Why the next decade in healthcare is India’s decade

India has emerged as a leader in the global pharmaceutical industry and the time has come for it to leverage its talent pool and cost advantages across the wider healthcare spectrum—say Pankaj Patel and Dr. Sharvil Patel while reflecting on their journey in scaling Zydus Lifesciences from an India-based generics player to a global leader in the healthcare sector with a presence in pharmaceuticals, consumer wellness, and hospitals.

Speaking with McKinsey’s Asia Chairman Gautam Kumra, the father-son duo discuss their vision for Zydus’ future, lessons learned from leading through the COVID-19 pandemic, and how businesses can build resilience in a rapidly changing world.

This interview has been edited for clarity and length.

India’s potential—in healthcare and beyond

McKinsey: How do you see the potential for Indian companies in the 21st century?

Pankaj Patel, Zydus Lifesciences: India will grow at a nominal growth rate of more than 10 percent over the next decade or more and is going to be able to offer products at scale with better productivity. That opens up a huge opportunity not only for the domestic market but also for global companies. In addition, India is a talent pool. There is a large number of educated, talented, and aspiring young people in India, and I believe that is going to be its biggest strength going forward. Further, government policies during and after COVID-19 were structured to support the manufacturing industry, grow the market in India, and encourage people to invest in the country. All of these factors create a big opportunity for India to become a world leader.

Looking at the pharmaceutical industry, we are known as the pharmacy of the world. During COVID-19, we supplied medicines to almost 160 countries. That has created huge goodwill toward India. I believe India’s capability and reliability are what is going to take the country forward and why the next decade is India’s.

McKinsey: Looking at the pharma industry, what are some of the trends and changes you see in the market globally that present specific opportunities for Indian companies?

Pankaj Patel: Medical science is moving toward a more biological-oriented model. There are more drugs coming into the market—such as gene therapy, cell therapy, and CAR T therapy—that target specific or very rare diseases. These newer sciences are available globally, but at their price point, they have a limited market. Given that challenge, what happens with the rest of the world? This is where I see greater opportunity for Indian pharma companies. I believe that some of these therapies can be offered at a significantly lower cost using Indian talent, manufacturing capabilities, and equipment.

The other area is medical devices. Healthcare is growing globally, and countries need medical equipment and devices. Currently, most of the equipment is produced in the West and is expensive, so many countries can’t afford it. India has done well with pharmaceutical production, and the time has come for it to do similarly with medical devices. This is another big opportunity for the country’s healthcare sector.

India also has a large number of beds available in hospitals, some of which are comparatively the best in the world in terms of doctors. There could be a huge opportunity for medical tourism here.

McKinsey: A thread that runs across medical therapies, devices, and tourism is innovation. I don’t think India has cracked that yet. What’s your instinct?

Pankaj Patel: An ecosystem for innovation is very important, and incentivization is vital here, as it would trigger innovation in a much bigger way. Also, some of the country’s institutes have now moved into much more of an innovation phase. And with start-up support being offered, younger people are coming in to start small enterprises, and these are going to be the bigger enterprises of the future. In 1952, when my father started the company, he innovated the first product and marketed it, but it didn’t have the reach to go to the world.

From that perspective, India always has done research, but it was more incremental. To get from incremental to fundamental research, we need a much larger research canvas. This is starting to happen. Our company focuses a great deal on innovation, and we are going to make sure that not only us but other Indian companies arrive in the world with innovative brands.

Leading through uncertainty

McKinsey: What has it been like for you to take charge from your father, and what have you learned in the last couple of years?

Dr. Sharvil Patel, Zydus Lifesciences: I have luckily, and largely due to my father, had a very good introduction into the organization. I think the reason for that is that, while we have a promoter-driven [founder-driven] culture, we have always been a very professionally managed organization. From when I first learned about our companies, I have always known that we built people to build our business, and that has stayed true. It is remarkable how we have been able to nurture the talent we have. What we are trying to do now is to see how we can get to the next level and how we are going to start thinking differently.

McKinsey: When you look to the future, what’s your vision for Zydus?

Dr. Sharvil Patel: What we have created well in the pharma industry is access and affordability. We have a significant volume share in the generics space. The next level of challenge is around the new technologies across biotechnology (mammalian-cell-culture-based products or monoclonal antibodies) and in vaccines; this is where access and affordability will again become important. India has already created inroads with regard to access to vaccines and HIV medicines, as well as biologics that are going to be used to treat the future diseases of the world. It is important to consider how we maintain being cost-competitive and innovative to ensure we create access to these medications.

The initial part of this vision is to make sure we run our organization well with a specific pillar of growth—accessibility and affordability. We always need to offer the best quality and affordable pricing and to create differentiation. We try to be the first in creating something new and in offering medications that are not easily accessible. We also want to be innovative around rare or tropical diseases. I believe we will be successful in developing all of these over the next five to eight years, bringing them to both developed and developing countries.

McKinsey: There are many issues facing the world currently—geopolitics, inflation, recession, energy concerns for the future, and AI and technology. How does a business build capabilities and get up to speed?

Dr. Sharvil Patel: All of these are happening very fast, faster than we anticipated. If you don’t have the agility and speed to react to these disruptions, you won’t survive in today’s world. The pace of change is tremendous right now in the industry. For example, drug discovery traditionally took ten to 12 years; we are now talking about three to five years. However, it’s not just about being successful in discovering something, but also about becoming commercially successful in a short period of time.

With regard to AI, it’s early for us to understand the concept and the vastness of what generative AI can do, but it is something we must learn because research in the future may happen in this way.

McKinsey: You led the company through the COVID-19 pandemic. What did you learn from navigating through it, and have you been able to sustain the new capabilities and cultural changes you built?

Dr. Sharvil Patel: What made all of us proud was the sheer resilience and commitment of our people—not just at leadership level but at every plant and operator level and in the field. In the worst of times, we had to remain open in terms of manufacturing to make products available, not only for India but around the world. India owns about 40 percent of world production, so to have facilities running and be able to supply products globally showed people’s incredible commitment and resilience.

Another issue was around how we used new communication methods, infrastructure capabilities, and digitization to be able to work more seamlessly. There was a big jump in the adoption of these capabilities, and this has become a way of life, allowing us to operate more effectively.

The last great learning for us was to take risks in difficult times. We took a big risk in producing large amounts of drugs to create access; we took a big risk on vaccines, and while we didn’t commercially succeed, we are very proud of the scientific innovation.

Lessons in CEO excellence

McKinsey: I would like to ask both of you about your personal leadership. What are two or three biggest lessons on leading a company as a CEO?

Pankaj Patel: First, to become successful, you need a team. I always believe that whatever your dream as CEO might be, your leadership should agree to it, and then everybody in the organization knows about it so there is a collective force to make the dream happen.

Second, whatever you decide, you should be consistent. There are going to be challenges, you are going to see ups and downs, but if you are able to absorb those shocks and continue to work as usual, then success will come.

McKinsey: Dr. Sharvil, what have you found to be the most difficult and challenging aspects of being a new CEO?

Dr. Sharvil Patel: First, the unpredictability in business today is an issue. How you manage risk to ensure you have a balanced portfolio and products is a challenge. You need to address the business core but diversify enough to make sure that you can be resilient in difficult times.

Second, as a company, we have a strong belief in creating our own infrastructure. One option is to outsource, which is sometimes easier. However, I think that for the future of Zydus, we need our own infrastructure to be capable and cost-conscious. If we had not had the infrastructure during the COVID-19 pandemic, we wouldn’t have been able to do much good—whether it was making so many vials or ensuring that we would be able to bring a recombinant vaccine to market. This would have never happened if we had been an outsourcing-driven company.

That said, partnerships are also important, as you can’t do everything on your own. Both globally and in India, you need to forge partnerships, whether with educational institutions, competitors, or research institutes.

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