News: Mukesh readies big-bang pharma move

(DNA 08/02/2007) Mumbai - The Mukesh Dhirubhai Ambani group is finalising a “multi-billion dollar, aggressive” entry into the pharmaceuticals retailing business in India.

The idea is to capture at least half of the Rs 30,000 crore market in the next five years, sources said.

This could mean the paths of the Ambani brothers may just be crossing once again, because Anil is said to be working on partnerships with regional distributors of drugs that will, in effect, lead to the excision of C&F agents from the pharma supply chain.

Mukesh’s plans are breath-taking: It will involve the acquisition of “scores” of contract manufacturers across the country, apart from outsourcing deals with a clutch of them.
The group will also have pill production facilities of its own, for which the machinery estimates alone tot up to Rs 1,000 crore, sources said.

The idea is to have the capability to produce most of the popular, fast-moving generic medicines which have wafer-thin margins at the retail level.

Producing them will afford the company far better realisations.

At the distribution level, the group’s pharmacy chain will dovetail into Reliance Retail stores.

There will also be link-ups with standalone chemists outside this network, whose facilities could be upgraded to .

“All the supermarkets and hypermarkets that Reliance Retail will set up - and there is no fixed number to this - will have pharma stores owned and run by Reliance,” said sources.

Down the road, products developed at Reliance Life Sciences will also be sold at these stores.

“There will also be a lot of emphasis on rural distribution because most of the drugs available in the hinterland are spurious,” said a group source.

“For example, patients in the Bimaru states (Bihar, Madhya Pradesh, Rajasthan, Uttar Pradesh are the most affected by the incredible amount of fake drugs - You won’t believe the versions of a simple paracetamol that exists. We will give them a safe alternative,” said the source.

Analysts said about a quarter of all pharmaceutical products sold in India are counterfeit or of substandard quality.

A World Health Organisation study said 35% of the counterfeit drugs marketed in the world are manufactured in India. To top it, statistics put out by the European Commission in November last year said three out of four fake drugs seized in Europe in 2005 were exported from India.