The Hindu Business Line : Hikal realigns pharma strategy

Hikal is "re-aligning" its strategy for the pharmaceutical segment. It will focus more on contract-manufacturing products for innovator companies, instead of focusing on generic drug-makers. Uncertainty in the generic or `me-too' drugs business, along with Hikal's `Gabapentin experience' has forced this change in tack, according to company top-brass. There is a lot of uncertainty in the generics space, said Mr Jai Hiremath, Hikal's Vice-Chairman and Managing Director, referring to the drastic price-erosion that takes place on drugs that go off patent.

He singled out Hikal's experience with epilepsy drug Gabapentin. Hikal contract-manufactures the bulk-drug for a multinational company. Besides landing in some litigation, a host of other generic drug companies also jumped onto the Gabapentin band-wagon.

"Prices (on gabapentin) started coming down. This will affect the bottom-line," he told Business Line, unwilling to get into specifics. He indicated that Hikal would look to work less with generic companies and more with innovator companies, a"less crowded" segment with stable revenue.

Hikal was hedging its strategy said Mr Navin Singh, Hikal's Chief Financial Officer, so that there would be cross-product profit generation.

Mr Hiremath also said the company was not reducing its presence in agro-chem. "The focus is equal (on agro-chem and pharma). Competition is less in agro-chem," he added. The company is also looking at niche veterinary products, and expects to contract-supply one such new veterinary drug in the fourth quarter of this year, he said.

Hikal clocked a turnover of Rs 241 crore, of which Rs 147 crore was from crop-protection and agro-chem; pharma contributedabout Rs 84 crore, Mr Singh said.

Hikal expects to begin pilot operations of its agro-chem plant in Taloja in August. Full-scale multi-purpose production is expected in 2008. Its bulk-drug plant in Bangalore is slated to be operational by end-2007. Both plants were set up at about Rs 50 crore. The first phase of its research centre in Pune would be ready in mid-2007 at a cost of Rs 30 crore. The entire project is estimated to be about Rs 60 crore, Mr Singh said.

Hikal expects its present alliances with pharmaceutical and agro-chemical companies to fructify in 2007-2008 and add Rs 100 crore to its turnover, according to senior officials with the company. No details were divulged on the contracts.

More Stories on : Outlook | Pharmaceuticals

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page