FROM THE CEO
"Vivimed expects to move into a new orbit in 24 months."
Dear fellow shareholders
At Vivimed Labs we are optimistic of our prospects to transform our fundamentals andimprove shareholder returns.
In the Healthcare space we expect to transform from an API-dominated pharmaceuticalplayer into a fully integrated healthcare company with a strong presence in regulated andsemi-regulated markets.
In the Specialty Chemicals space our relentless focus on product development isexpected to open up new avenues and strengthen our global footprint.
In view of these projected developments we expect that vivimed will graduate into anew orbit in 24 months.
The year 2013-14 can be regarded as an inflection point for our Healthcare business aswe established a strong foothold in the US the largest pharmaceutical market in theworld following the acquisition of a US FDA-approved Formulation unit in Alathur India.
Operational rationale: vivimed has three US FDA-approved facilities for the manufactureof APIs; we integrated backwards to manufacture our own intermediates and recentlyinvested in a Formulation and dossier development facility in Hyderabad. However a USFDA-approved Formulation facility was the critical missing link in the healthcare valuechain.
Strategic perspective: Despite a strong global API presence we could not takeadvantage of the growing generic formulation space in the regulated markets without whichour business model remained incomplete in terms of capability global recognition andvalue-addition.
The acquisition plugged two strategic gaps. It saved about three to four yearsnecessary for commissioning a new formulations unit (as per our original plan) andsecuring regulatory approvals; facilitated the ownership of two commercially active ANDAswhich made it possible to enter the US market immediately (first consignment shipped inthe last quarter of 2013-14). This further strengthened our relationship with Actavis.
Going ahead our focus will be on product and dossier development in our FormulationsR&D unit; this unit will be developing products where APIs can be sourced from Uquifaenhancing our competitiveness. Over the next 18-24 months we expect to have a number ofactive ANDAs in the US market and an equally strong filing pipeline to sustain our growthinto the long-term.
Our API business will continue to focus on product development efficient procurementprocedural improvements and product repairs which have been the cornerstone of ourintegration strategy. At the API R&D front new teams have been added to accelerate
The CMO business performed creditably in 2013-14 as we scaled up customer accounts. Weare optimistic that business volumes will increase meaningfully with several potential newprojects with existing and new customers.
Widening the speciality chemicals canvas
By virtue of having partnered global MNCs in the Personal and Home Care segmentsvivimed possesses thought leadership in terms of products processes and markets. Theresult is that vivimed has emerged as a valuable partner for leading consumer product MNCslike Unilever P&G and LOreal.
Leveraging chemistry expertise and global visibility vivimed is exploring growthavenues. The Companys two-year investment in establishing a presence in theautomotive specialties yielded results when it received approval for a product from aleading US-based company; vivimed is on course to receive approvals for two more productsfrom the same customer in the current year. Besides vivimeds photochromatic productwas approved by one of the worlds leading lens manufacturers which promises totranslate into sizeable business over the next 18-36 months.
Our natural ingredient-based solution in the Sun and Hair Care segments registeredsizeable volumes in the US and EU markets; we are in the process of developing a strongpipeline of products based on natural ingredients.
Having received a positive response for certain natural actives we will position thisportfolio as alternate replacements over synthetic chemistry ingredients in home andpersonal care products.
While we widen our opportunity canvas through joint product development with existingcustomers we are also broad-basing our overall business which is expected to enhance ourprofitability.
Message to shareholders
During the early part of our journey we transformed from a pure Specialty Chemicalsplayer into a thriving enterprise with a synergistic and balanced mix of Healthcare andSpecialty Chemicals.
In the second phase which is currently under implementation we expect to strengthenour global positioning in both businesses.
The benefits of this transition are likely to be visible over the medium-term throughimproved profitability and enhanced cash generation by the strengthening of ourfinancials and enhanced shareholder value.
Your company vivimed is really special as a diversified and unique player in SpecialtyChemicals and Pharmaceuticals. I and vivimed are appreciative of your continued zeal andsupport and I am confident of healthy growth increased profitability and superiorshareholder value of the Company.
Managing Director and CEO