mix of systems and processes to realize its true potential.

Over the past decade, the company has built highly efficient systems and processes that can manage the complex research process efficiently. It has established project-planning systems that ensure efficient filtering, selection, optimum resource allocation (both human and infrastructure) and the timely progress of various research projects. This provides the much needed nimbleness, alongwith robustness and sustainability to its research efforts.

In 2011, Glenmark also set up an in-house clinical operations team. This team is a valuable and strategic addition to its existing clinical setup and stands to make its clinical efforts more standardized and efficient, while significantly reducing costs.

Infrastructure:

Small Molecule Research: Mahape, Navi Mumbai, India

• Equipped with the most modern infrastructure required to carry out research activities such as medicinal chemistry process and analytical chemistry, in-vitro and in-vivo studies and project management
• Complete end to end setup with expertise in all areas of NCE discovery and development ranging from target selection to clinical development
• Responsible for discovering many NCEs in a short span of nine years, with 8 molecules having reached clinical studies.

Biologics Research: Canton of Neuchatel, Switzerland

• Dedicated to the discovery and development of novel monoclonal antibodies (mAbs) from inception through preclinical to clinical studies
• Know-how is in place to discover entirely novel molecules, engineer antibodies and also carry out process development of mAbs
• State-of-the-art equipments installed for up and down stream research with substantial capacity
• Responsible for the development of GBR 500, the first NBE to be out-licensed by an Indian company
• Several patents on novel monoclonal antibodies have been filed and two Phase I approvals received

Formulations Development R&D Facility: Sinnar, India

• Engaged in developing speciality/branded formulations for global markets
• Focuses on development of various NDDS projects and innovative formulation in areas of Dermatology, Metabolism, Respiratory and Oncology amongst others
• Houses a dedicated facility to develop HFA based MDI products, injectibles and liposomal products

Research and Development Centre: Taloja, India

• A state-of-the-art integrated R&D centre for developing API and formulated products
• Works in co-ordination with the Intellectual Property Management team to develop cost effective and patent driven APIs as well as generic formulations

Developing In-house Capabilities: Clinical Research Operations Group

With increase in NCE and NBE pipeline and augmented requirements for the clinical trials of branded generics, Glenmark has setup an in-house dedicated, state-of-art Clinical Research Operations Group (CROG).

The aim of CROG (see Figure is to develop in-house capabilities and expertise in managing Phase II to IV clinical trials that meet global standards are compliant to regulatory requirements of EMEA, ANVISA, DCGI and US FDA. The group is primarily responsible for Clinical Monitoring, Clinical Project Management, Site Management, Clinical Data Management, Statistical Programming and Medical Writing aspects of the company’s clinical requirements and will manage the same right from early phase to post marketing trials across Asia Pacific, Europe and LATAM.

The setting up of CROG promises to provide better control on the quality and timelines of the clinical trials and the capacity to meet the ever rising clinical demands of various global regulatory agencies. The setup of this group will also manifest into significant reduction in clinical trial outsourcing and strengthened support to fast track its clinical development program, hence deriving value in terms of cost, quality and time.

The company has also ensured that right talent, with relevant global experience, forms the core of this group. To start with, an initial team of 25 highly experienced professionals is already in place, and will be scaled up after 6 to 9 months. Crofelemer, first-in-class NCE for diarrhea, would be one of the late stage multi-country, multicentre clinical trials to be managed end-to-end in-house.

Value Innovation

Product Ideation and Development

The focus on higher productivity starts at the product idea inception stage itself. Glenmark strives to develop products for which there is sizeable unmet need, globally. Every product idea is rigorously analyzed and subjected to multiple filters to ensure that the final product is highly differentiated, globally relevant superior quality and has a good commercial potential. These systems ensure that the innovation efforts are highly productive and aligned with the overall strategy of Glenmark.

Value Generation

Production

Over the past few years, the company has increased its focus on injecting efficiencies across its production and distribution system many-folds. A major part of this effort was to drive up the productivity of the employees and derive maximum output from its existing infrastructure. The company launched an array of initiatives towards human capital development, including improved role definition, defining skill clusters for expertise building and job rotation. It also installed additional capacities and better systems to ensure a seamless and nimble production process with higher productivity.

Quality

Taking cognizance of the latest trends in the pharma space, Glenmark’s efforts in the quality space are focused on the following key areas:

• Harmonization of Quality systems: Glenmark has started moving towards having a unified approach to quality systems across all their entities.
• Quality systems: Glenmark is transforming its quality processes to become more modern, productive with subtended utility systems and have the capability to manage the complexities arising from multiple formulation types and delivery platforms that the business demands.
• Human Capital Development: In order to keep the human resource up to speed on the latest quality norms and preparing them proactively for the future, the company has ramped up its organized training processes across the value chain.
• Vendor Management: The company also monitors the quality of supplies from its vendor and has taken up the initiative to educate the vendors to ensure consistent quality supply of the incoming material.

Value Delivery: Sales and Marketing

At the core of the company’s sales and marketing efforts are its customers. Glenmark continues to build high equity with its target customers by consistently providing them with the best value products and a chain of positive experiences with the company. Across markets, its field force is equipped with the latest marketing tools, appropriate skills and extensive knowledge. the company has increasingly strengthened its business fundamentals and control on field activities, a successful example being the Glenmark-Focused Reporting for Complete Efficiency (G-Force) implemented by the Indian formulations team. Continuous learning need identification and training provide Glenmark’s field force and distint scientific and human edge over its competitors.

The Power and Focus brands strategy, along with therapeutic focus, continues to yield fruits by providing clear cut priorities for its marketing efforts and resource allocation. The company has also channelled its efforts on having higher impact new product launches and hence forming the stable foundation for future growth.

Smart Strategies: Overcoming the Economic Slowdown

Glenmark is currently ranked amongst the top 10–15 pharma companies in India and aims to be amongst the top 5–7. It has been the company whose revenues come 70 percent from abroad and 30 percent from India. It is also making efforts to capture a share of the US Generics market which is to the tune of ₹1500 crores.

While the company had been making steady progress, it faced its most disastrous year in 2008, when everything that it sought to do resulted in failure. In 2008, two quarters ended in losses, three molecules failed, there was also the economic slowdown especially in UK and USA which adversely affected the company.

Despite the above difficulties, Glenmark proceeded on its path of Innovation in the year 2000 along the lines of Dr Reddy’s and Ranbaxy. Innovation is very critical to the company as it is in search of discovering its first molecule. The CMD Glenn Saldanha spends about 30–40 percent of his time in pushing his organization towards Innovation.

The other area which requires attention is the shortage of talent in terms of researchers and scientists in India. On account of the shortage, Glenmark had to set up a separate research facility in Switzerland so that talent could be gathered for this important activity of Innovation.

Researching molecules is a very costly and risky business but can be rewarding too. Glenmark has sold one of its most promising molecules to Sanofi for an immediate down payment of $630 million.

Glenmark expects that the pharmaceutical environment in India is going to become more competitive and it is difficult to envisage from where and to what extent competition is going to grow in the worldwide pharmaceutical market.

With the unique business model of Glenmark, the company becomes a very attractive proposition for takeover. The CMD of Glenmark does not wish to sell the company as was done by Nicholas Piramal to Abbott and Ranbaxy to Diachi. Currently, the promoters of Glenmark are holding 48.29 percent share and the rest is held by a host of individual shareholders. As per the CMD in India, it is safe for companies to hold 26 percent shareholding to prevent hostile takeovers.

After Glenn Saldanha took charge, he undertook an uncharted course by taking a lot of risks especially during the difficult year between 2000 and 2004. All credit must go to the leadership team at Glenmark who faced all the odds and stabilized the company despite the number of problems it had to face. The HR department played a vital role not only in retaining employees but in motivating them to high levels of performance. The success mantra of CMD is having the right kind of people talent at different levels and being able to fire at different fronts.

Achievements and Future Plans

Glenmark is among the top 20 fastest growing pharmaceutical companies in Russia and among the top 25 pharmaceutical companies in India. Generics companies are about to enter a phase of incredible opportunity with the imminent ‘patent cliff’ when drugs worth $78 billion will go off patent and in the innovation space the prospects for high-value collaborations with big pharmaceuticals on research projects are increasingly plausible as pharmaceuticals giants look to cut research costs and fortify their R&D pipelines through tie-ups with other organizations. All this augurs well for Glenmark as it has the capability to capitalize on both these opportunities.

At the same time, however, the business environment of the industry has become particularly exigent. The generics space is witnessing significant value erosion with growing competition. While this market was hitherto the domain of pure play generic companies, it is now seen that innovator companies- those that have so far built fortunes by discovering new drugs – climbing into the generics bandwagon as they face an increasingly unpredictable future in the pursuit of a new blockbuster drug. And then they have the giants of the generics industry who are now looking to move up the value chain by investing in innovation and differentiated products to bolster the sustainability of their business model. Clearly the lines between innovator companies and generic companies have blurred and this along with increasing regulatory hurdles and pricing pressure is adding to the complexity of the business.

Glenmark’s R&D business, which is without a doubt the crown jewel of the company, has an innovation pipeline that is stronger than ever before. The company currently has six approvals in the Generic Business segment. While they launched 18 products in the US last year, the impact of these launches will be reflected in the current financial year.

QUESTIONS FOR DISCUSSION

1. What is Glenmark’s position in the pharmaceutical market in India? Who are its competitors and how has fared in comparison to them?
2. How is Glenmark’s policy in Research and Development different from that of other Indian Companies? Has it been successful?
3. Formulate a unique Business Model and explain why it will be successful for your company.
4. How did the recent global economic slowdown affect Glenmark and what steps were taken to overcome it?
5. Have Glenmark’s human resource policies helped in its success?
6. Discuss Glenmark’s CSR activities.