Mumbai-based Ajanta Pharma may re-enter into the bulk drugs business in a big way after it had exited from it citing dull prospects. The turnaround in the global bulk drug business and the impending expiry of patents of several drugs are two main reasons for this change of mind of the company.
In 1999, Ajanta Pharma had sold its standard bulk facility, used for manufacturing cephalosporins and macrolide antibiotics to Orchid Chemicals for Rs. 21 crore.
"Then, the global market for bulk drugs was on a down slide and our major focus was to enter the non-regulated and semi-regulated markets with branded formulations. Now, there is a turnaround with global companies inviting Indians in a big way for their bulk drug requirement. In such a scenario, we have to keep our option open to re-enter bulk drugs business," said Arvind Agarwal, chief financial officer, Ajanta Pharma Ltd.
Traditional pharma companies in the country are actively considering making bulk drugs business as one of their revenue models and are exploring the possibilities of buying out API manufacturing facilities from existing players or setting up fresh facilities, said analysts. These companies are mainly eyeing the US markets.
According to Dr V V L N Sastry, country head, Firstcall India Equity Advisors (FIEA), a Mumbai-based investment advisors for FIIs, in the next 2-3 years, the global market for bulk drugs is expected to reach about $ 85 billion.
"It takes only Rs 50 crore for putting up a bulk drug facility and a turnover of Rs 100-200 crore could be achieved in the initial three years of its operation, which is not possible in case of formulations," said an analyst based at a Mumbai-based equity analyst and brokerage outfit.