If any single company epitomizes India’s transition from economic minnow to burgeoning industrial superpower, it’s Bangalore-based pharma giant Micro Labs Ltd. Founded as a tiny regional concern in 1973, its rise to global status has paralleled India’s own economic progress including her emergence as a leading player in the world’s generic drugs market to which the country now exports nearly £20 billion worth of medicines every year.
With a presence in over 60 countries and a portfolio of leading brands such as award winning fever-management drug Dolo, Micro Labs has been in a continuous state of growth since its inception; yet it still remains a family firm – under the leadership of two second-generation sons and accounting for a rapidly growing slice of India’s pharmaceutical exports and domestic sales.
Though early growth was based on rising demand in the Indian subcontinent for health products, Micro Labs’ current position as a leader in branded generics is fuelled as much by an ability to provide competitively priced drugs to the world market.
With 14 global-standard manufacturing facilities across India and plants in South Africa and Dubai, overseas sales now account for about 40 per cent of revenue and are expected to overtake domestic volumes in coming years.
It is all a far cry from his late father’s small-scale beginnings, chairman and managing director, Dilip Surana, tells Pharmacy Business when we interviewed him in London – though patriarchal ambition, it seems, was never exactly in short supply.
Dilip, ranked 73rd – along with brother Anand – on Forbes’ list of 100 richest Indians, said: “My father had around ten years’ experience in pharmacy distribution when he decided to start his own company in 1973. He focused on southern India with a particular emphasis on supplying government agencies. The aim right from the beginning was to break the monopoly of the multinationals so he set up a manufacturing facility in Chennai to launch products.”
Things began modestly with a major focus on the manufacture of ethical pharmaceutical preparations. However, it soon became clear that G. C. Surana’s uncanny ability to know which drugs to focus on and how to develop them, coupled with a relentless work ethic, meant Micro Labs was unlikely to stay a small company for long and a second factory was set up a few years later.
“My father’s ability to pick up the chemistry of a drug was amazing. For him there was no holiday. He lived and breathed business and inculcated the same values in his children. Even during my high school days, he made sure I learnt the trade, starting from the lowest rung.”
One of the first lessons Dilip can recall had to do with the paramount importance of quality. Having designed to suggest Micro Labs could save money by using lesser quality packaging on low margin government orders, he was roundly rebuked: “My father told me whether you are making products for animals, whether you are making products for government, whether you are making products for the domestic market or exports, the quality has to be the same. You cannot give different directions to the manufacturer. If you are not constantly focused on quality, then you don’t join the pharma business, you get into some other business where you are not dealing with human life!”
Dilip also highlights the people management skills of his father as key to planting the seeds of success, along with a prodigious mastery of the art of the deal. “I remember that he never purchased anything other than the best, and always at the lowest prices. The suppliers would complain at the time, but they would still keep coming again and again.”
A major advantage enjoyed by the fledgeling company in the early Seventies, explains Dilip, lay in the absence of patents: “He could introduce any molecule without worrying about patents. He took full advantage of that and worked on a lot of products which only the multinationals had – on monopoly products no-one else was manufacturing. And he broke that monopoly.”
Dilip, who went to school in Bangalore and graduated in accountancy, took over the reins of Micro Labs in 1983 and was joined by younger brother Anand in 1993. The brothers set about realizing the family’s dream of establishing a national presence for the business which had, until this point, stayed mainly focused on southern India.
To start with he had just one team of medical reps promoting the entire portfolio. But he realized their work would be more effective if they specialised in particular therapeutic areas, not least because with growing demand in India for top-quality drugs, the Micro Labs portfolio was expanding rapidly, as were the number of its manufacturing units.
“Literally every month we were launching new products. So we became the first to create speciality marketing teams focusing on particular medical areas and that approach proved very successful. Today we have many divisions specialising in areas such as cardiology, diabetes, ophthalmology, dermatology, CNS, urology, and critical care.
“This approach leads to growth because every year you are adding a team of about 300 to 400 people. Later on every company followed our system and these days literally every [pharmaceutical] company has at least ten divisions.”
As the sales force expanded so did the rest of the business, with new manufacturing plants being set up every few years.
“In the early days everything had to be produced in-house. There was no concept of contract manufacturing in India but now things have changed. Now we have about 75 per cent in house production and 25 per cent contract manufacturing.”
Micro Labs’ second manufacturing plant had been set up by Dilip’s father in Hosur, an industrial city in the Indian state of Tamil Nadu. With demand continuing to outpace supply, a further 12 state-of-the-art manufacturing sites have been built by the brothers. These include the facility in Hosur, a unit in Peenya industrial Area, Bangalore, a factory in Pondicherry, and one at Kumbalgodu near Bangalore to make sustained release medicines. In January 2004, an automated plant specializing in Penicillin based products began production at Bommasandra Industrial Area. That same year Micro Labs inaugurated a new formulations plant in Goa. Approved by the United States FDA, it caters exclusively to export requirements including the various oral solid forms of Cephalosporin.
Although keen to stress the company’s growing international focus, Dilip points out that India still remains a crucial area of expanding opportunity with growth currently running at around 12 per cent. “We entered the Indian market at the right time and ever since there has been a great opportunity for us there as the whole healthcare system has evolved. And although we already have a pan India presence, when you get into the nitty-gritty you feel you have just touched the tip of the iceberg. There is still so much more to penetrate, particularly now as the rural market is developing.
“Hospitals are developing very well, farmers’ income is growing and everyone wants the best healthcare, especially in the paediatric segment as nobody wants to compromise for his or her child. Parents want to give the best treatment when it comes to their children and don’t mind spending any amount of money.”
In a first for India, Micro Labs unveiled a state-of-the-art plant in July 2006 to specialize exclusively in ophthalmic products. The move has led to a strategic partnership with the world-famous eye care company, Bausch &Lomb, to cater to the Asia Pacific markets as well as joint research and development of ophthalmic pharmaceuticals specifically for emerging markets.
Such moves have enhanced Micro Labs’ long-held reputation as a pioneering and diversified pharma company with products ranging from oral solids and oral liquids to topicals and injectables, with a reputation for producing high-quality bio-equivalent generics based on world-class research.
Success has not gone unnoticed. Apart from numerous personal awards for Dilip – he was named India’s Most Admired Business Leader in 2017 by White Page International – some of the biggest names in global pharmacy, including Pfizer, Mylan and Teva, are reported to have expressed an interest in buying the business.
The answer from this family-run firm has always been no: “We have had many offers to sell,” says Dilip, “but then what would we do after that? Probably go mad without having any work to do!”
Given it has come so far, the company’s inexorable progress over five decades shows little sign of abating, with Dilip targeting sales of $1 billion in 2024, with particular emphasis on expansion in countries like the UK, the USA, Germany, Australia and Nigeria where it has established wholly-owned subsidiaries.
The biggest of those subsidiaries in terms of turnover is its UK business Brown & Burk led by Preetham Sharma Hiremat, a mild-mannered and well-respected pharma professional with over two decades in the sector.
The company holds more than 100 product licenses in six countries and is Micro Labs’ springboard for penetration of a large part of northern Europe.
Products include a wide range of prescription-only and OTC medications. Dilip’s ambition for the UK business is to become a top ten player and to that end the company has invested heavily research and development. Says Preetham: “We see a lot of things happening in the coming years…at the end of the day it’s the pharmacist who is going to face the patient and they decide what medicine to buy and from that angle, the manufacturer must follow the pharmacies.
“UK independent pharmacies are very important to us. We value them and the important role they play in healthcare. Our Brown & Burk team spend a lot of time understanding their needs. Their future is changing from being solely a medicines dispenser to value-added services to take the pressure off GPs, and we are currently looking at launching products and services that will support them through this transition.”
This article also appears in the February issue of Pharmacy Business.