Largest Ibuprofen API maker eyes double revenue in next four years

Ludhiana-based bulk drug and chemical manufacturer IOL Chemicals and Pharmaceuticals, which has a one-third market share globally in painkiller drug ibuprofen active pharmaceutical ingredient (API), is looking to diversify its product basket to more than double its revenues in the next four years.

The company, however, does not wish to forward integrate to make formulations from these APIs. Sanjay Chaturvedi, executive director and CEO of IOL Chemicals, said they wanted to focus on the API business where they have a steady clientele and not get into formulation sales.

However, as part of de-risking their business, they have started reducing the share of ibuprofen in their overall turnover, and add more popular products to the portfolio. Chaturvedi explained that last year the share of ibuprofen was 65 per cent of the pharmaceutical business turnover, down from 90 per cent about two years back. It can make 12 000 tonnes of ibuprofen API every year, giving it a 30 per cent share of the world market.

From a single product company, now IOL Chemicals has added APIs for paracetamol (analgesic), metformin (anti-diabetic), a few anti-cholesterol, anti-hypertensive, anti-epileptic products. It is now working on adding more APIs – the recently off patented drugs sitagliptin and vildagliptin (anti-diabetic) are among them.

The pharma business is roughly 50 per cent of IOL’s turnover of Rs 2,216 crore. Chaturvedi says the idea is to double the turnover from the pharma business in about two years, and also the chemicals business will continue to grow. “In around four years, we should touch an overall topline of Rs 4,500 crore,” he says.

Vikas Gupta, executive director, and part of the promoter family said being backward integrated gives them an edge over others. In fact, IOL can supply APIs to Indian formulation makers at the same price as the Chinese APIs. Typically, Chinese APIs are 30 per cent cheaper than their Indian counterparts.

IOL is spending Rs 100-150 crore in capex every year, and is adding production lines at its Barnala plant which is spread over 100 acres. The company has posted a revenue CAGR of 22 per cent over the last five years, and its exports have clocked an 11.7 per cent CAGR. IOL exports 35-40 per cent of its production.

“We do not wish to file for hundreds of API products, and then make only a handful of them. In fact, we are working on reducing wastage, recycling the chemicals more, and improving our operational efficiencies to have better bottom lines,” he adds.