The FDA clearing our API and formulations facilities represents a significant positiveconsidering the number of notices issued to other domestic pharmaceutical players. Thisnot only indicates our alignment with globally-accepted systems and processes but alsoenhances our respect in the US market. Our US front-end facility has made a promisingstart. We secured all state licenses. We created a large product basket. We signed masterservice agreements. We delivered on the promises we made to our customers. We earned theirtrust the most important growth catalyst in this highly-competitive market place.We received a Most Reliable Supplier' award from an important customer. In additionwe crossed US$50 million in revenues. All this in only the first full year of operationsin the US. The question is how we plan to take things ahead. To get a directional sense ofour strategies it would be relevant to understand the prevailing sectoral environment. Inthe contemporary world compliance competition and costs have emerged as key growthchallenges for any pharmaceutical company. Compliances have become increasingly stringentand regulatory standards determine every single operational aspect from productquality to systemic accuracy and data integrity (including softer aspects). Regulatoryaudits can take place at any time as opposed to the earlier practice of them being plannedmonths in advance. This means that quality ceases to be only a product attribute butemerges as an integral component of organisational culture.
Competition continues to grow unabated in the world's largest pharmaceutical marketwith two ramifications. One for every ailment there are multiple solutions. Everyemerging opportunity open to for several players. Every product moving out of patentprotection has numerous filers. All these realities point to one conclusion thedifference between niche and commodity is declining faster than ever leading to profitmargins for conventional products getting squeezed. Two each player is increasing thecomplexity play increasing the pipeline of complex products that mandate a firmgrasp on multi-step challenging chemistries. This necessitates large investments bycorporates in widening their capabilities and growing their intellectual capital bases.
At Alembic our momentum-building strategy is similar to the other pharmaceuticalplayers. The difference lies in our execution aggressively moving ahead on multiplefronts at the same time.
Capacities: We made significant investments across the pharmaceutical value chain.Having commissioned our new API facility (API#3) which can accommodate a number ofadditional blocks as and when the need arises our project teams are working on setting upsophisticated facilities in the formulations (oral solid dosage and injectables) oncology(oral solid and injectables) and dermatology formulations spaces all high-growthand high-value therapies. All our facilities should be ready during the current financialyear which means we can commence production the day our products are approved.
Capabilities: We invested in dedicated R&D facilities for developing oncologyformulations (oral solid dosage and injectable) and created R&D capabilities fordeveloping multi-usage injectables and expanded our existing R&D expertise to catalysethe complexity value chain. Our research team is actively working on more than 260projects (60 in 2014-15) across our two R&D centres. Our filings should improve toabout 30 ANDAs annually compared to seven in 2014-15.
Alliances: At Alembic we are leaving no stone unturned to catalyse our progress. In2016-17 we forged a joint venture with Orbicular Pharmaceutical Technologies PrivateLimited to enter the dermatology segment thereby gaining a foothold in the US$ 4.7billion market. Today we have a pipeline of 45 molecules at various stages ofdevelopment.
Outsourcing: We understand that there is rich intellectual capital available outsideAlembic's boundaries which can be leveraged to catalyse our research. Consequently wepartnered with leading research outfits to intensify our R&D. The result: ~25% of ourresearch programmes are carried out in collaboration with partners.
Quality: We worked patiently in improving quality across the organisation. Wechallenged the status quo. We worked and re-worked. We institutionalised ado-it-right-the-first time' culture as opposed to the do-it-fast' philosophy.While we understand that this is an ongoing journey these initial results provide us withthe impetus needed to focus on more such quality-building initiatives.
India formulations: Alembic over the years has shifted its focus to chronic segments.This strategic change has yielded rich dividends. We are confident that growth from thisvertical will leapfrog past the historical average by clocking healthy double-digitrevenue accretion. This optimism stems from some important factors the launch ofseveral successful products during the current year our Sikkim plant operating at optimalutilisation and a small tweak in our marketing model which we feel should improve businessprofitability.
At Alembic a number of things are happening all at once which should result ininteresting transformation. Consolidate our presence in the lifestyle therapeutic segment;increase the proportion of complex products in our product basket; expand our deliveryplatform; skew our revenue mix in favour of high-value products that enjoy global demand.The bottomline is that our business is likely to emerge more profitable and sustainable.