The Chennai-based bulk drug and contract research solution major Shasun Chemicals and Drugs Limited (SCDL) has charted out an ambitious plan to become a leading Indian pharma conglomerate by the year 2009, growing through vertical integration and leveraging its core competencies.

The Rs 234 crore odd SCDL, which expects 12 per cent growth in top line (sales turnover) for the year 2003-04, is likely to complete its ongoing Rs 125 crore investment programme for capacity development and R&D capabilities by next year end, said S Vimal Kumar, finance director and N Govindarajan, CEO of Shasun, in an exclusive interview with Pharmabiz.

The first phase of the Knowledge Management Centre, a modern US FDA and EU compliant R&D center coming up at Keelakottaiyur, around 35 km from Chennai at an investment of about Rs 35 crore, will have its first phase ready by December, this year.

In the first phase, all the R&D activities undertaken at the Velachery premises of Shasun would be shifted to the new facility. Spread on an area of 8.74 acres, the facility envisages eight labs with quality control and analytical labs in the organic block, quality assurance and administration block, three cGMP compliant scalable kilo labs to carry out large-scale experiments, services and utility block, and zero effluent ETP facilities. The centre plans to house about 250 R& D personnel, instead of the present 90 people working in the R& D labs, said Govindarajan and Vimal Kumar.

They said the company would continue to leverage its growth from its main API, Ibuprofen, which contributes more than half of its overall sales turnover, mainly by strengthening its presence in the U.S. and European regulated markets. For Shasun, the product has a growth rate of about 10 to 15 per cent every year in the U.S. market for the last two years, and anticipates the growth rate to reach 30 to 35 per cent share of US market by next three years. Shasun, the largest manufacturer of Ibuprofen in the world caters to 50 per cent of the domestic market, and hopes a steady 8 to 10 per cent growth in the domestic market every year.

However, the company may exit in future from supplying to the small-scale domestic retail market, which currently contributes about 20 per cent of the domestic turnover. Bulk drugs and its derivatives would continue to be a mainstay of the business, besides other revenue streams, said the top-level professionals.

Shasun would offer its vast experience, R& D capabilities, cGMP manufacturing facilities and cost-effective solutions for global pharma players to outsource services as part of the growth process. Dedicated infrastructure and work force has been created for contract research, done through Custom Synthesis model and Contract Research Full Time Equivalent (FTE) programmes. The company already provides CRM activities to four global pharma majors, and negotiations are on with many other companies.

The recently formed Life Sciences Alliance, a consortium of four Indian companies including Shasun, and a US marketing and logistics partner to offer CRM capabilities, has excellent response from the global pharma industry. Concrete results are likely to happen in near future. Since the major pharma companies in the west would focus on research and drug development in future, the Indian companies having quality infrastructure and capacities would be able to grow through outsourcing, and Shasun would be in an advantageous position in this aspect, noted Govindarajan and Vimal Kumar.

They said Shasun would also look at offering contract manufacturing facilities for formulations. The company is in the process of setting up a Rs.40 crore US FDA and EU norms compliant multi-product formulation plant with a capacity to produce 3.6 billion capsules per year at Pondicherry. This facility would be ready by October 2004. While the strategy for bulk drugs would be to offer finished dosage forms instead of developing own brands, the formulation business would revolve around multiple products for contract manufacturing, informed Govindarajan and Vimal Kumar.