Chandigarh-based Ind-Swift Laboratories Ltd (ISLL) is one of the fast growing pharmaceutical companies in the country. ISLL is currently positioning itself as a primary supplier of bulk drugs to regulated markets, a forward looking change from its earlier focus on unregulated / soft regulated markets. With six cGMP compliant plants and a robust product basket of 18 molecules (20 more in the pipeline), ISLL is well set to reap the rewards of its initiatives over the next few years. In an exclusive interview, V K Mehta, joint managing director, ISLL shares more about ISLL vision with pharmabiz.com --- Excerpts:

What are the products and markets that brought in maximum profits during the recent fiscal for Ind-Swift Labs? Do you foresee continuity in this trend?

The audited results of ISLL for the fiscal 2003-04 are very robust. During the financial year exports grew by 53 per cent on the backdrop of the increased focus of the company on international markets .The company's Exports to Latin America and Europe saw a huge jump during the year.

The main reasons for the current profits are that we have got our products registered in the soft regulated markets. We are the primary/ secondary approved sources in top companies hence it is a long-term business relations. We have started supplying commercial quantities to the soft Regulated markets. We expect to participate in their growth.

We are in agreement with global players for the supply of blockbuster drugs/drug intermediates like clarithromycin, atorvastatin and fexofenadine to regulated markets on patent expiry. ISLL has already built up sizable capacities in some of these molecules. As a strategic move, ISLL shifted its focus to complex molecules and development on non-infringing processes, so as to minimise the risk of severe competition and commoditisation of its products.

The company was also among the first few players to launch other complex products like clopidogrel, candesartan, atorvastatin, pioglitazone, citalopram, rosuvastatin & ezitimibe. We are in fact the first in Asia to launch anti-diarroheal drug nitazoxande recently .

We have also worked aggressively towards bringing down overall manufacturing cost and the cost of debt, which has also contributed to the spurt in growth. Today we are recognized as one of the most cost efficient producers of the drugs/drug Intermediates.

CRAMS has been sighted as the future business-model by many a pharma company in India. How do you prioritize your API business plans?

Our business model too encompass CRAMS business as a major growth driver in next two to three years. Presently roughly 13 per cent of the current profits are being contributed by the CRAMS. The company is working exclusively for leading global companies in CRAMS business.

We are also working with leading players for contract research in Europe. Under contract research and manufacturing plans we are negotiating with US companies through our US subsidiary for long term agreements.

Backed by a strong R&D and production facilities we foresee 40-45 per cent of the bottom line coming from the CRAMS in next 3-4 years.

How do you foresee your API division post 2005 / five years from now?

The company has chalked out expansion plans which include investments to facilitate ISLL's entry into regulatory markets, particularly of US & Europe, with filing of 25 DMFs by 2007-08, as drugs worth US$ 84 billion go off patent by 2008. We expect an annual ROI of 35-40 per cent on total investment. Further the company expects the number of global companies with which it has long term tie up to double in next 2-3 years.

To facilitate the filing of 25 DMFs by 2008, a strong R&D support is
imperative, so the company plans to set up a new R&D centre. The R&D of the company has already launched 8-10 products in the past and it plans to launch 22-25 products in next 3-4 years.

Company plans to create USP for its products through R&D. The company has already filed patent for 2 non-infringing processes. It is ready with filing 4 non-infringing processes in the current year and 12 more in the next year. We are working on developing molecules under the statins, cardiology, diabetology and oncology segments. Efforts are also on for a tie-up with the originator through development of non-infringing processes and undertaking contract research for development of their molecules with an additional investment of US $ 5 million apart from the investment of US $2 million last year. Besides we also plan to increase our existing R&D strength from 70 to 150 by next year

We have already attained global status in clarithromycin, clarithromycin granules, fexofenadine & atorvastatin -- the molecules with world market of over US$ 14 billion. All these molecules are due for patent expiry between 2005 and 2011. We are aggressively working for positioning ourselves in clopidogrel, pioglitazone, ezitimibe and statins also.

The company's clarithromycin and Clarie granules plant is operating as per the FDA standards. Now the atorvastatin plant has been upgraded to meet regulated standards. Besides a FDA approved Fexo facility is also being installed at a total cost of US$ 3 million . All these molecules (Clarie, Fexofenadine & Atorva) are blockbuster molecules with world market of US$ 15 billion.

Five years from now I foresee ISLL to be a 7500 million company with net profit of Rs 500 million. We expect CRAMS to contribute mainly to the bottom line.

Any plans for setting up an overseas API manufacturing facility?

We have already set up a wholly- owned subsidiary in US which would facilitate company's entry into the US market and for expanding its custom research, custom manufacturing arrangements and exploring strategic partnership in the US market. The company has already tied up with few leading US companies, which figure among the top 15 companies in the US, for supply of its products. We do intend to set up a manufacturing base outside India. The company is also exploring the possibilities of expanding its global operations either through setting up its own facility or going for acquisition/ forming joint venture in partnership with a major pharma player in those markets.

ISLL has built a full fledged R&D centre with a team of around 70 people, which is clearly focused on developing new drugs and non-infringing processes for the same. The company has strong process chemistry skills, which helps it develop cost effective and complex processes for various APIs and intermediates. The R&D efforts have led to successful commercialization of 18 products so far, while
around 20 are in the pipeline to be launched over the next two to three years.

Besides developing new molecules and building large capacities for the same, ISLL has also been actively building a channel for marketing the
same in the targeted markets. While the company is already well entrenched in most unregulated markets, it is in talks with several players in Europe and US for supply contracts. ISLL has already tied up with a couple of companies in Europe, while discussions are on with several generic players for the US markets as well for the supply of various products post patent expiry.

The R&D of the company which has already successfully launched 8-10 products in the past now plans to launch 22-25 products in next 3-4 years. The latest product launch of the company are nitazoxanide (anti-diarroheal), osuvastatin & ezetimibe (anti-hyperlipidemic) & acamprosate (anti-alcoholic). Company is first in Asia to launch the anti-diarrheoal drug ‘nitazoxanide’ after the successful clinical trials of the drug in India .The R&D of the company is working on developing molecules in the high growth segment of cardiology, statins, diabetology & oncology.

What according to you can help India grow as a major provider of APIs in world pharmaceutical market?

According to me following are the pre-requisites:

• The build up of world class manufacturing facilities with global regulatory approvals
• Creation of strong IPR strengths to handle regulatory issues for obtaining entry into high margin regulated markets.
• Multi-fold increase in R&D activities

Indian Pharmaceutical Industry has threat from China, but strengths in R&D and intellectual property can really help India to establish as major generic supporter to regulated markets.