Alkem Laboratories is coming up with an IPO of 12.8 lakh equity shares in the price band of ₹1,020-1,050 to raise ₹1,311-1,350 core. Bloomberg TV India caught up with Alkem Laboratories CEO Prabhat Agarwal to get an insight on the company’s business strategy.

What kind of interest are you seeing from anchor investors?

We have seen great demand from anchor investors, both from top-notch domestic mutual funds and from FIIs. Some of the top names that have come in as anchor investors are HDFC Mutual Fund, Reliance Mutual Fund and ICICI Pru. We also have some international investors like DSP Blackrock and Abu Dhabi Investment Authority.

Could you give us some clarity on the real estate investment that you are planning to make?

The investments were made a few years back to optimise our returns in our overall treasury portfolio. But, as we go forward, we would look at those investments and decide the future course of action.

Can you give us a sense of your future growth drivers and what is your strategy looking like on that?

We are very well placed for growth, both in domestic and international markets. For the domestic market, we have leadership in certain key therapy areas. One of them is anti-infective.

Along with that we are growing very well in gastro-intestinal vitamin nutrients and those therapy areas. We have also invested in the last few years in other therapy areas like anti-diabetic, cardio, dermatology and neurology.

All these therapy areas provide us with great growth opportunities in the domestic market. For the international market, we have invested in developing a great ANDA pipeline — 69 filings has been done till September and more to go.

I noticed that your margins have been falling. What is the reason for that?

If you look at the first six months of this year, there is a margin expansion that has happened because some of the investments that we have done in the past are starting to yield results. Also, there is been a significant topline growth that has become a strong operational leverage for the company.

With all the investments that we have done in the past, we believe that we should be able to improve on our operating margins.

What are some of the risks that your business faces, specially as far as are regulatory concerns go?

The regulatory risk is faced by the entire sector as a whole. Up to now we have had a very clean USFDA compliance history and we are always prepared to maintain it as we have done in the past.

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