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

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

by Prince Mathews Thomas | May 31, 2014

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

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.

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)


About bambooinnovator
Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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