Cipla CEO heads for the exit as profits slump

Departing Cipla CEO Subhanu Saxena. (photo courtesy of Cipla)

Cipla's chief executive Subhanu Saxena is leaving the India-based generics maker at the end of this month amid a shake-up in the company's operations.

Saxena has been at the helm of Cipla since 2013, moving to the Indian drugmaker after a 14-year spell at Novartis, but is now leaving to handle emerging "family priorities," according to the company.  

He will be replaced by Umang Vohra, currently the company's global chief financial and strategy officer, who joined the company last October from Dr Reddy's Laboratories. Cipla also cemented ties with the family of longtime backer and non-executive chairman Y. K. Hamied by promoting his niece--Samina Vaziralli--to the role of executive vice chairman.

"Having been aware of his personal circumstances, we respect Subhanu's decision to leave Cipla," said Hamied, adding that he was "delighted to see two young leaders … take on higher responsibilities" within the company.

Last year, Cipla embarked on a major restructuring aimed at cutting costs and improving profitability. It bailed out of some smaller international markets to focus on key growth territories, particularly the U.S., where it is viewed as a late mover compared to its peers, as well as South Africa.

On Saxena's watch, Cipla closed a deal to acquire its first U.S.-based manufacturing facility, buying generic drugmaker InvaGen Pharmaceuticals in a deal valued at $550 million, and also made an $89 million investment in a South African biosimilars plant. Earlier this year, Saxena also formed a new executive council to simplify decisionmaking at the group.

Saxena's departure comes as Cipla posted a 6% decline in revenues--with a 21% fall in North America--as well as a 42% drop in earnings before interest, tax, depreciation and amortization (EBIDTA). 

The performance was put down to challenging conditions in the domestic market and an increased spend on R&D as it prepares for new product launches. U.S. sales were hit by lower sales of a generic version of AstraZeneca's gastrointestinal drug Nexium to Teva, after the latter's first-to-file market exclusivity lapsed. 

Meanwhile, Cipla's Indian business has been affected by a government ban on more than 300 fixed-dose combination medicines, which took effect in March, on the grounds they had no "therapeutic justification." The ban also affected products from Pfizer, Procter & Gamble and Glenmark, among others, but is currently being challenged in the courts.

Brokerage firm Systematix Institutional Equities said the second quarter been challenging for Indian pharmaceutical firms thanks to "regulatory headwinds in key markets, volatility in oil-linked products and sharp depreciation in currencies in certain emerging markets," according to a Nikkei Asian Review article.

That sentiment was echoed by analysts at RBC Capital Markets which said that other Indian generic drugmakers--including Sun Pharma and Dr Reddy's--have also been suffering from "US pricing erosion." 

- here's the release from Cipla
- here's the story from Nikkei Asian Review

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