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We hope to expand margins by almost 15-20 per cent, once we shift manufacturing facility from Germany to India.

Since May 10 the Torrent Pharma stock has underperformed the index by nearly 21 per cent. In fact, even after June 12 from when the Sensex started moving up, this stock has corrected 7 per cent.

The Executive Director of Torrent Pharmaceuticals, Mr Sanjay Dalal, says that they are looking for acquisitions in Europe. He adds that they expect the margins to expand by 15-20 per cent once their manufacturing is shifted from Germany to India.

Mr Dalal expects global sales of Rs 1,300-Rs 1,400 crore and an EPS between Rs 8-9 for fiscal 2007.

Excerpts from CNBC-TV18's exclusive interview with Mr Dalal:

In terms of acquisitions, what are your plans? Which are the segments, the geographies that Torrent Pharma would value?

Last year, we acquired German company Heumann Pharma from Pfizer. We are right now busy with integrating the operations of the two companies.

Going forward, our acquisition landscape includes some of the European countries such as Spain, Portugal, France and Italy.

Which business of therapeutics would you like to focus on because cardio vascular is still your biggest contributor, but you have diabetics, pain management and anti-infectives? Is there a business model that you are honing in on?

It would be dependent on the market that we are looking at. For example, for branded markets our focus essentially would be on therapeutics segments of the central nervous system and cardio vascular and oral anti-diabetics.

We are very strong in those areas and have a strong product pipeline available for those areas. But in markets where we are looking at pure generics, there would not be any therapeutic focus.

The Street is expecting your margins to improve in the light of manufacturing facilities of this new acquisition in Germany shifting to India. How much of an increment in margins do you see?

Essentially because of the high cost of manufacturing, the gross margins are pretty low in Germany. As we move the manufacturing to our Indian operations here, we hope to eventually expand margins by almost 15-20 per cent there.

What about the number of Abbreviated New Drug Application (ANDA) filings that Torrent Pharma has made and the numbers that you expect to be able to launch in FY07?

A: We have made about four submissions and hope to make another four to six submissions this year. On an average, the way we are building up our development pipeline, we hope to churn out about six to eight filings every year.

What is your outlook in terms of turnover for this fiscal?

For FY07, we hope to do about Rs 1,300-Rs 1,400 crore of global sales. That includes the acquired company's sales, which we did last year.

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