The Hindu Business Line : Unichem plans to buy herbal business

IN a couple of months, Unichem Laboratories will decide whether to pick up an existing bulk drugs production facility, or go in for a new plant, according to Dr P.A. Mody, Chairman and Managing Director (CMD) of the company.

The mid-size pharma company also has on its radar the acquisition of a herbal business to insulate itself from the consequences of a product patent regime, he added.

"Our requirement for Active Pharmaceutical Ingredients (API) has gone up and we will decide on whether to set up a plant on our own or pick up feeder-units and upgrade it," he said, speaking to Business Line after the company's board meet on Thursday.

The company posted total sales of Rs 105.70 crore for the three-month period ended December 31, 2004.

This was up 12 per cent from the sales posted in the corresponding quarter last year.

The company posted a net profit of Rs 9.30 crore for the same period, up 9 per cent from the net profit in the corresponding third quarter last year.

Dr Mody credited the growth in profits to a 40-per-cent growth in exports. "We have been working on formulations (or finished forms of medicine) for the international market. And this has been growing every quarter," he said. The profit has grown by 9 per cent and this is despite the recall of Unichem's version of painkiller medicine rofecoxib, a Rs 2.5-crore brand for the company.

Merck, the original patent holder of rofecoxib, withdrew its drug (Vioxx) globally following reports of heart-related side-effects. Subsequently, generic companies making similar versions of the drug had to follow suit and Unichem was one of them.

Further, Dr Mody said that the company was scouting around to acquire a Rs 50-crore to Rs 100-crore business, to stave-off the effects of a product patent regime, when generic drug companies will not be able to make chemically-similar or copy-cat drugs. Starting this month, India has adopted the product patent regime.

On how the company expected to finance these initiatives, he said, that the company would look at broadening its equity base at an appropriate time.

At present, the situation is unclear in the market, as a result of the Government's directive on levying excise based on the Maximum Retail Price (MRP), besides the announcement of value added tax, he added.

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