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Gaurav Raghuvanshi

Bavla (Gujarat) , March 10

CONTRACT drugs manufacturer Dishman Pharmaceuticals and Chemicals Ltd is investing Rs 100 crore for expanding its production capacity and setting up a research and development (R&D) lab at its Bavla facility in Gujarat.

"We are setting up a new API (Active Pharmaceutical Ingredient) plant that would have six product lines. In addition, we are about to commission a new R&D establishment at a cost of Rs 20 crore. The new plant would cost Rs 50 crore and would go on stream by the last quarter of 2005-06," the Dishman Managing Director, Mr J. R. Vyas, told Business Line.

The R&D lab would be ready by May this year. The company recently commissioned a new export-oriented unit at its Naroda plant on the outskirts of Ahmedabad.

The R&D lab would have a Rs 10-crore pilot manufacturing capability that would enable Dishman to produce small batches of drugs that could see a commercial launch by their innovators at a later stage.

"We already have about 150 research projects on our hands. We understand that very few molecules ultimately see a commercial launch but we see this as a major opportunity in the future. The innovator would normally trust the same company for commercial production where the pilot batch was produced," Mr Vyas said.

At present, the company manufactures APIs for three international pharmaceutical companies, including a hypertensive drug for European pharma giant Solvay. It has signed up with one European and another US-based company for long-term manufacturing contracts. Secrecy clauses in the agreements, however, do not permit Dishman to share the names of its clients.

"We are in an advanced stage of negotiations with several other international companies. By the time the new unit goes on stream next financial year, we would have long-term manufacturing contracts with at least eight pharma companies," he said.

In addition, the company is trying to tap the lucrative cosmetics and nutraceutical sectors, Mr Vyas said, adding that Dishman would stick to contract manufacturing and did not have any plans to enter into any product segment with its own brand.

"Our Bavla plant follows the stringent CGMP (Current Good Manufacturing Practices) norms laid down by the US and European markets. Not only do we offer a value proposition to our clients, but we have also built a reputation for protecting their intellectual property rights and delivering quality," he said.

Dishman normally tries to work with the original innovators, even for drugs that are out of patent protection, Mr Vyas said.

"That saves us from any legal wrangles because even after a drug goes out of patent protection, the original innovator tries every trick in the book to retain control. In addition, the innovator already has a name in the market and can continue to be the most dominant player by cutting costs. That is where we come in because we offer lower costs and the latest manufacturing technology."

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