NDTV: How do you describe the present market situation in India, now that you are the top company with nearly 7 per cent share of the Indian market? How do you see the emerging competitive landscape since the reach or accessibility factor to the patients is becoming a big factor in generating prescriptions?
Warmuth: As a starting point I want to speak about Abbott and our goals in the emerging markets. We are very well positioned in the emerging markets and certainly the action is in India. India is going to go a long way in propelling Abbott’s overall growth strategy. We have completed a year recently of achieving our leadership position in the India market but it is also important to acknowledge that only last year we celebrated our 100 years of operations in India. It is very safe to say that Abbott has a very long and deep history of knowing India and I can assure you that we are very much aware of the competitive environment. We are also aware of the unmet medical needs, so from our side I can say that complacency will not set in and we have a lot of things to offer. I know that there is nothing easy about it but I am very excited about the challenges in the Indian market.
NDTV: With all the entities like the legacy Abbott operations, the Solvay unit and the formulations businesses of Piramal Healthcare, as according to your own estimates alone India sales for Abbott can exceed $2.5 billion by 2020?
Warmuth: With all the businesses taken together, yes, we are a little below 7 per cent in Indian market and we have been able to maintain that figure in a growing market. Frankly, we would agree that we do have a very large workforce within India as compared to a few other countries and that is a sign of our serious commitment to India. We have large manufacturing set-ups at Goa and also now at Baddi, which came to us from the Piramal acquisition last year. Interestingly enough, outside the United States, we have the largest concentration of Abbott workforce in India. In terms of sales force we have 7,000 people who help us take advantage of the market and with our Number 1 position, backed by a dedicated sales team and a huge number of products – over 350 of those – we have the scale and the capacity to grow above the [average] market growth rate. You must be aware of the projections of India reaching a $55 billion mark by 2020 and we are confident to fill up the unmet medical needs.
NDTV: In terms of your overall plans, what sort of ramp up do you expect in the business, once you gain the efficiencies of an integrated organization in India with Abbott legacy, Solvay and Piramal Healthcare’s prescriptions business?
Warmuth: We have drawn up our internal numbers that I cannot share with you but we do have a lot of points. The idea has not just been to get onto a very large market. We have a dual portfolio that we continue to expand and that portfolio consists of the developing needs of the markets that we are present in while we also own a very strong therapeutic development pipeline. We know the needs of the markets and the products that are needed to be viable and commercially successful. So our idea is to match the local needs and also to position our other products. You must also be aware of the very diverse offerings like the nutrition products, diagnostics and there again is a broad umbrella of medical products that include diabetes care, vision and vascular care. So primarily we have very large number of high quality assets that we already own that will further be used to accelerate with our Piramal products. We will grow from all these opportunities. We know that people are our biggest assets and they know the local markets. We are aware that our business has to rely on the local leadership and cannot be run alone from our Chicago or the Basel, Switzerland offices.
NDTV: When you did the Piramal deal, you had said Abbott would look at taking some of Piramal’s products into other emerging markets. Has that process started?
Warmuth: At this moment, we are not exporting anything out of India but we have and will continue to evaluate our portfolio for any potential opportunities. We have a bunch of 350 products that are available and we are doing a very exhaustive analysis to understand the needs of the markets and what can benefit from the list of Piramal products in other countries. It is a rigorous and detailed process and we continue to check the global needs.
NDTV: You had agreed to buy Wockhardt’s nutrition business in 2009, but that had to be called off later and recently that business was sold off to French food giant Danone. Do you continue to look at growth through buyouts for your nutrition businesses in India?
Warmuth: From the nutrition standpoint, India and many other markets remain as our high priority. We are constantly talking to healthcare practitioners for the pediatric and the adult nutrition segments and certainly we have great assets to present in nutrition. Our development unit is looking at newer nutrition products. While licensing and acquisitions are important to us, we are not going to buy something, unless there is a strategic intent, a strategic fit and that applies to all our business segments.
NDTV: Will you look at integrating all of the India units like Abbott Healthcare, Solvay and Piramal healthcare businesses at some stage down the road?
Warmuth: That’s a fair question and has been raised quite frequently. We have maintained all along that Piramal has a very solid business model has been highly successful. Frankly why we wanted to keep the executive management, medical representatives and all of the middle management at Piramal was because they know the customers, they know the channels, they know the market needs. They are best to grow the business and help us in deriving synergies. While we always look for opportunities to get benefit across all of Abbott's businesses in India, there is no intention at this time to merge the businesses. You must have heard that we recently merged the Abbott business with Solvay, which was very consistent with our global plans.
NDTV: Abbott is perhaps amongst very few companies that have covered the two ends of the spectrum very well with very high-value products like Humira on one end and the hundreds of branded generics in a country like India on the other. How do you see the market for Abbott’s proprietary brands?
Warmuth: The most important thing under my direct responsibility as the President of the Established Products Division and you are correct in saying that the branded generics opportunity is significant and that is my primary responsibility. You are also right in pointing out that the opportunities in India, goes beyond branded generics and there is a lot on the side of the patented products and the growth prospects. We look at all emerging markets as growth opportunities and it is not just about taking a product and pushing it into the market. The plan has to focus on systematically meeting the medical needs of the patients we serve. We are constantly evaluating how the doctors can better serve those needs and focus is again all about the patients. We would gear up our product launches related to proprietary patented products suitable for the local needs.
NDTV: All of the EMs contributed around 24 per cent to Abbott last quarter. How much more can be done in terms of market share, at a time when other large pharma players are quickly ramping up their own presence in emerging markets?
Warmuth: Our successes in the global markets and also the Emerging Markets – of which India is an essential part - have been due to the very diversified presence that we have – and by that we mean operationally, financially, geographically and probably most importantly the variety of patients that we serve across the world. Something that surprises people when they think about Abbott as a U.S.-based multinational corporation is the fact 50% of our global sales comes from outside the U.S. Over 26 per cent of our sales belong to the emerging markets. With the recent acquisitions, we have 90,000 people of which 55,000 are located outside the U.S. We have had a fabulous year of earnings growth. In the healthcare industry, I am sure you will not see that mass of people spread across continents.
We have a two-fold growth strategy. While innovation is critical for us, in emerging and developing markets, this also relates to offering comprehensive healthcare, just the way we are doing in India. Our international sales last year was greater than $20 billion of which $8 billion was from the emerging markets – as we define them. With an estimated 15% growth from the emerging markets in the next five years that will be $14 to $15 billion and that speaks about our long term commitment to the set of countries in the emerging markets and I would put India right at the top of that list.
I would like to wrap the answer to this question with a little bit of granularity of our Established Products. Last year in May we formed the established products division and the whole idea was to have only one leadership for development, registration, regulatory, manufacturing and the whole idea was to provide access to established pharma products not only in India but over 140 countries that are outside the United States. Our share in the global sales has been growing and markets such as Russia, India and China will help us more going forward and quite frankly also by the acquisitions that we made last year of Solvay and Piramal.
NDTV: Emerging Markets is a very diverse set of countries, how do you plan to tap these markets for future opportunities?
Warmuth: The answer to this will depend on which country you are talking about. As is known, India is very different from China and then Brazil and Russia are very different again. But the one thing that is sure is the following: There are very few dominant companies in these countries and the markets are very highly fragmented. There is one thing about going after market share in a competitive environment but the benefit that we see here is that there is an incredible unmet medical need in these countries and access to healthcare continues to be a big priority for the governments and will continue to be so to explore affordable medicines at all levels. That makes me very bullish about the emerging markets, not just India but across.
NDTV: You have extended your alliance for the distribution of Novo Nordisk’s Human Mixtard insulin in India for two more years. What are the additional alliance possibilities for you in markets like India or even other EMs?
Warmuth: There are three components to our growth strategy. A very direct answer to your question is yes. If it is through licencing deals or outright acquisitions that we can further compliment our current offerings, we are always screening for that. Novo Nordisk has a very strong and deep understanding of the diabetes market and Abbott has very diverse businesses and our licensing and acquisition opportunities will continue to expand our product offerings. So on one side, we have the diverse presence in diabetes, vascular care, vision care and that can be further boosted by relevant products. Novo Nordisk and Abbott are filling up the unmet diabetes disease management needs of these markets. The backbone of being a truly multinational corporation helps us in developing the markets for us. We continue to look for opportunities to broaden our portfolio
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