Jubilant Organosys to integrate North American operations

Leading contract drug research company Jubilant Organosys has embarked on a major exercise to integrate its North American operations, three months after completing acquisition of the Canada-based Draxis Health. The functioning of Draxis will be aligned with the US subsidiary Hollister-Stier to strengthen Jubilant’s position as a preferred partner of global pharmaceutical companies. A $20 million capacity expansion programme has also been initiated by Jubilant.

Hari S Bhartia, co-chairman and managing director, in a conversation with Business Standard, stressed on the need for integrating the organisation, processes and technologies across Draxis and Hollister as both the entities are in the contract manufacturing business. “The successful integration of the two companies is a crucial part of the North American growth strategy that will add significant shareholder value,” he said.

A key factor in the integration process has been the changes at Hollister, which has seen the departure of four top executives since the acquisition 18 months ago. Bhartia said the changes were “mutually agreed”.

“Any integration will involve changes. In our case, it has been just 2 per cent. Hollister was an independent company earlier. Now, it is part of a larger organisation. We have augmented the sterile injectable production capacity of Hollister by 150 per cent and added 120 employees. We have promoted a lot of people internally, who have taken more responsibility”, Bhartia said.

The changes are part of the overall strategy to better integrate the two locations. “We have a strong and capable team that can carry forward the growth momentum. Hollister currently has 520 employees, up from 400 at the time of acquisition. This is expected to go up by 20 by the end of this financial year. Hollister continues to meet the growth target set at the beginning of the financial year”, Bhartia said.

Post the Draxis acquisition, Jubilant has joined the league of top 5 contract manufacturing organiastions in North America and the largest operating out of India. The $253 million Draxis acquisition was completed on May 28, 2008. Global pharma companies such as Johnson and Johnson, GE Healthcare and GSK are the long-term clients of Jubilant. The company expects to post a 50 per cent increase in revenues for FY2009 in the light of expanded capacities, larger product profile and expanding global footprint.