JB Chemicals & Pharmaceuticals (JBCPL) backed by US private equity giant KKR is evaluating assets that include select branded portfolios and even a mid-sized pharmaceutical company, to bolster its market share in India.
"There are some assets we are evaluating," Nikhil Chopra, CEO of JBCPL said in an interview to Moneycontrol.
"The closure would be dependent on the valuations," Chopra said. Chopra declined to name the companies with whom JBCPL is in discussions.
JB Chemicals is a debt-free cash rich company, which can generate free cash flows of Rs 250cr annually with limited capex of Rs 100 crore.
KKR's deep pockets and expertise is expected to help JBCPL to expand quickly using both organic and inorganic options. KKR bought a controlling stake in the Mumbai-based family-owned drug maker JBCPL a year ago for Rs 3,100 crore. JBCPL was seen as conservative company in its approach under its erstwhile promoters.
In October, 2020 - KKR roped in Cipla veteran Nikhil Chopra to helm the company. Chopra's role was to oversee the transition, build a cohesive leadership team comprising new faces and the old ones, put in place a fresh go to market strategy with therapy diversification, raise MR productivity, strengthen R&D, and more importantly establish systems and controls.
ALl these things were not new to Chopra, who had a spectacular journey at Cipla from joining the company in 1996 as a foot soldier, a medical rep and eventually heading its India formulation business that generates the largest share of revenues.
Chopra said that in the last 8-9 months he has made progress on the transformation journey and the company is poised to grow.
India focus
Nearly half of JBCPL revenues of Rs 2043 crore in FY21 came from India, the rest from overseas mainly from South Africa and Russia, where the company has front end presence. The company has a small presence in the US with 14 ANDAs, distributed by its partner on a cost plus basis. The company has a contract manufacturing business mainly centred around Lozenges to relieve discomfort caused by mouth and throat infections.
India is a market where JBCPL is focussing its energies on. At the moment JBCPL is ranked 28 in the Indian pharmaceutical market.
Five brands of JBCPL including calcium channel blockers - Cilacar (Cilnidipine) and Nicardia (Nifedipine) used in treatment of hypertension, antacid Rantac (Ranitidine) and antibiotic Metrogyl (Metronidazole) contribute about 70 percent of company's India sales. The chronic therapies now constitute about 45 percent domestic formulation business.
Rantac franchise that contributes about Rs 200 crore in sales did face some pressure, with concerns about probable carcinogenic impurities called NDMA or N-nitrosodimethylamine.
Chopra said the company is closely working with regulatory authorities on NDMA issues.
"We are sharing batch by batch details on NDMA, we are also working with our API suppliers on how to negate the NDMA issue at the source itself," Chopra said.
"The brand is doing much better now, the confidence-building measures with specialists and general physicians are working," Chopra said.
Chopra said the company has added four new therapeutic divisions.
It carved out a new Nephrology specialty division with half a dozen products and a 40-50 people sales team to promote them to the specialist doctors. In addition, the company has strengthened its metabolism or diabetes segment with the launch of products like anti-diabetes drugs like Vildagliptin and Dapagliflozin. The company also started a respiratory cum pediatric division with 350 salespeople marketing about dozen products, of which half of them are recently launched.
Chopra expects all these initiatives will help in "market-beating growth".
Guidance
Chopra said the company is working to improving the MRs productivity. In FY21 the monthly revenue per MR stood at Rs 4.6 lakh, which he wants to increase to 12-14 percent, without adding any extra costs. JBCPL has over 2100 field forces in the country.
Chopra said they would retain the EBITDA margin profile of FY21, as SG&A (selling, general and administrative) expenses were subdued in FY21, are coming back. JBCPIL EBITDA margin stood at 27.4 percent.
JBCPL recorded revenue of Rs. 2,043 crores in FY21 as compared to Rs. 1775 crores, registering a growth of 15 percent over the previous financial year ended March 31, 2020. The net profit stood at Rs 449 crore.
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