CT Renganathan, MD, RPG Life Sciences, said the company‘s long-term strategy is to focus on the formulation business and going forward they would like to see 90 percent of business coming from formulation.
RPG Life has sold its Gujarat-based biotechnology unit to Intas Pharmaceuticals for Rs 25 crore. The money from the sale is likely to be used for its fromulation business.
CT Renganathan, MD, RPG Life Sciences, said the company’s long-term strategy is to focus on the formulation business and going forward they would like to see 90 percent of business coming from formulation and 10 percent from active pharmaceutical ingredient (API).
Currently, about 60 percent of business comes from the domestic formulation and 40 percent constintues international sales.
Below is the verbatim transcript of CT Renganathan’s interview with CNBC-TV18's Ekta Batra and Anuj Singhal.
Ekta: Can you just give us a sense in terms of how much you have in fact raked up from this unit sale to Intas Pharma and the rationale behind it?
A: Actually this business used to contribute around Rs 25 crore on average for last three years and the business has been growing well. It has been an attractive business. Unfortunately we are spreading ourselves too thin in all areas. So, we are in formulations, active pharmaceutical ingredient (API) and also Biotech. Now, in our long term strategy we have decided to focus on formulation and selectively backward integrate with API. In fact the situation is better to take out Biotech and we can give it to a company who is committed to invest on this thing. So, they can focus separately on biotech to take forward its own growth opportunity. So, we would like to stay focussed on our formulation.
Ekta: When you say focus on formulation what do you mean by that? What kind of incremental focus would it be, how would you deploy the Rs 25 crore odd in your formulation business?
A: In two three ways. One is domestic market formulations that we are expanding our presence. I will come out with a launch of new segment soon next time when I interact in the annual results we will tell you and also we are planning to enter into US market. US registration and all the expenses we will do it. Our manufacturing capability we will improve further on formulations. So, all the investments will go revolving around formulations and line extensions.
Anuj: So, what kind of revenue and profit you will be able to do in your formulation business next year?
A: Currently 60 percent of our business is coming out of domestic formulation, 40 percent is international. Off the international also more than 70-80 percent comes out of formulation. We will like to have dependency on formulation to the level of 90 percent and 10 percent only will be API, remaining will be with our internal consumption, API related.
Ekta: Last time we had spoken to you, you said that your reply to the US Food and Drug Administration (FDA) was already done. You have some outstanding issues on your API as well as your formulation plan. Any update with regards to that that you can share with us?
A: There is a correction. We have not yet replied to US FDA. Still it is ongoing. We are getting ready, so once it is ready we will go for auditing. And then we will go for US operation.