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'India is a Price-Sensitive Market': Andreas Barner, Boehringer Ingelheim

Andreas Barner, the chairman of the board of managing directors, Boehringer Ingelheim, tells Prince Mathews Thomas that it's important for the German pharma company to strengthen its presence in India

Published: May 31, 2014 06:25:40 AM IST
Updated: May 29, 2014 12:34:28 PM IST
'India is a Price-Sensitive Market': Andreas Barner, Boehringer Ingelheim
Image: Getty Images

Andreas Barner
Assistant professor at the Federal Institute of Technology; Ciba-Geigy AG; joined BI in 1992
Education: Medicine from University of Freiburg, Germany; Mathematics from Federal Institute of Technology, Zurich

Q. Where does India lie in BI’s global strategy?
The US, Japan and Germany are the biggest markets for BI [one of the 20 leading pharmaceutical companies in the world]. India is one of the emerging markets where we entered in 2003. Many MNCs have a stronger presence than us, but it is crucial for us to make our presence felt and to make sure that it is considered in our plans. Our philosophy and approach is to keep building the business and understand the market. We have about 500 employees there. Growth has been impressive but we have a low base.

Q. How different is the Indian market?

India is a price-sensitive market and we aware of that. When we look at marketing a product, we are looking for an India-friendly pricing. That is a conscious decision and we want to make sure that we are pricing products that are accessible to local patients. We have a large investment in R&D and that should be rewarded. But the ability to pay in India is not the same as in other markets.

Q. Last year was challenging for BI with net sales down to €14.065 billion from €16.691 billion in 2012. But the share of R&D expenditure has increased to 19.5 percent from 19 percent. How do you balance your expenses to make short-term and long-term goals meet?
[The] good thing is that BI is not publicly held. So we invest when we believe it is the best time to. We never bring R&D down to prop up our profitability. That is different from publicly-listed companies and it works well.

Image: Getty Images

Q. What is the owning family’s involvement in the company?
They are not in the organisational operations but are present on the supervisory board. The board devises a strategy and discusses it with the shareholders. There is a formal shareholders’ committee that meets four times a year.

Q. An investigation by the US Food and Drug Administration (FDA) led to the closure of a BI unit. What were the organisational changes made after that action?

BI strengthened the quality management structure in the operations division, formalised a culture improvement programme at all employee levels, defined and implemented preventive actions to address FDA findings, and added more than 250 specialists in the manufacturing and quality organisations. We have intensified staff training and collaboration with our own global network and external experts to identify and exchange best practices. Among other initiatives, the company has intensified internal and external auditing, started initiatives to ensure that learnings are transferred and implemented globally. The result has been that BI successfully underwent four FDA inspections since May 2013.

(The writer’s trip to Ingelheim am Rhein was sponsored by Boehringer Ingelheim)

(This story appears in the 13 June, 2014 issue of Forbes India. To visit our Archives, click here.)