With its eyes on the US market, the Vadodara-based Alembic Pharmaceuticals Ltd looks to strengthen capabilities in the new segments of oncology solids and injectables, general injectables and ophthalmics.

The company is implementing a three-year capex plan of ₹1,600 crore, of which ₹700 crore has already been spent on augmentation of capacity and adding new capabilities, a top company official said.

“We found that in the international market, Alembic has been strong only in the oral solids - capsules and tablets. Now, we plan to build capabilities in other areas such as oncology solids, oncology injectables, general injectables, ophthalmics and dermaceuticals," said Pranav Amin, Managing Director, Alembic Pharmaceuticals Ltd.

“The acquisitions are tough in pharma space because of the expensive valuations. Hence, to grow fast, the partnership model is going well for us. We have been able to tie up with companies on manufacturing capabilities and unlock opportunity in the international business,” Amin told BusinessLine .

He, however, refrained from commenting on the minority shareholders’ demand for a representation in the board of Alembic — also owned by the Amin family.

Alembic Pharmaceuticals, which registered sales of ₹3,135 crore for 2016-17, has 59 per cent share coming from exports, while 41 per cent from the domestic sales.

The company has filed six Abbreviated New Drug Application (ANDA) during the first quarter of current fiscal.

The company’s research spend has been increasing from ₹148 crore in 2014-15 to ₹356 crore in 2015-16 and ₹470 crore in 2016-17.

Trial batches

Amin further maintained that company’s India business — the branded formulations business — will continue to grow, while the US market will grow at a faster pace because of the lower base.

Alembic will be doing trial batches from oncology oral solid and oncology injectable facilities in first half of the 2017-18.

For general injectable and derma facilities, trial batches will begin from the second-half of the fiscal. Filing from these plants will start from fiscal 2018-19.

“The management expects the R&D expenses to stand at ₹500 crore in fiscal 2017-18 to 2018-19. Majority of R&D spends would be towards filing new products in the US market for oncology injectables as well as general injectables, and oncology oral solids. As new filings are expected to begin from early 2018-19, we don’t expect approvals for these products to come in any time before second half of fiscal 2019-20. We expect margins to contract by 200 basis points in fiscal 2017-18 over last year, owing to higher R&D expenses, commercialisation of new facilities with no proportionate increase in immediate revenues, rupee appreciation against the dollar," said Equirus Securities in its research report on the company.

For the shareholders, the company continues to strengthen its international presence with the help of partners. As informed by Amin, besides the US, Europe, Australia, Canada continue to be important markets, where Alembic is developing business with the help of partners. “While most of the focus is on the US now, we have advantage in Algeria, where we have our manufacturing plant for generics. With import barriers being in force, we are better placed because of the local manufacturing,” added Amin.

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