Pharmaceutical market Views

«The formulary system should work on international names, not on trademarks»

Rajiv Gupta

A story of India native Rajiv Gupta, who was not afraid to start his business in a foreign country

One person cannot create a company. It is created by team. Rajiv Gupta, co-founder of the group of pharmaceutical companies, called «Kusum». His team is the most valuable asset in the company, which is a strong and competitive player not only in Ukraine, but also abroad.

Rajiv Gupta approaches everything with interest and love, even when it comes to difficulties. This positive character trait helped him many times to make the right management decisions in many difficult business situations and continues to lead the company going forward.

“Any investment requires its development,” says Rajiv, and looks confidently into the future. What feature distinguishes Kusum from other pharmaceutical companies tells the company’s CEO Rajiv Gupta in an exclusive interview of LDaily.

: You were at the root of the Ukraine`s pharmaceutical business development right at the time of Ukrainian independency. What did you start building your company with?

R. Gupta: We started our activity in 1994 as a distribution company. After the collapse of the USSR, there was a strong shortage of many drugs in Ukraine. This forced us to arrange the import of Indian medicines into the country. And, as it turned out, we were the first who decided to start distributing drugs from India. At that time there were no large-scale analytical reviews of the pharmaceutical market as there are today. We only knew which Indian drugs, that once were popular in the USSR, disappeared from the market. In addition, we asked the owners of the pharmacies, and doctors, which drugs the patients are lack of. Thus, we conducted our own marketing research. After identifying the needs, we were searching for these drugs in India, agreed with the suppliers, while simultaneously registering the drugs in Ukraine. Thanks to hard teamwork, in 1997, we became the largest distributor of Indian drugs in Ukraine. And by the end of the 90th our partners were not only Indian, but also Western pharmaceutical companies.

: At what development stage did you decide to start your own production?

R.Gupta: In 2001, we decided to expand the business and start production of drugs under our own brand. Such changes were strongly influenced by the devaluation of hryvnia in the late 1990th.Our business already became different, but any investment has to be developed. The decision to build a production field was not easy to make. But we did it. In 2005 we started the construction of two factories in Ukraine and in India. From that time our business has strongly changed.

: According to your own observations, it is  easier to conduct business in Ukraine or in India?

 R. Gupta: It’s easier for me to work in Ukraine. Because I studied here, started my own business here and I know how to do business here. The geography of activity of the group of pharmaceutical companies “Kusum” is not limited only to Ukraine and India. In addition to these two countries, we are represented in Kazakhstan, Uzbekistan, the Philippines, Myanmar and Moldova. In the nearest future we plan to enter the markets of Latin America and Southeast Asia. I want to note that

in all countries we work only in local currency, not shifting currency risks to the patient. In addition to our first priority – helping our patients, this solution helps to stay in the market and protect yourself from possible currency jumps

As manufactures we focus on the solvency of people in each country in local currency.

: Do you agree that this strategy helps you easily survive in the latest economic crisis?

R. Gupta: Of course, I agree. With the beginning of the crisis, the solvency of the population has declined, and people simply do not have the opportunity to buy expensive medicines with 100% of the foreign currency component. For example, if a certain kind of imported drug in currency equivalent was sold for $ 4, then in crisis time under the influence of devaluation processes its price in UAH grew in accordance with the currency rate. In other words, foreign companies raised the prices of their medicine. We also had a choice: either to increase prices, or take care of domestic patients by the reduce of profitability of business. Before making a decision, we analyzed in details all of the components of the cost of our products and divided them into two groups: first group consists of valued in local currency (staff salaries, electricity, gas, etc.) and the second group – with a currency component (raw materials and materials). Also, do not forget about marketing expenses, which play an important role not only for pharmaceutical companies. We understood that the price increase would be a disaster for the patient and our choice became evident. Using internal resources and constantly optimizing business processes, we still adhere to the policy of optimal pricing. Many domestic producers adapt faster than foreign companies to the rapidly changing market conditions, meeting the needs of society. In turn, we expect support from the state and relevant programs for the development of the industry. From such cooperation, everyone will benefit, especialy patients.

Is it true that this period was the start for the production of counterfeit products in Ukraine?

R. Gupta: Hard to answer.I think that this question should be addressed to the appropriate controlling bodies.

: Have Ukrainian patients already realized that domestic drugs are good?

R. Gupta: We are responsible for the quality and efficiency of all our medicines that we manufacture and sell.

Recently our plant, which is located in Sumy, once again successfully passed certification and confirmed the conformity of production conditions to the requirements of GMP

This event confirms that we are on the right track, and all production processes and the quality of the final product meet the most stringent international standards. During the inspection of our plant by the representatives of the State Forest Service, high professionalism, solidarity, as well as the equipment level of the plant and the competence of our team were noted. The growth in sales of domestic products, which we have seen in recent years, speaks for itself. Agree that the patient “votes” only for quality drugs. If he bought once and the drug did not help him, then the second time he will not buy this drug and tell all his friends about his inefficiency.

: Do you think the state should interfere in the regulation of the pharmaceutical market?

R. Gupta: Everything should be in moderation. First of all, the state has to take control of the formulary system. Until it is fully reformed, doctors will continue to prescribe both necessary and unnecessary medications. This system should work on international names, and not on trademarks. Its reform will save the patient`s money, and will also give more effective treatment.

: Do you agree that the main problem of pharmaceutical business is frequent innovations? Too frequent changes in the rules of the game are pushing off the foreign businessmen. How do your partners react to such changes?

R. Gupta: The changes in the legislation concerning our business sphere were made quite often by the previous authority. I cannot say that they were all bad. But they regularly created artificial barriers that prevented the normal business dealing. With the beginning of 2014, we practically do not notice this. There is certain stability on our market, which has positively affected the growth of domestic pharmaceutical business.

: Is it possible to conclude that now the pharmaceutical industry is developing seamlessly, and nobody stops it?

R. Gupta: Yes, that’s right. For us, the most important thing is not to be interfered. And this rule is relevant for any other market. Only in this case the business will develop. But we have to deal with populist statements of some politicians who convince people of the bad quality of domestic drugs. For those, who allow themselves such unreasonable statements, I suggest to visit the top Ukrainian pharmaceutical factories, including ours, to observe the process, and then to explain why they made such a statement.

Zhanna Garashchuk

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