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P.T. Jyothi Datta

Mumbai , Feb. 11

WITH outsourcing in the global pharmaceutical segment not facing the negative overtones witnessed in infotech, the Ahmedabad-based Dishman Pharmaceuticals & Chemicals Ltd is looking to strengthen its research and manufacturing facilities to support existing and future outsourcing agreements.

To fund plans in this direction, the company is entering the capital market through an IPO and given the necessary regulatory clearances, the issue is expected by early March, the Dishman's Managing Director, Mr J.R. Vyas, told Business Line.

Dishman is predominantly into manufacturing bulk actives and intermediates that go into the finished form of the drug and the proposed IPO is to fund an active pharmaceutical ingredients (API) plant and a dedicated research and development centre at its existing site in Bavla, Gujarat. "The post-2005 deadline is significant for drug companies in the formulations or finished drugs segment, since they would be targeting drugs going off patents. But being in the bulk drugs category, our strategy is to work with innovator companies and to continue to respect intellectual property," he said.

The proposed IPO is of 3,433,500 equity shares of Rs 10 each. The issue would constitute 25 per cent of the fully diluted post-issue paid up capital of the company and would be entirely through the book-building route.

Besides Bavla, the company has a manufacturing facility at Naroda in Ahmedabad. Mr Vyas said that a new facility was being put in place at Naroda too and this would be an export-oriented unit. The unit is expected to commence operations by the end of this calendar year, he added.

Meanwhile, Dishman already has a long-term contract with Solvay Pharmaceuticals B.V. of Netherlands, besides being in talks with a clutch of pharma majors for more outsourcing deals. "The Solvay supply contract is for a patented anti-hypertensive drug whose patent expires in 2013. Dishman is already supplying four molecules to Solvay," he said.

The company looks to end March 2004 with a sales of about Rs 160 crore and a profit after tax of 23 crore, he said. More than 85 per cent of its sales are from exports and the company has four subsidiaries: Dishman Europe Limited, Dishman US Inc, Dishman Holland B.V. and Dishman Africa, based in South Africa.

More Stories on : Outsourcing | IPOs | Pharmaceuticals

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