We are looking at vaccines as new growth pivot: Strides Pharma chief

In a Q&A, pharma major's MD & CEO, R Ananthanarayanan says the firm is setting up a vaccine suite and is in final-stage talks with global players to seal a deal for developing a Covid-19 vaccine

Bengaluru-based Strides Pharma Science has seen a 269 per cent increase in pre-tax profit for Q1 of FY21 at Rs 105 crore and a 34 times rise in PAT at Rs 101 crore though the company is cautious for Q2. It looks at conserving cash and refrain from new investments this year because of the Covid-19 pandemic. The pharma major's Managing Director & CEO, R Ananthanarayanan, in an interview with Samreen Ahmad says the company is setting up a vaccine suite for new business prospects keeping the Covid situation in mind. The company, he said, is also in final stage talks with global pharma players to seal a deal for developing a potential Covid-19 vaccine. Edited excerpts: 

How has the pandemic played out for Strides’ business?

From a Covid perspective, we did not see any major disruptions in Q1 because we had enough inventory of key active pharmaceutical ingredients and raw materials, while we also ensured we had enough inventory in the markets for our customers. Now there’s softening taking place, mainly because of decline in elective surgeries, poorer demand generation of prescriptions, and lower footfall in pharmacies. Also, logistics costs have gone up. Hence, we are cautiously optimistic on the second quarter (Q2).

Will you stick to the growth outlook for FY21?

We believe our combined regulated markets will continue to be the aspirational growth levels we target.

Is the company going to be prudent with investment this year?

Given the Covid scenario, we have put on hold all new investments. We will focus on both cost control and cash conservation for the whole year. There will be no new investments or mergers and acquisitions until there’s clarity on the Covid situation. We will only spend $15 million as maintenance capital.

Where has the process of getting approval for favipiravir to treat Covid-19 patients reached? Any other drugs the company is looking at repurposing to treat the virus?

The bioequivalence studies are on. Once the final Drug Controller General of India approval comes, we will be able to take a call on the roll-out in the market. We keep providing products such as dexamethasone and hydrocortisone to give relief to the Covid-distressed, but there’s nothing specific other than favipiravir at this point in time.

How much of the $40 million the company has earmarked to invest in subsidiary Stelis Biopharma has been utilised? Any new areas the company is going to focus on in the biotech vertical?

Around $15 million has already been invested. We expect the Stelis operations to break even in 2021-22. The first product in biologics which looks promising is the PTH Teriparatide biosimilar targeting osteoporosis. We expect its European filing by the end of Q2. We have insulin and insulin analogues at different stages of clinical trials. With the current Covid scenario, we are looking at vaccines as the new pivot for growth. We will be commissioning a new suite, which can handle multiple types of vaccines, including viral vector, protein subunit, RNA, and DNA. We are also in talks to develop potential vaccines for Covid-19.

Who are you in talks with to develop these potential Covid vaccines?

We are in discussion with some global players and almost towards a closure there. Once the vaccine is developed, we will be providing manufacturing capability.

Has the effect of ranitidine ban in the US worn off on the company’s revenue? By when is it likely to make a comeback in the US market?

We took all inventory and withdrawal-related write-offs in the fourth quarter. We will not see any impact of ranitidine on our business. I don’t have much hope for ranitidine as a molecule, purely because the US Food and Drug Administration has put in a different protocol that one needs to complete and refile supplemental abbreviated new drug applications. This process will take anywhere between 12 months and 16 months, followed by a review, which will take eight to nine more months. We are talking of at least a 24-month period to get approval from the regulator. During that period, almost all patients would have switched to alternative products. Once patients move away and doctors get used to prescribing, the prospect of coming back to ranitidine as a molecule looks bleak. We have revised our growth plans, considering we will have no ranitidine.