Largest among the top five Gujarat pharma companies and also the seventh largest drug company in the country, the Rs 1172 crore Cadila Healthcare (Zydus) is entering the world's largest generics market, estimated at US $ 17 billion as an integrated generics player.

The company as part of its global roadmap has established Zydus Healthcare (USA) LLC and Zydus Pharmaceuticals (USA) Inc to cater to the API and formulation generics markets respectively. Having identified a basket of about 100 formulation products for launch in the US market over the next few years, it has filed 12 ANDAs with the US FDA in 2003-04.

The company has also established its presence in France through Zydus France SAS and would be launching generics in the French market in the current year. Zydus is also planning to enter Italy and Spain over the next two years.

Looking at the CIS as another most potential market, the company has revamped business model to grow aggressively in these markets, mainly Russia & Ukraine. Focusing on high growth therapeutic segments of CVS, GI etc., the company has already expanded field-force and geographic coverage and entered into an arrangement with top distributors.

According to Pankaj R Patel, chairman and managing director, for the company the year 2003-04 was a remarkable period as its performance was excellently well. The company, which posted the highest sales ever at Rs. 11.7 bn, has registered a growth of 14 %. The major growth driver was exports, which grew by 62 %. On a consolidated basis, the sales reached Rs. 13.3 bn, growing by 18 %.

The company significantly increased investments in R&D, with total R&D expenses going up to Rs. 0.9 bn, from Rs. 0.4 bn in 2002-03, or nearly two and a half times. Of this, the revenue expenses on R&D went up three-fold to Rs. 0.6 bn.

Inspite of substantial hike in R&D spend, Profit Before Interest Depreciation and Tax (PBIDT) increased by 29.4 % to Rs. 2.5 bn. The PBIDT margin jumped to 21.2 % from 18.7 %, which is the highest in the history of the company. The net profit also jumped to Rs. 1.43 bn with a growth of 86.5 %.

Similarly, Zydus Altana Healthcare Pvt. Ltd., the 50:50 JV with Altana Pharma turned in an excellent performance with record sales of Rs. 1.47 bn and Net Profit of Rs. 1.22 bn, an 82 % net margin on sales. The JV paid Rs. 600 mn in dividends, up three-fold from 2002-03.

"These results mark another successful year in our pursuit to realise the full potential of Zydus Cadila. Our initiatives were well received by both the investors and the stock market and this is reflected in the market capitalisation which nearly quadrupled to Rs. 28 bn by the end of the financial year," says Patel.

He added that the company's focus in the coming years will be on globalisation of operations. This is both a challenging and inevitable process. "The year 2003-04 was when we truly globalised our operations by marking our presence in the large and lucrative regulated generics markets," he said.

Estimating the future potential of generics in the regulated market, Zydus' global plans conclude that the total global pharma market is pegged at US $ 466 bn (IMS). North America, Europe and Japan account for 88 % of the pharmaceuticals sales in 2003. Generics sales contributes almost 4-5 % of this market, making the global generics market about 6 times the Indian market. While the generics business in US is the largest in the world, Europe is also an attractive market and provides quicker access opportunities.

"It is a tremendous growth opportunity that these markets represent with several blockbuster multi-billion dollar drugs going off patent over the next few years," he adds.