API supply concerns from China fuel Alembic Pharma’s global prospects

Rutam Vora Ahmedabad | Updated on May 04, 2021

Company’s segment revenues surge 35% during the year

The Covid-led supply disruptions of Active Pharmaceutical Ingredients (API) from China last year has proved to be a blessing in disguise for Alembic Pharma.

The API revenues of the Indian drug major during fiscal 2020-21 jumped by 35 per cent following international buyers’ preference for ‘China-plus-one’ strategy to secure key medical inputs.

API shortage after Chinese supply disruptions early in 2020 had triggered concerns across the markets for a possible shortage of the raw materials.

Speaking to BusinessLine, Pranav Amin, MD, Alembic Pharmaceuticals Ltd, said, “This (API supply disruptions from China) gave an impetus to our API business globally. After second half of the year, Chinese were back in the market and there was competition again. (But) we had secured some markets with existing customers, who adopted a China-plus-one strategy to reduce their dependence on China. They were looking for pharmaceuticals suppliers from India.”

For the fourth quarter of fiscal 2020-21, Alembic’s API business grew by 38 per cent to ₹214 crore, while for the full year, it was reported at ₹955 crore, up 35 per cent from previous year. API is a key raw material for drug manufacturing.

Amin expects to maintain the momentum in the current fiscal, too. “We’d like to compete with better pricing and for more FDA approved facilities. There is still opportunity for good Indian suppliers in the global market,” Amin said.

Even as Alembic opened a parallel front to China, the company isn’t worried about what may prompt to become a ‘price-war.’ “We don’t have any load on pricing. We realised that compliance and supply is equally important. Buyers want quality and right documentation,” he added.

During the fiscal, the company’s international formulations business grew by 19 per cent to ₹2,942 crore, while US generics business grew by 9 per cent to ₹2,163 crore. But the company saw a sharp surge in the non-US International Formulations business in Australia, Canada and Europe besides some parts of Brazil, by growing 57 per cent to ₹779 crore during the fiscal.

R&D aimed at the US

Alembic will continue to focus on its R&D for new product development with its eyes on US market. “About 80 per cent of our R&D spend is targeted to the US market. And within that we have all products including ophthalmic, oncology, oral solids, injectibles, etc. We need to have a large-enough portfolio to tap new opportunities,” he added.

Alembic spent ₹670 crore or about 12 per cent of its annual revenues of ₹5,393 crore for fiscal 2020-21.

Financial results

The consolidated net profit for the quarter ended March, stood at ₹251 crore (₹225 crore). Quarterly revenues grew by 6 per cent on year at ₹1,280 crore for the period under review.

On annual basis, the company’s consolidated net profit stood at ₹1,178 crore (₹829 crore). Revenues for the year stood at ₹5,393 crore (₹4,606 crore).

Published on May 04, 2021

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