Moneycontrol
Last Updated : Nov 02, 2018 07:09 PM IST | Source: Housing.com/news

Kilitch Drugs bets on Africa to grow sales in its comeback bid

The company is targeting to double the sales in the current financial year, and is well on the track to achieve it.

Viswanath Pilla @viswanath_pilla
 
 
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Viswanath Pilla
Moneycontrol News

Kilitch Drugs, the Mumbai-based pharmaceutical firm is betting on Africa market to revive business and double sales in the next two years.

The company focused on contract manufacturing of generic injectable drugs, sold its main plant at Paonta Sahib, Himachal Pradesh to US-based drug maker Akorn for around $60 million in 2012.

The sale also came with a non-compete clause that restricted the company from supplying drugs to its existing customers, effectively limiting its operations.

“Subsequent to the sale, the revenues have fallen from Rs 180 crore to 6 crore, and 7 crore was the expense, and we are making a loss of one crore,” said Mukund Mehta, Managing Director of Kilitch in an interview to Moneycontrol.

The company was left with a much smaller parenteral facility in Navi Mumbai and a small presence across a few emerging markets to rebuild the business.

Mehta said in those four years the company decided to concentrate on the export business, focusing on registering generic products in dozens of African countries and signing up with local distributors to market those products.

Mehta said registering a product in many African countries can be a lengthy process, as it takes between 2.5 and 3 years and costs $5000-$15000.

The idea was to prepare the company for the next big leap before the non-compete agreement ended, Mehta added.

The foresight has started paying off, the company sales in FY18 grew 45 percent to Rs 53.89 crore, more than 90 percent coming from exports.

Mehta said his company is targeting doubling the sales in the current financial year and is well on the track to achieve it.

"We are in take-off stage," he said.

The upcoming cephalosporin injectable plant in Ethiopia, where Kilitch is investing around $7-$10 million is expected to begin commercial operations by June 2019.

The plant with a capacity of 20-25 million vials, the first one in the East African country will add Rs 100 crore in sales from FY20 onwards, Mehta said.

To encourage local drug manufacturing, many African countries in their public procurement have been giving preference in terms of offering higher prices to locally made medicines compared to imported ones.

Kilitch said it’s exploring opportunities to start manufacturing in 2-3 large African countries through partnerships.

The company so far registered 320 products across Africa, plans to scale it up to 500 products in coming quarters.

Africa is a diversified and complex market, with potential business and political risks, but the opportunity is huge, he said.

“Next decade belongs to Africa, they have resources, manpower and only assembling is needed,” Mehta said.
First Published on Nov 2, 2018 07:09 pm
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