Arvind Remedies Ltd. (ARL), which kicked off operations in 1988 with its branded formulations, institutional sales, exports and contract research and manufacturing services (CRAMS) is now charting inorganic growth paths. In an email interaction, Dr. Arvind Shah, managing director and CEO, Arvind Remedies gives an overview of the prospects and promising avenues in the CRAMS market to Nandita Vijay. Excerpts:
What is the action plan to augment CRAMS business which at present contributes to 13 per cent of ARL's revenues?
Currently, CRAMS contribute 13 per cent to ARL revenues. We plan to take this share up to 20 per cent in coming four years. For this, we have planned capacity upgradation of our WHO facility at Kakkalur. We are also planning to set up a new manufacturing plant which is a cGMP- USFDA compliant facility for general category products at Irungattukottai with an exclusive product development lab and also separate dedicated manufacturing facilities for Beta-Lactum, Cephalosporin and Ayurvedic products. With these, we will cover the entire spectrum of conventional dosage forms and will be well equipped to serve the pharma fraternity in a comprehensive manner from contract research to manufacturing services. This will significantly enhance our stature and presence in the pharma space and of course the overall output of the company ensuring superior growth in volumes, along with improvement in profitability.
What are the factors which attract companies to undertake CRAMS at ARL?
ARL has recognized the opportunity presented by international and Indian pharma companies in search of lower costs and higher profits. Our low cost base and pool of highly skilled workforce with an effective supply chain, positions us as a key provider of contract research and manufacturing service. Due to this we have been able to win major pharma companies like Sun Pharma, Wockhardt, Cipla, Abbott and Fourtts India as our clients.
Another, key reason which attracts companies to undertake contract manufacturing with us is our new plant designed and operated on the lines of USFDA at Irungattukottai. At this facility, we manufacture a wide range of dosage forms which include oral solid dosage, oral liquid dosage, topical preparations like ointments and creams, liquid parenterals and soft gelatins. Our strong compliance and quality orientation leads us to produce products of highest quality conforming to stringent regulatory guidelines of various authorities like USFDA, EDQM, MHRA, MCA and TGA.
Would you look at more inorganic growth moves like that of the Coronet Labs in Roorkee?
Acquisition of Coronet Labs has not only enabled us to increase our market share but also has also improved scope of CMS (contract manufacturing service) business for us. It has also facilitated addition of clients like Novartis, IPCA, Torrent and Wanbury to our kitty. We would be open to any such opportunities in future.
What would be your earnings targets from CRAMS for the fiscal 2013-14?
In FY 14 we have a target to garner Rs. 83 crore from CRAMS
Is the present infrastructure adequate to attract global orders for CRAMS?
Yes. Post upgradation of our Kakkalur facility and complete commissioning of our USFDA approvable plant, we are confident of attracting international orders.
What is the kind of contract research services that ARL is offering at present?
ARL offers contract manufacturing for quantities ranging from lab scale to pilot plant stage up to commercial production. Our capacities meet global standards and are geared to cater high quality finished dosage forms. These cover novel drug delivery, site specified drug delivery, product development-optimization-scale-up, conventional drug delivery system and wide range of dosage forms.
What are your views on the future prospects of CRAMS in India?
The CRAMS industry revenues is estimated at US$7.6 billion by 2013. The momentum gained by this segment of the Indian pharmaceutical industry is noteworthy. Over the last five years CRAMS industry has been contributing close to eight per cent to the total Indian pharmaceutical business. Factors like a vast expanse of speciality hospitals with state-of-the-art facilities diverse population and gene pool; increasing number of chronic diseases and a combination of diseases characteristic of developing and the developed countries is expected to propel the CRAMS industry to grow at a CAGR of over of 42.2 % (2007-2012).
Out of the total CRAMS market, leading companies in India are Nicholas Piramal, Zydus Cadila, Ranbaxy, Intas, Lupin , IPCA, Aurobindo Pharma to name a few.
How would the emergence of efficient and cost - effective pharma companies in South East Asia impact companies like yours?
To meet the market demand and taking into consideration the hike in cost, we are fully geared up with our state-of-the-art USFDA plant and a strong research and development team to meet big targets.
Business ‘pulling’ shall happen because South East Asia is well known for its economical process capabilities in terms of labour, technically qualified personnel, low infrastructure costs and various tax and duty benefits for enterprise management all this leading to a substantial reduction in cost of drug discovery or contract research.
We are also working on an efficient and economical CRAMS model so as to enter in a larger way and gain a strong foothold in the competitive market.
What are the emerging trends in CRAMS space ?
Companies in CRAMS are comprehending and complying with and anticipating possible changes in the regulatory environment. The companies creating a successful CRAMS strategy by providing end-to-end solutions. We are also witnessing managing and upgrading internal standards of self auditory inspections too.
What are the challenges for companies in the CRAMS space?
The key challenges for companies in the CRAMS business is the long gestation period. This means the time gap between business development and actual delivery of the product is significant. There is increased competition as number of new entrants are growing despite high level entry barriers. Clinical trials are a critical part of this business and unavailability of skilled manpower is an important issue to be addressed. There is also strong competition from China because it enjoys low cost advantage. Lack of support from government in terms of tackling regulatory issues and the need to keep pace with the new guidelines of global regulatory authorities delays approval processes.