BSV portfolio can touch Rs 5K cr in 3-4 yrs: Mankind Pharma's Rajeev Juneja

In one of the biggest pharmaceutical (pharma) deals in recent years, Delhi-based Mankind Pharma acquired Mumbai-headquartered specialty pharma company Bharat Serums and Vaccines (BSV) for Rs 13,630 crore on Friday. RAJEEV JUNEJA, managing director (MD) and vice-chairman of Mankind Pharma, spoke to Sohini Das over the phone about the potential of the BSV portfolio to reach a Rs 5,000 crore turnover in three to four years with Mankind’s marketing prowess. Edited excerpts:

Will this deal lead to Mankind Pharma focusing on exports too?

We have been very clear from the beginning that we don’t want to get into exports with generic or me-too products. We always wanted products with a high level of entry barriers and complexity.

With the BSV deal, we now have branded products — in some cases, there is no competition, and in others, there is limited competition (one or two players).

For example, consider the AntiD product that BSV has — nearly 5-7 per cent of Indian mothers are Rh negative (blood group), which amounts to 8-10 million mothers.

Lack of preventive measures can cause brain damage or jaundice in newborns. The mother needs to take a dose in the third trimester and within 72 hours after delivery with an Rh-positive child. Only 30-40 per cent of expecting mothers adhere to this due to lack of awareness.

BSV has the world’s first and only recombinant for Anti-RhoD, which has a valid patent until 2028. It also has vertically integrated in-house cell lines. If anyone tries to make any product of BSV, it would take five to 10 years at least.

But we also feel there is huge potential for these products in the Indian market itself. Even after acquiring BSV, 87 per cent of the revenues of the combined entity will come from India. Wherever we have strong opportunities in the rest of the world, we will pursue them. Our ambition is to become a great company in India.

Do you think the deal was at a fair valuation? Your stock prices went down by over 4 per cent on Friday.

This is a very special kind of company. Around five years back, we had tried for this company, but it was a different company back then. This current management, very capable people, has done the job under the leadership of Sanjiv (Navangul), the MD and chief executive officer, and turned this company around completely. This is the reason we went for BSV. These capabilities are not there in Mankind Pharma.

We launched the specialised divisions five years back, including cardio-diabetic, neurology, urology, etc. But BSV is a super-specialty with the highest entry barrier and patented products. When we bought Panacea, many said we bought it expensive — ‘Sir, aapne bahut mehengi li hai’. People didn’t understand that Panacea had very special businesses — a super-specialty transplant business, a patented product for haemorrhoids (Sitcom), and Glizid (anti-diabetic). This entity (Panacea business) is growing at 25-30 per cent now.

Our strategy is very clear — first, we started with bottom up, then we moved to over-the-counter (OTC); then we built the brand Mankind (in the past 25 years, which another company has built such a brand name); and then we went for specialty; and now the ambition is to go for super-specialty (patented products).

You want a property on Peddar Road, and you also want it cheap. Can that happen? We are very clear about our strategy, and it is not short-term. We are not concerned about the stock going down 4-5 per cent in one day. It does not deter us. Whatever is good for Mankind in the long run, we will go for it. Mankind’s experience, sharpness, and execution will make it happen. We are not going for short-term gains.

How do you wish to grow the synergies between BSV and Mankind?

Probably the fastest-growing therapy segment is infertility treatment. People are marrying late, then deciding to have a baby later on in their lives, focusing on careers, stress — myriad factors are affecting fertility.

At Mankind, we have a product called Ova News — an ovulation detection kit. Around 78 per cent of women don’t know their five most fertile days. We have actor Sonam Kapoor as its brand ambassador. We see that there are synergies with our existing line of products Ova News, Prega News, etc. We can use our brand ambassadors to promote awareness about AntiD. With Mankind’s marketing prowess, much can be done.

BSV has a product called Lactare, an OTC product for lactating mothers. The flavour of OTC will come from Mankind. Plenty of product synergies are there.

In the next three to four years, the BSV portfolio could touch Rs 5,000 crore (from a current Rs 1,700 crore). They are growing very fast.

Will you merge BSV into Mankind or keep it as a separate subsidiary?

We will keep it initially as a subsidiary and then plan to merge it into Mankind in the next two to two and a half years. It is a part of Mankind, but it will always have its distinct presence and growth engine because they are a super-specialty division. The entire team from BSV will come into Mankind Pharma.

The office for products that need mass marketing will be based in Delhi, the specialty products office will be based in Mumbai, and the super-specialty products office will stay where it is (Airoli in Navi Mumbai). They have a very different working culture. We will keep it distinct.

How much debt do you wish to take on to finance the deal?

We generate cash. We will have Rs 4,000 crore from internal accruals, and the maximum portion of the funding will come from debt. The debt-to-earnings before interest, tax, depreciation, and amortisation ratio will not cross 2x. Around Rs 7,000 crore would come from debt, and the remaining from equity (qualified institutional placement route).