Indore facility to start production in 2 months: Ipca Labs

The US FDA has inspected the Indore facility of Ipca Labs in April, and in about two months the company will be able to start production, says executive director AK Jain.

Talking to CNBC-TV18, he says the pain management segment has been doing very well and now contributes to around 31 percent of the company’s domestic business. This year, the company has incurred substantial of research and development cost, but will maintain margins despite that, he added.   Here is the edited transcript of his interview with CNBC-TV18 Q: When is the Indore SEZ likely to go on-stream? A: We have already started production for other markets except this facility and US FDA has done the inspection in the month of April, and hopefully, maybe in two months time we will be able to get the final clearance to start the production. Q: Let me talk about your numbers. Pain management has been the big contributor. In FY13, you had a growth of 18 percent, against industry growth of about 8 percent and you have a market share of 5 percent now. What is the target for FY14? A: Overall pain management has been doing very well for us. In fact the pain management now contributes around 31 percent of our domestic business and both the segment osteoarthritis and rheumatoid arthritis we are doing very well and we have leadership in rheumatoid arthritis with substantial market share. As far as pain management portfolio is concerned we will continuously beat the market and continue to have outperformance on them. Q: You did very well on margin expansion and you attributed it to manpower productivity gains that was what 1.2 percent point margin expansion, will you do better or at least will you be able to stabilise at that level? A: This financial year if you see our overall EBITDA margin has improved and that improvement is almost about 0.3 percent. We are at 22.3 compared to around 22 percent in last financial year. However this year there is a substantial amount of research and development cost which is on some special research which is going on, that we have incurred and those costs we have debited to P&L account. Q: In FY14 what kind of R&D expenses can we see? A: On one particular project which is currently clinical research is happening in US, it is close to around USD 5 million and that would be revenue expenditure for me. Therefore inspite of that additional cost on P&L account we feel we should be able to maintain the EBITDA margin around 32 percent in the next financial year. Q: Overall EBITDA margin will it be 21.2 percent as you pointed out or will it do better in the current year? A: It will be around current level.