Take Solutions today is India’s only listed clinical research company. Here’s how it got there.
At the peak of the IT boom, HR Srinivasan founded Take Solutions, a software development company focused on supply chain management.
A former civil servant, Srinivasan’s own expertise was in the field of logistics and supply chain management.
The company had its eyes set on supply chain management, an area that still continues to form a small part of the business, till -- in 2004 – it hired Ram Yeleswarapu who came with a diverse pharmaceuticals background.
Yeleswarapu helped the company build tech solutions that would allow pharmaceutical companies to capture clinical data on drug safety, and report adverse events on post-marketed drugs. A few years down, the company decided it would add regulatory submissions for drugs and devices, as a new stream.
In 2008, one of Take Solutions’ client, an innovator pharmaceutical company, asked it to make a regulatory submission. Regulatory submissions are filings that pharmaceutical companies make to the regulators outlining details of their various drugs.
“They said, you're very good at the software [that helps organise the data], why don't you just start making submissions for us,” Srinivasan, Take’s Vice Chairman and Managing Director, told Moneycontrol in a recent interview.
For the next few years, Take Solutions helped companies make regulatory submissions for hundreds of drugs, both branded and generics.
“We figured that we were actually very good at services around the domain,” Srinivasan says. “And the technology, we started using it as an enabler or as a differentiator for the service.”
Growth was quick to come by, with pharma clients eager to avail the services of a company that would help them deal with a bulk of the regulatory legwork required for drug submissions.
As it grew, Take added consulting capabilities, helping clients build strategies around regulatory information management and labelling.
The penny drops
Come 2011-12, the company realised that life sciences was a recession-proof business. It decided to become a full-fledged clinical research organisation.
It was around the time clinical research had taken off in India, with pharmaceutical companies in the West eager to outsource some part of their operations at a lower cost.
Soon, though, the industry hit a stonewall.
In 2012, an NGO filed a public interest litigation in the Supreme Court, alleging that clinical trials in India suffered from serious irregularities. It said that often patients were not compensated enough, their consent was not sought, data was falsified and the government was not doing enough to monitor these practices.
The government, on its part, put out hazy rules in its attempt to regulate the space.
In 2013, the number of clinical trials approved in India hit a bottom of 17, from over 500 in 2010.
Besides, while Take Solutions had the technology piece figured out, it didn’t have the operational experience, access to network of clinical trial sites, infrastructure and human resources to administer trials.
The company ambled along, till in 2016, an opportunity opened up in the form of Ecron Acunova.
Ecron was a full-service CRO with a presence in India and Germany, and offered clinical trials across all four phases. It had managed to hold its head above water even when the industry was going through a tough time.
“They were not making a hell lot of money, but they were not making a loss,” Srinivasan says.
Besides, the company’s founder wasn’t in good health.
Take purchased Ecron Acunova at Rs 115 crore, a fairly reasonable price for a company its size.
Ecron was backed by the Manipal Group and US-based PE fund OrbiMed, which had deep expertise in therapeutics segments such as oncology, medical imaging and cardiovascular.
It had dozens of customers and access to 400 network sites in India and Europe, including Manipal’s hospital network.
Ecron’s clinical expertise and Take’s understanding of the safety and regulatory ecosystem meant the acquisition turned out to be a huge success. Today, clinical services account for around 30 percent of sales.
Since then, Take has expanded its network sites to 7500, with presence across more than 15 countries. It has enrolled more than 120,000 plus patients, 25,000 volunteers and expertise across 20 therapeutic segments.
As it turned out, the clinical research landscape in India turned the corner, with policy becoming more stable, Srinivasan points out.
Recently, the government unveiled Clinical Trial Rules, reducing the time taken for approving applications to 30 days for drugs discovered, developed and proposed to be manufactured in India.
For drugs developed outside the country, the approval time has been fixed at 90 days.
If approval doesn't come in this stipulated time period, the clinical trial is deemed approved.
Currently, it takes around six to 12 months to secure approval for a clinical trial. The Ethics Committee can now be located within the same city or within a radius of 50 km of the clinical trial site. This helps to expand trial to more centres. The ethics committee reviews ethical standards and scientific merit of research involving human subjects.
Last fiscal, Take took in revenues of Rs 2,039 crore, growing at 28.5 percent, with a profit of Rs 178.4 crore (an EBITDA margin of 18.8 percent).
Life Sciences now constitute 92 percent of Take’s overall revenues, of which regulatory and pharmacovigilance constitutes 60 percent. The company has an order book of $200 million.
The company is confident of growth revenues by 18-20 percent in FY20 as well. But Srinivasan isn’t content. He is setting a much stiffer target of $500 million revenues by 2021, or about Rs 3,500 crore at current rates.
This it plans to do via strategic acquisitions.
In January 2019, the company acquired US-based KAI Research and DataCeutics for $27 million and $45 million, respectively.
The Maryland-based KAI Research is a CRO with expertise in mental health, musculoskeletal diseases, neurology, infectious diseases, oncology and medical devices. The acquisition helps Take to acquire Phase II and Ill capabilities in US.
DataCeutics is a clinical functional services provider. Its services include software as a service-based statistical programming, clinical reporting and clinical data management programming.
Last year, the company prepared a Rs 250 crore a war chest through a preferential allotment to fund such acquisitions, even as internal accruals also remain strong.
Srinivasan is hopeful of the opportunity in India, saying that the market is no longer about cost arbitrage.
"You have to sell clinical trial on the basis of how you're going to be able to enrol more patients, better and faster. So that you can crunch the study time," he says.With the industry rediscovering its mojo, Take seems poised to make the most of this era.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.