Glenn Saldanha tells MoneyLIFE how he created an innovative pharma

company
September 16, 2008
I think most of the outside world thought we were crazy when we said we
are going to do drug discovery
Five years ago, Glenmark was a small formulations company, the bulk of its
revenues coming from India. Today, it is a radically transformed company
focused on daring new drug discovery with two molecules in clinical trials and
two landmark deals with leading foreign companies. The man behind this pathbreaking success is managing director Glenn Saldanha, 38, a serious, highly
focused and confident young man, who seems extremely certain about the
companys growth path to a place in the global pharma scene. After a stint in
consulting with Pricewaterhouse, Glenn returned to Mumbai to join the
company, started by his father Gracias in 1977 and named after him and his
brother Mark. His experience of consulting with global pharma majors and the
opportunities opened by Indias economic liberalisation programme together
allowed him to quickly put the company on a high growth path by creating its
own proprietary products rather than doing contract research. His game plan
includes organic growth through expansion and acquisitions in India and
abroad. Glenmark has a successful drug discovery programme and has been
forging marketing partnerships around the world. The result: a compounded
annual growth rate of over 27% in the past six years.

ML: Would you please start by telling us a little about your background?
Saldanha: I am a pharmacy graduate from the Bombay University. I worked in
India for about three and a half years as a medical representative and a product
manager. Then I went to the US to do my MBA from New York University and
then went to work for Eli Lily in Indianapolis. I worked there for a short while
and then moved to California to Pricewaterhouse (now Pricewaterhouse
Coopers, PWC), consulting for the pharma industry. In that capacity, I worked
with most big pharma companies, such as Astra Zeneca, Merck, Rhone Poulenc,
Bristol Myers Squibb, SmithKline Beecham, Johnson & Johnson, etc. I was
with Lily for over a year, with PWC for two and a half years and moved back to
India towards the end of 1998.

At PWC, I worked on consulting projects for pharma companies; typically,

three or four-month projects where youre brought in to do fire-fighting and
advise clients about how they should re-formulate their strategies. Most of my
consulting was in sales and marketing. I did some post-patent strategic work for
one client, planned the life cycle of a product for another, did a lot of work in
fire-fighting issues such as some brands getting hit by competitors and helping
to get through that or how a client should revamp operations. It was mostly very
high-end consulting. PWC in the US had a boutique pharmaceutical practice
which exclusively focused on this area. Most of the work there was with CEOs
and senior executives in big pharma companies. So I got a very good overall
experience and insight into the global industry. I actually got promoted at PWC
a week before I put in my papers and decided to move back to India.
ML: How old were you then?
Saldanha: I was around 30 or 31 at that time and I saw tremendous opportunity
in India. My stint in the US was five-six years, of which three and a half years
were in consulting. If you get two years of consulting experience, it is probably
equal to eight to 10 years of a regular job because it is a very high-pressure
environment, especially in the US. People expect you to add a lot of value from
the first day you walk in because the billing rates are high. It is a different ball
game altogether.
ML: When you came back to India did you plan to start something of your
own?
Saldanha: No, Glenmark was promoted by my father. It is named after me and
my brother Mark. It was a 29-year old company and was relatively small when I
moved back -- just about Rs70 crore to Rs80 crore in sales. Last year, we closed
sales at about Rs750 crore and, this year, we have crossed the Rs1,000 crore
mark. I had worked initially with a sister company of Glenmark that we
subsequently moved out of, just to get experience without direct association
with the promoter group. At that time, almost 99% of our business came out of
India. I saw tremendous potential, primarily because of the talent pool that we
had to offer, especially in research. Providing the right environment, a lot could
be done within India to propel growth. Thats what we did -- we went public in
1999, raised capital and built a facility in New Bombay. I think most of the
outside world thought we were crazy when we said we are going to do drug
discovery and look at new chemical entities and so on.
ML: What about Dr Reddys, wasnt it already doing this?
Saldanha: At that time, there was Dr Reddys and Ranbaxy -- they were the
two majors. Dr Reddys had done two deals in 1998 and that excited us. We
thought intellectual capital is very high in India and, if we could attract people
of Indian origin back from the US into leadership positions and provide them

the right kind of environment, we could do research here at a much lower cost
than the West. Those days, our pitch used to be that the cost of doing research in
India is a tenth of the West; obviously things have changed. Now it is probably
more like one-fourth or one-fifth; but we are still very competitive. So we did
all that. We raised money; attracted key scientists back from the US and built
the whole research effort and capability.
ML: But you looked straight away at original research and not contract
research?
Saldanha: We never saw ourselves doing contract research. Culturally, we
thought doing work as a CRO (contract research organisation) was not our cup
of tea for whatever reasons and have always stayed out of it as a company. If
you look at Glenmark today, all our work is our own products and proprietary
stuff. We stuck to it. The thought process was - yes, research is risky, but we
took on those risks. The idea was that if we had to break out of where we were
and move up the value chain very quickly, the only way we could do it was
through innovation and discovery. Today, Glenmark has emerged as what it is
because we put in that effort over the last five-six years and pride ourselves on
having one of the best product pipelines in the Indian pharma industry. We then
acquired companies in Brazil, set up fully-owned subsidiaries in the US and
Brazil and announced the discovery of a lead molecule which clearly put India,
not just Glenmark, on the global map. I think India is increasingly getting
recognised and, as we go along the curve with more and more deals and value
being added, we will be able to re-position Indias capabilities in the drug
discovery area -- thats where we see the future going.
ML: Would you take us through the leadership challenges you faced.
Saldanha: The first thing we did after I moved back was to put in place a
corporate strategy looking at where we saw the firm going over the next five to
seven years. At that time, GATT had just been signed and that made it even
more exciting, as there would be many challenges that Indian companies would
face. One could look at it either way -- as doomsday scenario or an opportunity.
We decided to focus on four areas: the first was our domestic business. Then,
almost 99% of revenue was domestic; last year, we closed with 50% of the
revenues coming out of India and, this year, it would probably go down to 35%.
So we completely de-risked that, but we are still among the top 10 or 15 Indian
pharmaceutical companies. We are leaders in dermatology, womens healthcare,
paediatrics, diabetes, respiratory diseases, etc. These are some of the franchises
that we dominate within India. So we built a reasonably good domestic
business, but we have done better in other areas.
The second piece of the strategy was our discovery effort, which I will talk
about as we go along. The third area was generics and API (active

pharmaceutical ingredients). The interim strategy would always be generics and

whatever cash you are able to generate from the generics side of the business
would be reinvested in innovation -- that was the whole game plan. So we said
we needed API capabilities. We bought GSKs facility at Ankleshwar and got it
USFDA (US Food and Drug Administration) approved. We have filed 15
applications and, this year, we have another 15 or 16 going out. In generics, we
supply to a huge number of companies across the world.
Today, we have about $30million to $40 million coming out of API. This year, it
is going to be about $55million or Rs250-odd crore. So we have created a
certain amount of scale there. The fourth focus area is international
formulations. We had some presence in scattered markets like Africa and Russia
when I moved back, but today Glenmark is completely global. Over the past six
years, we have developed operations in over 80 countries through direct sales,
tie-ups and partnerships.
The tie-up part is to accelerate bringing products to market. We have six
products now. Whether we sell six products or whether we sell 30 products, the
infrastructure required is the same. Effectively, our thought process is to
increase the number of products going through our pipeline in the US. If we
were going to try to build it on our own, it would take a decade or two; so we
went out and did deals. We got Forest Laboratories as one partner to do a joint
development deal and we got Teijin Pharma as a second partner. We also did a
whole bunch of in-licensing deals to increase the throughput from our own
front-end.
ML: Did you acquire a marketing company?
Saldanha: No, we built it completely. Last year was our first year in the US
market. We have been there for a little over three years. In the first quarter, we
had virtually zero sales; in the second quarter, we were $1 million; third quarter
was $4 million and last quarter, we had $7.5 million -- so it is a huge ramp up in
scale. This year, we put out numbers of $35 million. With the 17 filings with the
FDA, we are looking at eight to 10 approvals this year. Plus we have this
controlled substances pipeline where we have about five products, which we
have started launching this month. These are already approved. So the US
clearly is a large opportunity for us. Our strategy is that whatever comes out of
our NCE (new chemical entity) pipeline, we will partner for US, Europe and
Japan. We will keep the rights for the rest of the world with us.
ML: Is that decision purely based on market size?
Saldanha: Yes, because it is all related to funding. Europe, the US and Japan
require huge amount of capital, if you want to go branded, which clearly we will
never have for the next decade. I dont think any Indian company will have it.

To launch a proprietary molecule in the US, you need millions of dollars. You
need large marketing budgets and investments in clinical testing -- so that is a
dream for Indian companies. We decided to give out the US, Europe and Japan
and use that capital to build up scale in the rest of the world. That is the strategy
and it works well because most companies, who are in-licensed, want to keep
Europe, the US and Japan, which is 80%-85% of the market today. It is another
matter that growth will actually come from markets other than these -- for
instance, countries like India, China, Brazil and Russia.
ML: Is your strategy to build infrastructure or grow through acquisitions?
Saldanha: We are doing a combination of infrastructure building and
acquisitions. If the US, Europe and Japan is one market, then Latin America is a
second market. Here, we bought a company in Brazil and another in Argentina
and have a fairly large presence of around 400 people. This is part of the game
plan -- of building rest of the world (or ROW) markets. The third region is less
regulated markets --Africa, Asia and CIS. In Africa, we cover 34 markets out of
the 54-odd. We have bought companies in South Africa and Nigeria. The game
plan is that, in 2009, when we launch Oglemilast, we must have infrastructure
on the ground in these markets. In Asia, we cover most countries except China,
Japan and South Korea. We have a presence in Malaysia, the Philippines,
Vietnam, Sri Lanka, Myanmar, Singapore and other countries. In CIS, we have
a presence in Russia with a reasonable size. We dont have much of a presence
elsewhere but we are building it up. We dont have much of a presence in
Europe but we are looking at getting a foot in the door -- nothing big ticket. So
other than the US, Europe and Japan, we will do something on our own or
through co-marketing -- that is our strategy.
ML: Many pharma companies have faced litigation overseas. How do you
plan to avoid that?
Saldanha: If you look at the discovery side, we have simply avoided the Para
IV (gunning for products that are going off-patent) side of the business. We
have gone with Para III (NCE) as a strategy, primarily to avoid lawsuits, large
investments and the challenges that you face in the Para IV business. We
decided that the risk that we would take was on the discovery side and capped
our risk there. Everything else is plain vanilla -- very stable. We may have some
innovation and niche products; but we dont have any risks or potential losses
coming out of the rest of the business, unlike some companies who have a much
broader risk profile, obviously because their capabilities are much larger.
ML: Does this planning on the risk mitigation come out of your consulting
experience in the US?
Saldanha: Yes, maybe. I am not taking credit for what we have done; we still
have a long way to go. As a firm, we are still in the building phase. So we dont

claim to be pioneers. We have done some good things and we know where our
strength lies. As a firm, we capped our risk, and hedged our risk. For instance,
we reduced our domestic market dependence to 50% -- we hedged that. We had
to decide if we want to get into litigation, fight that game and put up big dollars
or put our money in innovation. We clearly saw innovation as the way forward
because the skill set that we would acquire in the discovery process would stand
by us in the long run. Only time will tell who is right and who is wrong. You
can have a big hit by litigation or sink money in discovery.
ML: Given the cost advantage in India, why havent big pharma
companies, which already have a presence in India, ever used India as a
base for research?
Saldanha: What we have done is still an exception to the rule. I still think India
has some way to go in terms of its understanding of research. It has not yet
established itself in the discovery stage, which will take some time. Whatever
research has been done on the discovery side in India is less than a decade old;
while in terms of discovery of molecules, the West has been doing research for
over a hundred years. To replicate that learning requires time. Yes, we work
hard and we are smart people, but we need time to completely understand the
process. As for Glenmark, we have done some right things and that has given us
some advantage and helped us move ahead. But for India to get recognised as a
country for its research capability needs more time. A lot many deals have to
happen before India gets on to the global map.
ML: Is it all about costs?
Saldanha: No, it is not about cost at all, cost is just one element. It is about
being convinced about intellectual capital, understanding research and making
an investment - that is now beginning to happen. Some MNCs, such as Astra
Zeneca in Bangalore are doing discovery research. There are one or two others
who are doing some components of discovery like some chemistry work and
taking the compounds to their parents. India still does not have a single
molecule in the market. When that happens, we as a country will get
recognition. Typically, we would be viewed as a manufacturing base for
contract research, because there is a clear cost advantage here.
ML: In your success story, there is a strong component of management.
With all the right ideas, you could still take the wrong turn. Will you give
us a sense of how you have managed things?
Saldanha: This is a question we have been repeatedly asked. How do we
manage the momentum of growth and how we are able to deliver, what many of
our peers are not able to execute. What we have done at Glenmark, I believe, is
that we have recruited the best talent in the industry. We have some of the finest
guys working for us. We recruit aggressively from the IIMs, we go to most of

the leading management schools and have a lot of smart people within the
organisation - that has been our key strength. Obviously the challenge is also in
retaining that talent and managing the whole thing. We have done a reasonably
good job at retaining talent. With the company doing well, a lot of people have
been rewarded adequately across the board. On execution, we have phenomenal
guys all around and we have depended on local talent to run individual pieces of
the global business and it is working great. Local talent in different countries
has a great inherent advantage and we find that works very well for us. Most
people also enjoy being exposed to different cultures.
ML: What has been your biggest breakthrough so far?
Saldanha: Clearly, we always worked for that one hit which was Oglemilast, in
discovery. All it takes is one product in the market. Once you have that, you
have made it. Today we have a pipeline of six products, two of them are in
Phase II trials. Oglemilast and 8200 are both in Phase II and we have four other
molecules which are going into Phase I. As a firm, if one of these six goes into
market, you are looking at millions of dollars coming into the firm every year
for the rest of the patent life of around 15 years. We have always worked for
that one strike. Oglemilast was that strike. Obviously Oglemilast has to go to
the market, when that happens, expectations from Glenmark will be that from a
big pharma, because that kind of money will come into the business. We will
then have to look at our business and decide how to evolve. We cannot depend
on discovery alone. It is a great engine, you have to be working for that one
strike. At the same time, the rest of the business has to generate cash.
ML: What is your biggest challenge and did you make any mistakes?
Saldanha: Our biggest challenge clearly remains how to hedge out the risk in
discovery and how to get more molecules in the clinics through more deals. The
second challenge obviously is in retaining the team and making sure we
continue to have that consistency. These are the two broad challenges we have.
Obviously we have made mistakes. Every company has to make mistakes in
order to be successful. We made some mistakes with people and some mistakes
in terms of investments. I dont want to elaborate on the specifics, but I think at
the end of the day as long as your successes outweigh your mistakes, it is okay.
There arent any big enough mistakes that have hurt the foundation of the
company.
ML: Has nothing ever happened to ever make you change track?
Saldanha: So far nothing has made us change track. Our focus, our
commitment and our belief are the three key things that drive us. We are very
focused and we believe in what we do as an organisation, irrespective of what
the outside world thinks of us. We have charted a particular course and we dont
leave it until we see success. What makes us unique is our execution skill. At

the end of the day, if you make a mistake in strategy you will not go ahead as an
individual or as a firm. But even if you have the strategy, right, you have to
execute it right. Execution is what has differentiated us from the rest.
ML: How difficult has it been for our pharma companies to be accepted
globally, given that India also has a reputation for piracy and
counterfeiting medicine?
Saldanha: Well, it has always been like that isnt it? India has always got bad
publicity all over the world for various things. Yet, Indian pharma companies
have done well and established a reputation for themselves. India has begun to
be taken seriously as a potential global powerhouse. Our big breakthrough was
in signing the GATT and accepting the patent regime, the second stage will be
tightening of regulation which will put pressure on the bad eggs. We will evolve
over the next 10 years or so, but we are clearly being taken very seriously
already and this is evident from the number of global companies that are
partnering with India.