Monday, July 1, 2013

Cipla Ventures - What's the real story Gen-3?

Greed for quality & comprehension makes one less effective & less productive.........
........... Stash away those cudgels people, this is NOT about pharmaceutical manufacturing, this IS about my realization after a month of sub-par blogging that resulted in my number of posts going low (just one article to be precise in June 2013!) and the number of views I get per a month hitting the nadir! - A promise to myself... will try to type out a few "casually turned out" articles every now n then, instead of generating it through my oft employed time-consuming approach of Mull-it-over-for-a-week-Type-it-on-Word-Edit-it-as-though-HBR-were-publishing-it-and-finally-Paste-it-on-the-blog....... Spontaneity ain't dead yet!

Now the REAL topic...

The recent news of Cipla charting new course to achieve a $5 billion revenue in next ten years caught my attention & got me thinking.... Not because a 10 year objective as this is anything novel, but the simultaneous creation of a dedicated investing arm Cipla Ventures, towards this vision, is what interests me. 

Now again, what's so novel about corporate venture capital? its's been around for some time and the trend is bound to catch-on with whichever company that's sitting on surplus cash reserves jumping into the fray if not anything else, as someone said (Super LP??) for the blood & gore and the adrenalin rush that venture investing & enterprise incubation gives.


What interests me is.... 
........ the brief agenda of this arm of Cipla, as reported by Economic times, that says will "weigh the prospect of investing in companies from start-up hubs like Boston and London among other places, in areas such as biotechnology, medical devices and new chemical entity

What interests me is.... 
....... the expansive & prophetic way in which the new CEO Subhanu Saxena says "Out of the five or six bets I place, only two or three need to pay off"

What interests me is.... 
....... what is this "pay off" for which Cipla is ready to take "sensible risk", a novel term for a generic Indian company that has taken the traditionally low risk option of staying close to the home turf?

What interests me is.... 
...... what key takeaway Saxena is walking away with from Novartis & bringing to Cipla?

Let me be clear, I am not insinuating anything unethical here nor I am attaching ulterior motives to a darn-clear writing-on-the-wall business opportunity, all I am doing is trying to get to the heart of matter as to what will Cipla gain eventually through these investments..

Two theories that strike me right away are as follows;

i) TOOL FOR NEGOTIATION:  

The multiple niche stakes & thereby the 'possible' control on the licensing /sale of the pipeline candidates & technologies of the portfolio companies in the NCE, Biotechnology & Diagnostic space will potentially help Cipla negotiate/ barter generic deals with the big pharma companies whose drugs Cipla is/ will/ would aggressively pursue to market in the US & European markets

Will this fly...? despite the generous window of hit-miss offered by Saxena, this is an opportunity completely out in the ether & my guess is as good as Cipla's :-)

ii) EXIT PREPPING OF FOUNDER PROMOTERS: 

Before I am clobbered for suggesting India's most nationalistic  private pharmaceutical company would sell-out, let me remind that no one's above liquidity & no company is unattainable in this corporate game. Let's also remember that the new leadership of Cipla is, surprise, surprise.... of all places, from Novartis, the bĂȘte noire of Cipla in many a litigation?? - Let's also remember that the new leadership of Cipla in US & EU is Ex-Teva... the generic behemoth that can make big-ticket acquisitions every now and then (read: $6.5 billion Cephalon; $7.5 billion Barr et al..)

Will this fly...? Of course it'll - the lure is the access to a 1.24 billion strong Indian market.

Anymore theories?