Vivimed to focus on formulations biz in regulated markets

Hyderabad-based Vivimed Labs Limited, which entered the regulated markets in the generics business just a few months ago, believes there is no such thing as late entry as far as the global generic pharmaceutical business goes.

“The growth from here on will come primarily from filing of more ANDAs (abbreviated new drug applications) and getting into more markets. Recently, we got one of our plants approved for CIS and European markets,” Santosh Varalwar, managing director and CEO of Vivimed, told Business Standard.

The company filed two new drug applications (ANDAs) in the US recently after it acquired the FDA approved formulations plant from Actavis Pharma in August 2013. It is working on three more ANDAs, which are expected to be filed by the end of this year.

Varalwar said they would be filing 8-10 ANDAs each year in the next three years while simultaneously making efforts to enter other regulatory markets in Europe and Asia. In the Asian region, the company would be looking at Japan and Korea where it has a presence in the active pharmaceutical ingredient (API) space.

Generics markets are growing at a rapid pace across the globe while in countries like the US and Japan the potential for opening up the market is much higher. Adding to this, the new drug delivery forms would also provide additional impetus to grow in this business, he said.

In 1989 Vivimed started its journey as a specialty chemicals company making active ingredients that go into personal care products produced by major global FMCG companies. Later, it diversified into pharmaceutical APIs and formulations business through a series of acquisitions. The company’s revenues rose to Rs 1,350 crore last year from just Rs 170 crore less than five years ago in 2008-09. Its formulations business is expected to be around Rs 350 crore out of the projected revenues of Rs 1,600 crore in the current year.

The company has enough R&D and manufacturing capabilities to scale up the formulations business into a dominant revenue generator in the next three-five years, according to Varalwar.

On the financial performance front, the company's net profit, however, declined to Rs 66.39 crore in 2013-14 from Rs 83.58 crore in the previous year. Varalwar said profitability was impacted by the rise in cost of finance mainly on account of the acquisition that was almost fully funded through debt.

To bring some relief on this front, the company is now planning to pump in Rs 150-200 crore in additional equity through options like qualified institutional placement (QIP) at an appropriate time this year, primarily to reduce the debt.

“No significant capital expenditure is required either this year and the next year on formulations and API front. Investments made in the Chennai formulations plant will start bearing fruit soon. So, going forward we hope to increase our profitability and focus more on operations,”said Saurabh S G, director, corporate strategy at Vivimed.