Sanofi-Aventis APAC Business Development VP Arjun Oberoi On Innovation Pacts And Deal-Making In Asia: An Interview With PharmAsia News (Part 1 of 2)

Arjun Oberoi, Sanofi-Aventis' vice president for business development Asia Pacific, mirrors his company's leadership ambitions in the Asian markets. Open to calculated risks and high on energy, Oberoi has played a leading role in clinching a few important deals for Sanofi such as last year's acquisition of China OTC play BMP Sunstone and its joint venture with Minsheng Pharmaceutical Group ('Sanofi Expands Consumer Health Reach With New Joint Venture In China,' PharmAsia News, Feb. 1, 2010).

Arjun Oberoi, Sanofi-Aventis' vice president for business development Asia Pacific, mirrors his company's leadership ambitions in the Asian markets. Open to calculated risks and high on energy, Oberoi has played a leading role in clinching a few important deals for Sanofi such as last year's acquisition of China OTC play BMP Sunstone and its joint venture with Minsheng Pharmaceutical Group (Also see "Sanofi Expands Consumer Health Reach With New Joint Venture In China" - Scrip, 1 Feb, 2010.).

But the former Pfizer Inc. executive, who is based in Singapore, says there is much more to do to help build Sanofi in China, India and other emerging markets like Russia and Southeast Asia. During the annual JP Morgan conference in January, Oberoi also acknowledged that Sanofi is under "considerable pressure" to demonstrate value from its recent dealmaking in China (Also see "How Much Risk Should Big Pharma Accept To Close Deals In China? (Part 2 of 2)" - Scrip, 18 Jan, 2011.). Oberoi sat down recently in Singapore with PharmAsia News' India bureau to elaborate and discuss his vision for the company and region.

PharmAsia News: You have played a critical role for Sanofi-Aventis for the last three years in deal making, and that period has been quite eventful for the company from a global deal-making perspective. Can you provide some color on the evolution of some of those deals?

Arjun Oberoi: In 2008 when I was brought in, we were already well under way with implementing some of our growth strategies but the real strategic exercise was when we worked with a consultant to go "blue sky" in knowing the exact opportunities in the Asia region and its varied markets. We took into account where we stood and where we want to be in the foreseeable future. So in 2008-09, we established a five-year plan in terms of a quantitative aspiration and a qualitative aspiration in determining what will get us to that level. We worked on a roadmap and specifically on five key strategic initiatives.

One of them was obviously to maximize and see what we can do with our existing businesses. An important point was to defend our big brands that were threatened with generic copies. In some other cases, we looked at opportunities to extend the potential of our mature brands and, in particular, we studied how best we can strengthen our presence in diabetes and oncology segments.

The first major growth platform for us was diabetes - particularly with the powerful brand portfolio that we have ranging from the insulins to the best known oral anti-diabetes offerings. We felt that with our portfolio matching with the growing proportion of diabetics in India and China, we have to choose the segment for some really aggressive moves.

Then we looked at the "affordable medicines" segment in achieving the volumes play and reaching out to the "next billion customers," as we call it. Addressing that segment was key strategically - with an affordable offering through branded generics or such similar channels like getting the business model right, getting the portfolio right and then the pricing right - through a good organization and execution model.

The third important aspect for us was to have a good diversification plan, particularly in consumer health, and within that we selected certain segments like nutraceutical brands - and you may see more from us on this in the coming months - like VMS [vitamins, minerals and supplements], cough and cold, gastro-intestinal products. You have seen that we have bought the largest pediatric cough and cold brand in China through the last BMP Sunstone deal in China [ (Also see "Sanofi Expands China Footprint In OTC And Rx Markets With BMP Sunstone Acquisition" - Scrip, 29 Oct, 2010.)].

That apart, we also spoke about the core value franchises and that's where our core products came in, from where we could really see growth in diabetes segment and also from products like Plavix [clopidogrel]. In China we have already seen a very good growth. That is where we are continuing to expand our oncology business for newer indications. We have the newer products like Jevtana [cabazitaxel]. Then we have very good line up in heart drugs like Multaq [dronadarone] which are other high-growth opportunities [ (Also see "Sanofi-Aventis Emerging Markets Sales Exceed U.S., Europe: Emerging Markets Earnings Round Up (Part 2)" - Scrip, 11 Feb, 2011.) ].

PharmAsia News: Is there an affordability issue for these drugs in emerging markets?

Oberoi: We knew that if we get into the price-volume model of business, we will effectively see more competition and so we thought of covering both the brand and the volume models. One important aspect for us is an affordable offering and you will increasingly see us getting more and more active in Southeast Asia, the way we have reached into the Tier II market in India through our Prayas initiative and that is a very innovative model in play for us [ (Also see "Sanofi-Aventis Closes In On Diabetics In India; Big Push On Rural Markets And New Launches" - Scrip, 6 Dec, 2010.)].

Again, beyond approaching these markets, we are trying to work around our optimum price structures like tiered pricing. We are working on a range of products like Plavix and Taxotere [docetaxel]where we will be significantly reducing our prices. The idea is to remove the access barriers for products where we feel that perhaps more intelligent pricing structures can be created, given the large number of patients or volumes like in India.

Speaking about our next billion customers, we are looking at China through the BMP Sunstone and Minsheng units, which have very focused businesses in the Tier III and IV cities. Through these acquisitions, we feel that not only have we acquired well-known brands, which have diversified our business, and an OTC platform, which has a strong distribution channel, but also a channel that gets us closer to the goal of reaching the "next billion customers."

In China, it is a very interesting market as until Tier VI stage we are still talking about small cities and not the rural markets as that country has about 600 cities. What we are saying is that our business should be in the top 150 cities there and these two companies should have deep penetration in those markets. So we get the commercial platform, the distribution channel and the feet on the street. This also helps us to plant the seeds of our core products like Amaryl [glimepiride], our vaccines, and so on.

Similarly in Russia, we are trying to leverage our Zentiva offering, which is a branded generics business, where we have heard about discussions of an Essential Drugs List in the next two to three years alongside having some local manufacturing. That will need us to tailor our own portfolio. We are presently discussing issues such as local manufacturing. For Lantus [glargine insulin], we have done it already with the acquisition of Bioton in Russia. Our discussions now are centering on whether we should have a manufacturing set up for generic drugs and what would be the right portfolio in case we look at the branded generics market in Russia [ (Also see "Russia Pledges $3.9 Billion For Local Pharma Growth, As Big Pharma Scrambles To Set Up Shop" - Scrip, 22 Dec, 2010.)].

PharmAsia News: You have spoken about the price-volume models, the core products. What are the plans on the innovation side so far as Asia is concerned?

Oberoi: For the innovation side, we have developed a research unit called Asia-Pacific Therapy Strategy unit, and the APTS has the responsibility to build an innovative and cost-effective drug development model for the region, shorten the time it takes the global brands to be registered and launched in these markets, participate in global trials to the extent that is possible and very importantly develop drugs that are relevant for the Asian population. In that we are looking at engaging with companies where we can do licensing deals for products - like infectious diseases, hepatitis and liver protection and various forms of cancer like gastric, hepatocellular and head and neck, which are very prevalent in this region and figure as a significant unmet medical need.

So a couple of things may happen in this. One option could be to develop drugs as part of our portfolio, or in-licensed candidates, and develop them from our capabilities in Shanghai. The other point is to look at low-cost innovation. For example, in diabetes we are looking at low-cost insulin pen devices to be made available in markets like India. As such, for more Western-type diseases, we are saying we want to make our products to be accessed by patients rather than giving them the option of only a Solostar pen, which may be accessed by the high-end segment. So the new pen is intended to be targeted to the mass market from the fair pricing angle, competitive with the local brands.

PharmAsia News: How do you look at the broad diversification drive in the Asia markets into consumer products or OTC products?

Oberoi: That part will primarily revolve around consumer health products. We have seen a number of areas like cough and cold, VMS, nutraceuticals, women's health or through our global brands like Marlox and EnteGermina, which are still small in countries in Asia. The idea is to do organic launches and check the inorganic platforms where we don't have a sizeable presence. In Australia, for example, we had no such platform and so we acquired Symbion and now we have the Synovis brand spread out in Korea, Phillipines, Thailand [ (Also see "Sanofi-Aventis Nurtures Supplement Interest With Symbion Consumer Buy" - Scrip, 23 Jul, 2008.)]. Soon we will be in most Southeast Asian markets and that will be followed up with launches in China and Russia as well.

- Vikas Dandekar ([email protected])

[Editor's note: This part one of a two-part interview; look for part two in an upcoming issue of PharmAsia News.]