Apex Lab to handle certain IP projects under new entity to raise PE funds

Apex Laboratories is planning to have some of its 21 intellectual property rights (IPR) related projects handled through a seperate entity, as part of its plans to expand presence to the regulated markets of US and European Union. 

The company might also look at diluting a significant minority share in the new entity to Private Equity investors to raise funds to support this plan. The company is expected to reach a turnover of around Rs 750 crore by March, 2021,  as against around Rs 500 crore now.

The IP projects which it would move to the new entitiy would be mostly for the regulated markets. "Certain molecules for which we have the IPR are new to the US market, while some others are very generic and available in the US and European Union. We would like to have a seperate company to handle the works on certain molecules. The reimbursement structures across the world is different. We have to accordingly strategise which company to export where," said S V Vishagan, Executive Director, Apex Laboratories. The company currently has around 21 patents and another 20 are in the pipeline.

Also, the family decision is not to dilute any share in the parent company as of now and this is another reason to look at a new entity in which the company can bring in external investors, he said. The company do not have plan to go for an IPO in the near future.

"The fund raising will be for the specific project  - like leveraging its IPR for certain territories for which PE fund raising is planned. These projects are yet to start," he said. The quantum of dilution and the funds to be raised would depend on the progress of the development of a New Chemical Entity (NCE), a new molecule it is currently working on an antibacterial with rapid wound healing in the skin care segment, which the company target to register with the US drug regulator.

Commenting on the expansion plan, he said, "We are in the process of expanding the Zincovit basket, which would bring in additional revenue for the brand. We are focusing on the cardio diabetic segment, probably in the nutraceutical space and we are focusing on some of the innovative projects in the herbal pre-diabetic medication, which all would help us to achieve the turnover target." 

Apex has invested about Rs 220 crore in the last five years in upgrading manufacturing and R&D infrastructure. The EU GMP facility for Oral solid manufacturing is currently under expansion with an investment of Rs 25 crore, which will help enhance capacity by 30-40%.

The company currently exports  to UK and Canada from its MHRA approved facility, which is also undergoing expansion now. It also exports to around 20 countries in the rest of the world markets. These exports include Oral Solid tablets and capsules.  Its Topical plant and liquid manufacturing plant are in the process of completing approval processes with various regulatory agencies. 

Once the regulatory approvals are in place for these plants, exports from all the plants will be possible and customers have  shown keen interest. This will help company to enhance its export business substantially in the years to come, said the management.