The Hindu Business Line : Aurobindo Pharma on course to emerge global generic major

Hyderabad March 9 With a long pipeline of products approved for the lucrative regulated markets, a large manufacturing capacity that is USFDA compliant and a solid research and development workforce giving the needed future direction, Aurobindo Pharma Ltd (APL) is confident to emerge as a fully integrated global pharma major soon.

The Rs 1,472-crore turnover company has invested up to $337 million in creating infrastructure, built a portfolio of 180 APIs (Active Pharmaceutical Ingredients) and 250 formulations and adopted a strategy of acquiring companies in Europe that would give greater access to markets.

Easily among the top 5 Indian pharma majors, APL today boasts of building strong foundation in all the four important links in the pharma business — intermediates, APIs, formulation and generics. It is moving well in the fifth space of trade as well, says Mr Lanka Srinivas, Director and one of the key persons behind the rapid growth of the company post 2000.

A pharma industry strongman, Mr Srinivas, answered a variety of questions from Business Line on the company and the pharma industry in a freewheeling interview. Excerpts:

Your most recent strategy seems to be aggressive filing of Abbreviated New Drug Applications (ANDAs) and Drug Master Files (DMF) in key global markets, especially Europe, the US and Africa. How does it help you in terms of growth?

Yes, we are betting big on this strategy. More product approvals mean more revenues for the company. For example, with 8-10 product approvals in Europe, we did $125 million sales in 18 months. If we get 200 product approvals, it will signal a huge jump.

In the US, we have 38 approvals from the US Food and Drug Administration, of which 21 are final and should hit the market by the end of this quarter. We see product approvals as our building blocks.

Our robust pipeline includes over 1,732 DMFs/ANDAs/formulation dossiers across the globe. In US alone, we have 105 DMFs and 77 ANDAs . Similarly, in Europe, we have 225 DMFs and 127 ANDAs filed. The company has built the capability to not just file rapidly, but once approval is obtained to bring to the market in 45-60 days, which has proved to be a competitive edge.

We started commercial operations in the US in 2005. During 2006-07 expect $35 million revenues. Next year will add 30 new products, which should shoot up our sales. With IP and products in pipeline, the US and Europe are very promising. We are also a leader in the anti-retroviral (ARV) space and have a chest of products that should bring rich dividends given the global emphasis on fighting AIDS.

What was the idea behind your bold approach to acquire two companies in Europe in 2006. Are more buyouts in the offing?

We have two objectives in Europe— first is to market our large APIs and second to sell dossiers and expand our presence throughout Europe. Although Europe is a single continent, every country has its own regulatory climate and presents different issues and challenges. For example in the UK there is lot of scope for generics, while in Germany the domestic realities are totally different. It takes 1-2 years for incorporating, 2-3 years for product approvals.

In this background, we decided to build marketing platforms, which will give us the required advantages. Milpharm Ltd, UK, which we acquired in February 2006, has been integrated and is growing well. It has brought savings on our R&D budget.

The Netherlands company Pharmacin, which we bought for 6 million euros has an impressive product registrations and R&D. We want to build the strengths of these two companies. This fiscal, we should be doing at least 9 million euros. Many Indian drug majors might not require or find such companies attractive, but they fit well into our strategy. If we get the right price, we will buy more and we are on the look out with the intention of maximising our market reach in the growing European markets.

While you presented this bold step of acquiring foreign companies there were reports indicating that, your company was likely to be the target of big MNCs like Teva and Novartis. What is the status?

There is absolutely no truth in such speculation. Our company is on a major growth path and we want to consolidate and emerge a global player in the near term. We have built a strong global presence in six major areas like antibiotics, ARVs, CVS/statins/diabetology; CNS, gastro, anti-fungal/allergy/ respiratory.

You have recently acquired Senor Organics based in Hyderabad. How does it help your scheme of things?

It is a small profit making company, with a USFDA approved manufacturing unit for drug intermediates. Also it is located close to one of our own units. Therefore, it is easy to integrate it and boost our intermediate capacity, which in turn will help meet the increasing demands from Africa. We expect to complete the merger by the end of March.

With the importance on patents, R&D and discovery research for drug companies to be long-term players in the post-WTO era, how is Aurobindo shaping up?

We have nearly 670 scientists, technical staff at our R&D Centre in Hyderabad. It is focussed on generics and our investments are anything between $43-50 million in the overall research, gram to pilot scale manufacturing activity per year.

I can confidently state that Aurobindo is perhaps the first non-US company to do well in a short term in this area. For example, we have filed 225 patents, have the largest number of ANDAs filed in US, largest manufacturing capacity approved by FDA.

In India, we have filed 106 DMFs, which should make us the highest, even more than Teva, which was number one at the end of September 2006 with 93 DMFs. In the US and India, we have filed 84 ANDAs in just two years. All this is backed by a strong R&D team and unlimited fund support.

Some sections of drug industry think that India has built large capacity for manufacturing, some of which is languishing? What is your view on manufacturing capability and market advantage that India has?

No, I feel we still have inadequate manufacturing facility in the country. We, specially require high capacity, high quality manufacturing that is suitable for the regulated markets. With more global markets opening up there is scope for a scale up in the manufacturing capacity.

Aurobindo itself has established a large facility with 13-14 manufacturing units spread over 240 acres in Visakhapatnam. This is in addition to four large units on the outskirts of Hyderabad.

The Andhra Government recently announced that an exclusive pharma SEZ was planned and Aurobindo and Dr Reddy's Laboratories would develop it. What are your plans?

The Government is planning an SEZ over 250 acres. Aurobindo has been give 75 acres. We are planning to set up a formulations unit. We have paid up the land amount and are waiting for the Government to notify. The 10-year tax holiday should help us.

How is the company managing HR issues?

We feel the company offers three incentives— good R&D environment for research and challenge; since we are among top 5 companies, quick results are in the offing; also offer reasonable salaries, and enough promotional avenues within the Indian drug sector and our attrition rates are within manageable limits.

More Stories on : Interview | Pharmaceuticals

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