As an essential service, pharmaceuticals may have been one of the sectors allowed to continue production during India’s strict COVID-19 lockdown, but that doesn’t mean 2020 has been an easy year. "It’s been challenging," admits one of the industry’s foremost figures, Dilip Surana.
"Although we have been able to continue our production during the lockdown, there have been a lot of issues to sort out, especially in terms of manufacturing and attendance, and logistics surrounding transportation and distribution," explains the Chairman and Managing Director of Bangalore-based pharmaceutical formulations and active pharmaceutical ingredients (API) manufacturer and distributor Micro Labs.
Given all the limitations in place, it’s not surprising that production has fallen to half the normal output. However, the priority has been to keep the production line operational, irrespective of the logistical challenges, price increases and transportation obstacles that have been encountered.
"Our whole objective has been to ensure that there is a free supply of medicines so that patients are not inconvenienced at any point in time, and that the right product is available at their doorstep," Dilip says.
In the years since Micro Labs was established in Chennai in 1973 by Dilip’s late father, GC Surana, the company has grown into one of India’s leading healthcare organisations. Core areas of expertise include cardiology, diabetology, ophthalmology, dermatology, pain management, antibiotics, neurology and veterinary.
Its pharmaceutical range includes oral solids, oral liquids, topical ointments and injectables. Despite all it has achieved, the company and its executives remain loyal to the founding principle: the provision of quality healthcare solutions at affordable costs.
Our whole objective has been to ensure that there is a free supply of medicines so that patients are not inconvenienced at any point in time, and that the right product is available at their doorstep.
Dilip became responsible for operations in 1983 and is joined on the management team by his brother Anand Surana, who is Director. Today, its footprint has expanded across India to include 14 state-of-the-art manufacturing facilities and three research and development centres that employ more than 300 dedicated scientists.
A sales team of 5,000-plus medical representatives reaches more than 250,000 doctors and 180,000 pharmacies around the country.
Since its first export batch of pharmaceuticals to Sri Lanka in 1993, its presence has also grown on a global scale. Currently, Micro Labs is present in more than 50 countries and has wholly owned subsidiaries in the following countries: the US (Micro Labs USA); the UK (Brown & Burk UK); Germany (Micro Labs); Australia (Micro Labs); and Nigeria (Micro Nova Pharmaceuticals Ind).
Its manufacturing sites are approved by international bodies including the US Food and Drug Administration, the UK Medicines and Healthcare products Regulatory Agency, Australia’s Therapeutic Goods Administration, and New Zealand Medsafe.
Enlarging the footprint
When The CEO Magazine first spoke to Dilip in 2016, the executive predicted sustained growth in both the export and domestic markets, especially in light of India’s rapidly improving healthcare system and growing population. Four years later, and accounting for more than 50% of its revenue, India still continues to be his focus.
"We will continue to grow domestically and many of our investments will continue to be in the Indian market," he says. "In the medium-term, we have a strong field force and our focus would be to increase their productivity in order to increase our share of the Indian market."
But that doesn’t mean he plans to turn his back on the opportunities he has spotted for the business on a global level. The RoW, or Rest of World, markets are a particular area of interest.
"Here, we have a similar type of sales model to India. We have done a lot of homework in terms of registration and R&D, and are gradually increasing our team in the field," he says.
There’s always room to grow in the countries where Micro Labs already has a strong presence as well, such as the US and Europe (including the UK, Germany, France and Scandinavia). In terms of manufacturing – one of its core areas – Dilip hints at future expansion plans for its plants.
"In the next four to five years, I expect our capital expenditure on this side of the business to be to the tune of more than INR1,000 crore [US$135 million]," he explains. Of its 14 plants, some have specific geographical focuses.
"Our Goa plant is dedicated to regulated markets like the US, Europe, Canada, New Zealand and Australia, whereas our Sikkim plant is just for the domestic market." Some are mixed-use, such as its seven plants in Bangalore where the operational scope covers both regulated and domestic markets.
"We are also keeping ourselves busy on the manufacturing side with upgrades and adopting new technologies," Dilip continues. "There was a time when you used to take delivery of a machine and then you wouldn’t look at it for the next 20 or 30 years. Today, technology is moving at such a rapid pace that you end up changing your instruments every few years."
This is something he says the company is embracing in terms of quality and automation. For Dilip, one of the keys to the company’s success is that, rather than doing everything, Micro Labs concentrates on doing what it does well right.
And in this case, those business segments happen to be formulations and APIs. But another important part of the equation is a determination to keep as much as possible in-house, from the development of its own APIs and formulations all the way through to its marketing operations.
"Reliance on outsiders, on third parties, can sometimes put you in an embarrassing position," Dilip says. "We are focused on trying to keep as much as possible within our control as we know that if you’re not present across the total chain, then you can’t compete."
Micro Labs: A Timeline
1973: Founded in Madras (now Chennai) by GC Surana to manufacture ethical pharmaceutical preparations.
1982: In response to increasing demand for its pharmaceutical products, the company establishes a second manufacturing facility in Hosur, Tamil Nadu.
1993: The company’s first foray into the export market: to Sri Lanka.
2000: The new millennium was celebrated with the purchase of a non-functioning manufacturing unit in Kumbalgodu Industrial Area in Bangalore. Now the site produces sustained-release medicines.
2004: Inauguration of an automated plant dedicated to the production of penicillin-based products at the Bommasandra Industrial Area, also in Bangalore.
The same year is marked by another new facility, a formulations plant in Goa for export markets and approved by the US FDA.
2006: The company opens a state-of-the-art ophthalmic plant. It is the first of its kind in Asia, leading to a collaboration with Bausch + Lomb.
2011: Micro Labs US is incorporated.
2012: First product is launched in Europe.
2013: First product is launched in the US.
2017: Became the majority stakeholder in RA Chem Pharma.
At the core of this philosophy are three R&D centres located in Bangalore and Mumbai with a commitment to developing generic bioequivalents. Dilip explains that the company’s team of scientists, pharmacists, analysts, chemists and microbiologists have the next five years mapped out in terms of product and analytical development.
"We’re not depending on the outside for our APIs anymore," he says, adding that already a lot of molecules have been developed. "Now we are ready to ensure their commercial production." Expiring patents are another segment that Dilip says will keep the Micro Labs R&D team busy.
"Now is a time when you will find a lot of products where the patents are expiring in India, especially in cardiology and diabetology – two areas where we are traditionally strong. There is great opportunity for us here," he affirms.
More with less
There’s much to occupy Dilip on the business front for the next five years. However, one of the larger questions he is currently contemplating is how to improve efficiencies while reducing costs.
"We’ve created various teams internally to brainstorm ways to lower our overheads," he says. So far, certain avenues have been identified. "One way is our field force. By increasing their productivity, our overall costs as a percentage come down," he says. Opportunities on the manufacturing side have also been studied.
We are looking at how we can optimise our operations, embrace technology and increase automation.
"We are looking at how we can optimise our operations, embrace technology and increase automation, especially in domains that involve a lot of manpower." While his goal may be to do more with less, there are particular traits of the business that Dilip won’t allow to be sacrificed: quality and a sense of ethics in all of the company’s dealings.
"For us, it’s about getting things right the first time rather than just doing something for the sake of it and then redoing it," he says. A very clear message has been sent to all its plants to inform the staff to never compromise on quality.
"If mistakes do happen, however, they need to be open. We don’t want them to have any fear or feel the need to cover up anything." This openness and honesty can be found across the workplace.
"It’s been very important to create a culture where, even if someone has made an error, they know they will not be reprimanded and that they have the opportunity to fix it. It’s a system where people own up to the mistakes, take corrective steps and move on," he explains.
Enduring supplier relations
The concept of more with less is one that also extends to supplier relationships, according to Dilip. "We are working with various suppliers to increase productivity and reduce costs and handling, especially when it comes to the manual handling of material," he explains, giving one product – paracetamol – as an example.
"Before we used to receive 50-kilogram bags that would have to be opened and dispensed. Now, it is delivered in a crate, as a batch, and it gets completely dispensed as such."
As demand for Micro Labs’ paracetamol products has risen (its paracetamol brand Dolo 650 is the most prescribed brand in the country, Dilip states), the company has been able to increase its production thanks to firmly established supplier relationships.
"At one time, we produced a very small quantity of tablets, but our batch size has increased 25-fold," he says. "The only way we have been able to achieve this is with the help of one of our machine suppliers in creating higher capacities."
Many of the business lessons Dilip’s late father taught his sons are still applied today, particularly with regards to the continuity of supplier relationships. "One simple philosophy my father had was to choose the best supplier and remain loyal to them throughout. He would never change supplier," he says.
"That has helped in ensuring consistency of quality." From an end-user viewpoint, it means that a patient will never see a change in the taste or quality of a particular medicine. Another strategy the company employs is to work with people who are "a master of one trade rather than a Jack of all", Dilip explains.
"When you work with a business whose expertise lies in a particular ingredient or product, they are often large companies and are able to invest a lot of money into R&D, and we stand to reap the benefit of that."
At Micro Labs, community health is as important as individual health. Its diverse and busy CSR program includes educational initiatives such as scholarship opportunities for underprivileged students, patient support activities including the sponsorship and construction of a diabetic care centre at Vasanth Nagar and JP Nagar, Bangalore, and operation of the Sri GC Surana eye care project Drushti at Bangalore, social welfare programs such as the contribution to hospital and nursing home infrastructure, and more specific projects such as a disaster relief fund for flood rehabilitation in Karnataka.
In the current environment – and the exceptional circumstances brought on by the COVID-19 pandemic – the importance of firmly established supplier relationships comes into sharp relief.
"The cost of many of the active ingredients has shot up and there are shortages," Dilip says. But the company knows it has the support of its longstanding suppliers. "We are assured of availability. We are assured of better pricing. We are assured of consistent quality. These are three benefits that we see from remaining loyal to our strategic partners," he adds.
Consequences of COVID-19
After what Dilip describes as "panic buying" as the scale of the pandemic dawned on people, because they were concerned about shortages and started stocking two to three months’ worth of medicines, especially in cardiology, diabetology and CNS drugs, he does foresee a short-term slump will hit the pharmaceutical industry, especially with the closure of many hospitals and private clinics during India’s lockdown.
"Patients have also been scared of going to hospitals, as they might contract the virus," he says. Like the rest of the world, much of what are considered non-critical cases, particularly in the fields of dermatology and ophthalmology, have been being postponed.
"This, especially leading into the peak months of June to October for the industry, will lead to a market dip," Dilip says. Many measures have been implemented to ensure business continuity, despite the obstacles the company is facing.
Its force of pan-India sales representatives initially used lockdown as an opportunity to focus on improving their personal and professional skills. It was also a chance to think about the business beyond their usual medical client list and undertake tasks such as retail mapping.
The lockdown also served as a chance for the sales force to catch up on parts of the job that are often overlooked. "It’s normal that when you’re always running after sales for the training aspect to be compromised," Dilip shares.
"Therefore, now is a good time to train our team, to sharpen their skills on particular products." With much of the Micro Labs workforce, outside of the plant employees, confined to working from home, everyone has been focused on training, from senior management down.
Face-to-face visits with its client base of medical professionals may not have been possible during India’s lockdown, but it has remained essential to keep the lines of communication open. "Our field force has been asked to contact doctors by telephone or WhatsApp," Dilip says.
"We don’t want to unnecessarily disturb doctors as we appreciate the pressure they are under. We do want to be in touch with them, however, to see how we can be of use to them during this difficult period."
It has also been crucial to maintain contact with Micro Labs’ network of retailers and stockists, to ensure the supply of product remains constant. Dilip and his colleagues have also used this time to move the company’s professional development program for doctors and other medical professionals online.
We have also played a big role in india becoming a major force in global pharmaceutical brands, with operations in more than 50 countries and world-class facilities with many international accreditations.
"We have been conducting a lot of educational webinars with guest speakers," he says. Of course, on the manufacturing side, the business has been able to maintain operations.
"It’s our moral duty to ensure that production continues so that the supply chain isn’t disturbed," Dilip says. Employees in the manufacturing plants have all been asked to continue to be present, although due to both health concerns and logistical challenges, duty attendance was around 50% at the time of the interview.
"It’s going alright," he reflects honestly. "We have no supply issue and, at half attendance, we’re able to maintain social distancing. It’s also easier to manage the required safety procedures. If we had 100% attendance, it would be more of a challenge for us."
Even with a reduced workforce present in its manufacturing plants, the company has introduced many policies in response to the pandemic. "We asked workers to come in on alternate days so that we don’t crowd around too much in the plants," Dilip says.
Jointly, Dilip and Anand made their first appearance on Forbes India’s 2014 India Rich List, coming in at position number 73 with a combined wealth of US$1.3 billion.
"We have implemented a lot of safety systems and precautions, including sanitation tunnels, and people are forbidden to move between departments. No-one mixes at the moment." But Dilip, a much-lauded executive in pharma, knows his industry is robust.
"Pharma is a regular industry, one that doesn’t see too many ups and downs," he says, adding that he doesn’t think it will take too long for the sector to rebound from the disruption of COVID-19.
"The coming months are going to be challenging. But after that, things will again look great for the sector because everyone is going to start to focus on what has been pending during this time."
Leader of the pack
Dilip has "led from the front" during the health crisis. "I have been fully compliant with the government regulations. I accepted the challenges like a resilient warrior, steering the core team with a focused approach," he says.
"My working during the crisis was 100% and I assured complete safety for all our staff. Our offices have fortified uncompromising safety measures for all, including our field force, by initially switching to remote working and also initiating digital ways of keeping in contact. We have restarted working in the field whenever possible, keeping in line with government regulations."
Such demonstrations of strong leadership are nothing new for Dilip. Throughout his career, he has received numerous accolades in recognition of it: three of the more recent awards to be added to his trophy cabinet are CEO of the Year 2016 – World CSR Day, National CSR Leadership Congress & Awards; Asia’s Most Admired Leaders 2016 – URS Media and AsiaOne Magazine; and Responsible Business Leader 2019 – Responsible Business Leaders in Mumbai. Dilip describes himself as a people-oriented leader.
"I focus on creating overall success and aspire to build lasting relationships with employees. I am very hands-on in all operational details," he reveals, adding that discipline has been a hallmark of both his professional and personal life.
If he had to nominate a defining moment in his career, Dilip says he would go back to a point at its very beginning. "During my college days, I would absorb the nuances of management by observing my father and doing things by trial and error," he says.
As he evolved in the business, so did his leadership style, under the watchful guidance of his father. "This has had an immense influence on me. Uncompromised quality, right from the plant layout to the manufacturing systems, people orientation, keeping eyes and ears open on new opportunities, and introducing the latest molecules in the country are the major lessons from those early days in the business with my father."
But the schooling didn’t end there. "He taught me to work passionately and tirelessly, and encouraged me to know every detail of the business by learning end-to-end operations from the grassroots level," Dilip says.
"Most importantly, he has etched the fact that people are our real assets." Now that Micro Labs is no longer the small startup enterprise it once was, but rather a leading Indian corporation, Dilip’s vision has expanded and he strives to communicate a message to his people to "think big and do big".
In a role with no shortage of memorable moments, it’s clear that those which have affirmed the company’s pioneer status in India are the ones Dilip holds dearest.
"I am proud of the fact that we were the first one in the country to bring in a specialty division concept in the industry, which was something that subsequently became the norm," he says.
"I also guided my team to build many formidable brands." Along with its bestselling Dolo 650 paracetamol and a household name, he adds, some of the most respected brands in the country are produced by Micro Labs, such as Amlong, Tenepride, Vildapride, Bactoclav, Caripill, Dolopar, Lubrex and Esofag.
"We have also played a big role in India becoming a major force in global pharmaceutical brands, with operations in more than 50 countries and world-class facilities with many international accreditations," Dilip says.
For an individual who still incorporates so much of his father’s teachings into his leadership, how would he like to be remembered when the time comes to finish his career? "I need to be remembered as a man of words, an obedient son and a popular leader for all employees," Dilip reflects. "Discipline and work–life balance are my core strengths."
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