Good evening everyone, such a pleasure to be back. The global backdrop as we know currently is actually quite noisy. Tariffs, supply chains, global growth, rupee, dollar, manufacturing; a lot is at play. So how is the world evolving, how will the world evolve, and what really could be the shape of India at a time when deglobalization seems to be an ugly throat? So today we'll talk about tariffs, how this could really have an impact on two global sectors: steel and pharma. Mr. Sanghvi, I know I am on your left side, but that's not the wrong side. But is India on the wrong side of what is happening to global tariffs, given that the Indian pharma sector gets more than 30% of its business from the United States alone? What would tariffs do to the Indian pharma sector?
So our view is that we have to wait for the issue to clear because the products that we supply to the US fulfill a very important requirement for the US government, which is to control the healthcare cost in the US. I mean, if you read some of the statements, then they're also looking at multiple carve-outs so that some of the products will be kept out of the scope of the tariff. I mean, we have to wait for PM to share with us what has been his understanding, but I believe that pharma generic products will be spared. Even if they are not, I think the generic business, as you are aware, has undergone significant price erosion over the last few years. So in case if tariffs are levied, I think most of those tariffs will be passed on to customers. So I'm not seeing a significant negative impact of the tariff on the industry because the competitive advantage that we have as a country is long-term; it's not going to go away overnight. And even if some manufacturing was to start in the pharma business, it takes at least 5 to 7 years to bring a new manufacturing facility online, get products approved, start manufacturing. So it's a long-term process. So I expect no immediate short-term impact of tariffs on the pharma industry.
So if I can pick from your initial answer, Mr. Sanghvi, can I say that the Indian pharma sector has nothing to worry? In fact, this actually would be an opportunity for the Indian pharma sector because tariffs are coming on China, they're not coming on India?
No, I think you're reading more than what I said. What I said is that our products fulfill a very important healthcare need in the US, so I expect this to be kept out of the scope of tariff. And even if they are not, I think most of the tariffs will be passed on to the consumer. But what impact it has on the business, very difficult to predict. But we fulfill an important role, and that gives me the confidence that in case if there is a negative, it will be minimum.
Mr. Jindal, that is not the story for the steel sector. For the steel sector, tariffs already have been announced, and we know how tariffs in a sense could impact steel demand. Is the Indian steel sector ready to deal with this new reality in global steel tariffs?
Good evening everyone. So many of you would be surprised to know that these tariffs from the US actually are just not now 25% — for many products they are more than 200%, and it's been like that for decades already. Now, Indian steel production... I'm sure all of you know that India is the second largest producer of steel in the world, and our capacity is more than double that of the USA, and our population is more than four times that of the USA. So we produce steel in India not for the USA; we primarily produce steel for domestic consumption. We are growing, we are a growing economy, we are growing at a very fast rate, much faster than the US or any other country. So our demand is mostly for domestic consumption. And this tariff, it may help us in fact. If they only put 25% and remove all the other duties — they have anti-dumping duty, they have countervailing duty, etc., which is more than 200% — if they removed all that and put only 25%, and that equates us with every other steel producer in the world, then maybe it may work to our benefit in fact.
But are Indian steel companies globally competitive? Because the view, at least in the stock markets and those who track the steel sector, is that China is better, Russia is cheaper. Indian steel...
Like I said, is now the second largest producer of steel in the world after China. We are very competitive. We have built our plants now, so we have very, very modern plants, and we are able to compete with everybody. There's hardly any protection that the Indian steel industry has. But obviously, with this, all the countries that were exporting to the US might start wanting to dump in India because we have a huge demand. So for that, the Indian steel industry would have to be protected from unfair exports happening into India. So for that, already we have, as the Indian Steel Association, we are already in talks. We have already filed applications, so DGTR they are already reviewing, and we hope that in the near future we are expecting the Commerce Ministry to put countervailing duty on all imports from every country.
I'll come to what India should do, but I'm sorry, safeguard duty? Safe guard duty, of course, of course. When do you see that coming? When do you see the duty coming? Because there is an indication, but we've been waiting for it for some time now.
Mr. Sanghvi, just to introduce Sun Pharma for the audience here and for millions of our viewers who would be watching this show: Sun Pharma is India's largest pharma company, Sun Pharma is India's largest pharma exporter, Sun Pharma has the largest market share in the branded market, Sun Pharma has the highest spend on R&D. Am I missing on anything?
It's good. We have the highest market cap in terms of... we believe that our performance should talk for us rather than us talking for the performance.
Indian pharma sector has really moved up the value chain from oral and generic then to complex, and now to specialized. Where do you see the Indian pharma sector moving, evolving, and expanding?
No, I think as you rightly say, Indian companies which were essentially inward-looking in the last 20 years have started focusing on international business, and we have done quite well. Almost let's say four or five tablets out of 10 consumed in the US are produced or linked with Indian API. So that's a remarkable achievement in a relatively short period of time. So what it to me reflects is that as an industry and as people working in the industry, we are able to do whatever that we wish to and focus on doing. Innovation I think is something that we've not done till now. As a company, Sun Pharma started investing in specialty products a few years back. We invested till now some 3 to 4 billion dollars in that business, and that business is now almost 20% of our turnover but growing very rapidly, and we will continue to make investment to make it bigger. Because globally, if I look at generics, they represent around 15% of the total business in terms of top line; 85% is still specialty products. So it is important for us to succeed in that business. We are very small there, but I think like when we started, we were a small company in an industry where many large companies we were competing. Our focus is that how do we use our smallness of size to become a competitive advantage: decide faster, take innovative solutions so that we can grow. So we focused on ophthalmology as well as dermatology, which are relatively small areas and not very attractive to very big pharma companies, so we can focus. Because for us, a $500 million global product is a big product; for them, a product less than a billion dollars is not economically viable. So we want to play in an area where we can compete with people who are similar to us, and we can find a way to grow. To your question as to how Indian companies will compete and become successful, I think I am very confident of the industry's ability to do whatever it is focused on doing. So I'm expecting that when, say like we have some close to 20 products in different stages of clinical development, all products developed in India, if some of them become globally successful, I think it will create a virtuous cycle and Indian companies will start investing larger sums of money in innovative products so that we can become a more meaningful player globally.
I like to share with the audience here that it has taken us almost 5 years to convince Mr. Sanghvi to come for an interaction, so I've got a lot of questions. I hope you're ready, sir.
So I will take the chance of taking the 5 years forward. Sure, sure, sure. We are in 2025. Hypothetically, if we are in 2030, what do you think we should be discussing about Sun Pharma?
