Domestic formulations to grow significantly ahead: Unichem

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Pharma company Unichem Labs recently received an EU GMP certificate from the Irish Medicines Board for manufacturing 12 Active Pharmaceutical Ingredients (API's) at its Roha plant. The company can also market approved API's in Europe.

Unichem, a prominent player in the domestic formulation space, has seen a growth of about 17.5% on a year-over-year basis in the space.

Officials at the company say its API exports are picking and niche sub-generics are reaching breakeven. Its heritage products are seeing double digit growth.

In the Indian market, its main products are Losar, Losar H and Ampoxin, which are leaders here. Ampoxin an anti infective is growing at 14% is a market leader with a share of 41%. The company intends to enter the gynaecology and injectables antibiotics businesses in the medium term. It also intends to launch 20 new products in the next 12 months, which will also include nephrology.

In Q3, its revenue grew 13.5% to Rs 172.8 crore as against Rs 152.2 crore on a YoY basis. Net profit stood at Rs 33.68 crore versus Rs 28.11 crore in the same period last year.

In an interview with CNBC-TV18, Rakesh Parikh, VP-Finance, Unichem Labs gave his perspective on the company's business plans and the road ahead.

Here is a verbatim transcript of the interview. Also watch the accompanying video.

Q: Now that you received an approval from the Irish medicine board from the 12 APIs from your Roha plant when will you start manufacturing if you could give us a timeline and when would you eventual supply in Europe starts and also how much of incremental revenue are you expecting from this?

A: This approval which we have got for the Roha plant for the 12 molecules, most of the molecules have already been developed by us and we are already marketing these molecules. But the regulatory process there and the kind of entry barriers which they were putting were coming in the way.

Now by getting this, a direct EU GMP approval opens the floodgate for us to supply for all the countries without asking for individual approvals and individual plant inspection.

So to that extent, it facilitates us to market the products more and with the improvement in the economic scenario, the slowdown in Europe has been arrested, we hope that this will definitely help us to see that we are able to sell much more.

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Q: Could you put a number to that?

A: Normally this is for the API. So the API exports are roughly about 5-6% of the sales. But this will enable us to see that we are able to maintain double-digit growth in this inspite of the condition in Europe.

Q: Tell us a bit about your domestic formulations business then? Are you launching any new products, how do you see the business shaping up in terms of growth in FY10 first and then more importantly in FY11?

A: In FY10, as far as Unichem is concerned almost 70% plus of consolidated revenues are coming from the Indian formulation business and the company focuses more on brand building. If you see there are 5 brands in the top 300 and almost 25 brands account for 70-75% of our business.

We have taken a lot of initiatives in view of the economic scenarios, which were there in India as well as outside because of which certain changes in strategies and restructuring was taking place. This has resulted in a kind of a flattish growth.

If you look at the first two quarters of the current year, the initiatives taken by us in terms of focusing more on the secondary and other strategic initiatives, the product rationalization, the restructuring, the field force in the marketing division and the team have made us grow much faster than the market.

If you see the ORG IMS right from June onwards, our growth has been a few percentage points above the market.

Q: Can you give us some number therefore of how you are expecting full year FY10 and more importantly full year FY11?

A: FY10 will include the first six months which is almost 50% of the business where our growth was in the lower single digit. But if you look at Q3, the results which are out, we have already grown India formulations by more than 80% and we expect the same numbers to continue in Q4 as well. We have already seen the two months of that going through.

Coming to FY11, we are expecting this trend to continue and the India business will definitely do much better than the market. We expect to continue doing a few percentage points above the market growth.