How Torrent Pharma is integrating Unichem to boost its domestic business

The Ahmedabad-based pharma company plans to launch its first product from Bio-Pharm stable this quarter in the US; Unichem MR attrition rate has halved in the hope of a turnaround

Ahmedabad-based drug company Torrent Pharmaceuticals, which has faced a slowdown in its US business, has now turned its focus on growing its domestic business. The company hopes to clock 25 per cent compound annual growth rate (CAGR) for its India business over the next three years to beat the slowdown in other geographies.

Besides, the pharmaceutical firm is working actively on integrating the portfolio Unichem, whose branded business it acquired in November last year. And, it is also set to launch the first product from the stable of its recent US acquisition, Bio-Pharm Inc.

The domestic formulations business accounts for the bulk of Torrent’s revenues. It is expected to draw nearly 41 per cent of its revenues from the Indian market this financial year (up from a 34.5 per cent share last year). With the latest acquisition in its kitty – a portfolio of 120 brands from Unichem's India and Nepal business – the company is now working on repeating what it did with its Elder acquisition four years ago.

In fact, the company pointed out in its post-earnings media address that the attrition rate at Unichem had halved in the past month or so. This could be in the hope of a Unichem turnaround after its acquisition by Torrent. Unichem had some great brands, but earlier it was not able to take them forward aggressively.

Torrent has more than doubled the portfolio Elder, which it had acquired earlier. The company had acquired 30-odd brands from Elder (for Rs 20 billion in December 2013), the major ones being Shelcal, Chymoral, Enzar, Deviry, Carnisure. According to the company’s spokesperson, Shelcal had now crossed Rs 3-billion mark from a base of Rs 1.5 billion, while Chymoral had touched Rs 1.5 billion from a base of Rs 600 million.

After Torrent added a field force of 2,800 from its Unichem acquisition, the company now collectively had 5,000 medical representatives for its India business, the spokesperson said. On the productivity front, Unichem’s current medical representative (MR) productivity is definitely lower than Torrent’s Rs 600,000 per MR per month, the spokesperson admitted. "We are looking forward to increasing top line to ensure productivity grows further."

A Mumbai-based analyst who did not wish to be named said there would definitely be some downsizing of the field force, given that there would be doctor overlaps. This could be in the range of 10-15 per cent. Asked about future plans, the company said: "We believe in optimising the field force throughout the organisation in sync with our business priorities."

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The Torrent spokesperson said that the business overlap was around 30 per cent. Overlap brands would continue to be promoted on the basis of their prescriber base, positioning and potential.

"Redundancy is likely to be much lower than the estimated 9 per cent. Such Redundancy would typically come from tail-end brands with low sales value. It is not expected to result into sellout or divestment as such," he explained.

On the US front, Torrent has had a tough time for over a year. It saw its US business’ share of its total revenues shrinking from 40 per cent in FY16 to 23 per cent in FY17. Analysts expect this to further contract to 18 per cent in FY18. Amey Chalke, analyst with HDFC Securities, said while the company was slowly building a US pipeline, there was no major blockbuster drug at the moment.

From the stable of Bio-Pharm Inc, the US-based generic pharma and over-the-counter (OTC) drug firm it acquired recently, Torrent expects to launch the first product during the current quarter itself. "The first product will be launched in the current financial year (2017-18). Bio-Pharm has currently 10 ANDAs (abbreviated new drug applications) under approval at the US Food and Drug Administration. We should expect a few of them to get approval and be launched in the next financial year," the spokesperson said.