The Indian pharmaceutical industry has established its strong presence in international market and now gearing upto tap future opportunities. The companies from Hyderabad, the state capital of Andhra Pradesh, moved very fast and attracted other international players during the last couple of years for consolidating business operations. Hyderabad based companies emerged as major players in every field of pharmaceutical segment with focus on exports and research and development. Several international players are looking at Hyderabad as their next destination in Asia.
These companies have set up facilities as per good manufacturing practices (cGMP) standards and received approvals from international regulatory authorities like US FDA, WHO, MHRA, EDQM, MCC, ANVISA etc. Hyderabad based companies are contributing significantly to the growth of India's pharma business and received international acclaim.
Globally, many major innovator companies are passing through a difficult phase due to loss of patent protection on blockbuster drugs and lower product launches during the last few years. Further, the cost of R&D and marketing is going up significantly putting pressure on bottom line. These international companies are now major customers for Indian companies for providing research based manufacturing services at low cost. Hyderabad-based companies are using this opportunity and increasing their cliental base by entering new contracts with MNCs.
Hyderabad offers better infrastructure, cost effective workforce, strong support from ancillary units and easy availability of raw materials. These companies are addressing the needs of quality conscious markets and looking at long-term gains. The pharmaceutical companies in Hyderabad are mainly engaged in drug discovery through own R&D efforts, CRAMS activities and production of generics, APIs, commercialization of new products in regulated market, mergers & acquisitions and clinical trials.
Few important players from Hyderabad viz., Dr Reddy's Laboratories, Aurobindo Pharma, Matrix Laboratories, Divi's Laboratories, Suven Life Sciences, Jupiter Bioscience, Vimta Labs, Krebs Biochemicals & Industries, Avon Organics, Neuland Laboratories, Natco Pharma are consolidating their business and spreading their activities in domestic as well as international markets. These companies have entered into several collaborative agreements with foreign majors.
Dr Reddy's Laboratories (DRL) remained on the top among the Hyderabad based companies with net sales of over Rs 1550 crore and the third largest among all the Indian companies after Ranbaxy Laboratories and Cipla Ltd. DRL is one of the highest spender on research & development (R&D) and its R&D expenditure increased by 41 per cent to Rs 280 crore during 2004-05. The company has created strong product pipeline over the last three to four years which will start yielding results from next fiscal year. DRL has filed 65 DMFs and 45 ANDAs with US FDA, which are awaiting approvals. It is continuously working on its main objective of becoming a discovery-led global pharmaceutical company.
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DRL's long-term operations will depend to a large extent, upon its ability to successfully patent and commercialization of its own discovery molecules and specialty products. It is focusing on measures to control costs, drive productivity and process excellene across the organization. To mitigate R&D risks and defray such costs through risk capital alliances, it entered partnership with ICICI Ventures during 2004-05. DRL is spreading its business through mergers and acquisitions. It acquired Trigenesis Therapeutics Inc., a US based research company specializing in dermatology field, for a total consideration of Rs 49.67 crore during April 2004.
Aurobindo Pharma, a multi-product company with presence in diverse segments, has made significant footprints in the ARV, CNS and CVS segments. The company's manufacturing facilities have received approvals from regulatory authorities like US FDA, WHO, MHRA, EDQM, MCC, etc. The company shifted its emphasis and invested in knowledge capital, and made the transition to a research led, chemistry company. It got vertically and horizontally integrated - from chemical and process research to regulatory product approvals and manufacturing excellence.
Aurobindo filed record number of DMFs and ANDAs during 2004-05. It filed 64 DMFs (including 24 with US FDA and 11 in Europe) and 25 ANDAs. Aurobindo is now focusing more on regulated markets. Its transition from API manufacturer to a generics player was on the back of a strong R&D and world-class manufacturing system. The company's R&D expenditure touched to Rs 54 crore during the year ended March 2005 from Rs 49 crore in the previous year. Allocation for R&D was stepped up during the year by 10.8 per cent over the amount set aside in the previous year. The stiff competition in the international market, however, put pressure on exports which declined to Rs 555 crore from Rs 642 crore.
Aurobindo is creating a very broad portfolio of approvals from international regulatory authorities. To reduce the marketing cost the company has set up subsidiaries in USA, China, the Netherlands, Brazil, Hong Kong and Thailand. It has set up 10 subsidiaries and three joint ventures in various parts. The total income of subsidiaries and joint ventures reached at Rs 474 crore during 2004-05.
Matrix Laboratories, a Rs 650-crore plus one of India's fastest growing API companies, is producing APIs which find application in wide range of therapeutic areas such as anti-bacterial, anti-fungal, CNS, gastro-intestinal, anti-retroviral (anti-AIDS), anti-viral, anti-depressant and cardiovascular. The company's manufacturing facilities are located at Jeedimetla, Pashamylarm, Kazipally near Hyderabad and G Chodavaram, near Visakhapatnam with regulatory approvals from US FDA, EDQM, UKMHRA, TGA, etc.
Matrix achieved inorganic growth with implementing mergers and acquisitions during last couple of years. Recently its Belgian subsidiary acquired 95.51 per cent (4,644,512 shares) of Docpharma with the offer price of EUR 34.00 per share. The company merged Mediorp and Vorin during the year 2002 and it merged the US FDA-approved Vera Laboratories and FDCL during 2004. The company intends to emerge as a strategic global partner for customers and innovator companies.
It commissioned a contract research and manufacturing (CRAM) initiative as early as 2002-03 and now assisting MNCs in developing NCEs as well as the contract manufacture of APIs. The company's net sales reached at Rs 637crore during the year ended March 2005 from Rs 529 crore in the previous year. It earned a net profit of Rs 130.27 crore as against Rs124.61 crore.
Divi's Laboratories is planning a major expansion programme and setting up an export- oriented unit with a capital investment of Rs 35 crore at its unit-2. The company filed 19 DMF with US FDA during 2004-05 and likely to go up to 25 in the current year. It is working on 15 future generic compounds to strengthen its pipeline to percolate revenues as and when the patents expire. The company also received Certificate of Suitability for four APIs and it has completed trials of a specialty ingredient jointly with a large MNC company.
The year 2004-05 was somewhat difficult in terms of profitability for Divi's Lab due to the movement of certain products with higher material costs and increase in price of petroleum and the molasses based solvents. Further some of the custom synthesis projects are going thorugh a longer development phase resulting in delayed sales. Its net sales increased to Rs 347 crore with export contribution of 88 per cent at Rs 302 core. The company filed 19 DMFs for the US market. The company added 17 new products to its product portfolio for generics APIs.
Suven Life Sciences is providing world-class R&D solutions for Global Life Science companies with quality, speed and in a cost effective manner. The company is focusing on cutting edge R&D and manufacturing services with IPR compliance. Suven is offering the CRAMS to major MNCs and till now it has completed 250 CRAMS projects . It is currently working on 43 new CRAMS projects. The company's net sales moved up to Rs 51.18 crore during the year ended March 2005 from Rs 45.20 crore in the previous year.
Suven merged its subsidiary - Suven Synthesis during 2004-05. Its manufacturing plant at Pashamylaram is currently undertaking trial batches for validations in order to file new DMFs. The company's US subsidiary - Suven Life Sciences USA LLC is providing an effective marketing channel. The US subsidiary is now targeting small and mid sized US biotech companies for marketing Suven's drug discovery and development support services.
Natco Pharma, a Rs 150-crore pharma company in Hyderabad, is moving ahead strong with a recent US FDA approval for its API facility at Mekaguda village in Mahaboonbnagar district. Natco filed 7 DMFs in US and 93 DMF in Europe upto the end of March 2005. Natco received approval for ondansetron tablets and metrodinazole 400 mg. tablets respectively from Danish and UK regulatory authorities.
The company is setting up a dedicated cyto-toxic oncology block exclusively for the manufacture of APIs. This unit will be operational by April 2006. The company is also constructing for producing high value, low volume specialty peptide APIs which is likely to commission in next few months. Natco is planning to set up new finished dosage formulation unit in the state of Uttaranchal..
Neuland Laboratories is focusing more on R&D activities and planning to work closely with innovators and facilitate their developmental activity. The company is in the process of setting up a world-class research centre in collaboration with a US based consulting firm. The project is likely to go on stream by the first half of 2006. The company's sales for the year ended March 2005 reached at Rs 154 core and it earned a net profit of Rs 4.48 crore. Its exports reached at Rs 120 core.
Vimta Lab, established in 1984, is a leading provider of multi-disciplinary contract research and testing services in India. The company is providing contract research and testing services in the areas of clinical research, pre-clinical (animal) studies, clinical reference lab services, environmental assessments and analytical testing of a wide variety of products.
As these firms based in Hyderabad take leads in Indian Pharma Inc' march towards global conquest, they always see to it that their investors are properly taken care of. They pay hefty dividends and bonus shares to investors. With focus on R&D, aggressive entry in the regulated markets strong reserve and surplus position, Hyderbad based companies are better positioned to add value to stakeholders and their partners.