How Alkem's 83-year-old founder is remaking India's 4th-largest pharma firm

Sitting in a corner office in the heart of Mumbai’s business district of Lower Parel, Basudeo Narain Singh sounds excited about the future. He is 83, does not use a laptop, and relies on his brain to do most of the computing. He can conduct a meeting without any notes, firing questions from memory.  

Hailing from Okari, a remote village in Jehanabad district of Bihar, Singh and his brother, Samprada, moved to Mumbai in 1973 to start Alkem Laboratories with a seed capital of Rs 5 lakh. This was the next stage in their journey, which had started with a pharma distribution business in Patna.
 

“My family wanted me to get into farming. I wanted a career in academics,” says Singh, as he unhesitatingly adds sugar to his own tea and serves a no-sugar cuppa to this writer. It was Samprada who insisted that Basudeo join him in business.
 

Samprada, 13 years older to Basudeo, was one of the first in Okari to graduate. In 1953, he opened a medical store, and six years later started the pharma distribution company, Laxmi Pharma.
 

In Mumbai, the first challenge the brothers faced was deciding on a name for their company. Samprada suggested Falcon Labs and Dawn Pharma. But Basudeo wanted a name starting with A, the first letter of the Alphabet.
 

“We went to the bookstore of Hotel Bombay International and started to look for names in a dictionary. The Parsi bookstore owner also got involved and he suggested the name Alchemy, which is linked to chemistry," recalls Singh. They modified it to Alkem. 
 

Samprada died in 2019 at the age of 92. The third generation of Singhs is now actively involved in running Alkem. Six months ago, the family appointed a professional CEO to look after the day-to-day affairs and chart the next leg of growth.
 

But that has not stopped Singh from coming to the office every day. He goes for a walk every morning and his mind is alert as ever. And he is the executive chairman.
 

“In FY24, we touched a turnover of $1.5 billion, and in the next three years we aim to cross $2 billion. The growth will come from new ventures like medical devices, biologics, exports, and primarily by gaining a foothold in chronic therapies, while maintaining the acute therapy market share,” he says.
 

At the current exchange rate, $2 billion would be more than Rs 16,000 crore. For context, it was only in 1995 that Alkem first clocked Rs 100 crore in turnover.
 

Open to acquisitions
 

Alkem Laboratories, the fourth-largest pharmaceutical company in India’s Rs 1.97 trillion domestic drug market, is now charting a new course that includes medical devices and biologics, in addition to a sharper focus on exports. Thus far focused on acute therapy, the company, which draws hardly 17 to 18 per cent of its turnover from chronic drugs, is also trying to gain a foothold in this high-margin and ‘sticky’ segment.
 

Acute drugs are those that are prescribed for a short period (for example antibiotics), whereas chronic drugs are those that a patient takes for longer durations (like cardiac and diabetic drugs).
 

Vikas Gupta, CEO, Alkem Labs, who is a doctor by training and has worked with Cipla and Glenmark, says he is bullish on four therapy areas in the domestic market: Diabetic, dermatology, neurology and urology.
 

“We are open to potential acquisition targets in these segments,” he says.
 

Chairman Singh highlights that Alkem has grown organically over the years, but is now open to acquisitions if needed, but not by “over-borrowing”.
 

Analysts say chronic therapy should be the company’s “first priority” for M&A. The issue is availability of assets at the right price, says one analyst.

“Alkem is the fourth- largest domestic pharma company in the India Pharma Market (IPM), with a 4 per cent market share. India business accounts for 70 per cent of its revenues and over 85 per cent of its Ebitda,” JP Morgan noted in a June commentary. “The outlook for the India business remains healthy for Alkem, in our view, as it consolidates its dominant position in acute therapies, gains market share in the chronic segment, and sees good growth in trade generic business.”  
 

JP Morgan expects 150 bps margin improvements between FY24 and FY26, driven by easing of key raw material cost, improved medical representatives’ productivity, and operating leverage.
 

Gupta sees the Glucagon-like peptide-1 (GLP-1) market, a class of diabetes and obesity drugs, as a major opportunity. “The weight loss market is around $150 billion globally. Major drugs like semaglutide are going to go off-patent in 2026. However, there are supply issues which are keeping the multinationals from bringing in these molecules quickly into markets across the world,” he says.
 

Export focus
 

Research and development is likely to play a key role as Alkem increases its focus on chronic therapy, high-margin biological products, and exports. Gupta says that typically the company’s R&D spend has been 4 to 5 per cent of turnover, and it would continue to remain in a similar range.
 

“In FY24 we crossed Rs 4,000 crore in export turnover for the first time, and the United States business continues to grow. The price erosions are stabilising in that market,” he says, adding that non-US markets such as Germany, Chile, Australia, and the United Kingdom are also going to be big.

Analysts expect Alkem to launch six to seven products in the US in FY25, with 7 to 8 per cent of growth contributed by these new products. None of these products is from Alkem’s Baddi plant, which has recently received observations from the US Federal Drug Administration.
 

Bhavesh Gandhi from Yes Securities says higher expenses would be in the form of increased R&D on clinical trials for biosimilar products.
 

Alkem’s subsidiary Enzene, which focuses on biosimilars and also does contract development and manufacturing work, is going to be a growth driver.  
 

Enzene is making more investments in the US market. “Investments made so far in India and Europe have broken even. Around Rs 30-40 crore expenses related to opex on Enzene in FY25 is expected and around Rs 130 crore in FY26,” Gandhi noted in a recent report, adding that Enzene had started building its order book in US, and thus revenues from it should start to flow from the first quarter of FY26.
 

The domestic biosimilar portfolio has seven products and is 5 per cent of the domestic business. 
 

Alkem is setting up a medical devices segment and last December hired Kaustav Bannerjee as the head of its medtech business. Gupta says the company will start with focusing on the domestic market and segments such as orthopaedic and cardiovascular products like implants and cardiac stents.
 

“We are also open to looking at point of care devices,” he adds.
 

Alkem also has a thriving trade generics business, where generic medicines are sold directly through trade channels (distributors, etc). This is seeing margins improve every year, Gandhi says. It is 20-21 per cent of the India business and is clocking a similar growth rate as the prescription business.

Back in 1973, Alkem’s first products were in the anti-infective, gynaecology therapies, which were contract manufactured. Its breakthrough came in 1989, with the launch of antibiotic brand Taxim, followed by several successful ones like Clavam in 1996 (a rival to GSK’s Augmentin), A2Z vitamin, and PAN (used to treat heavy bloating and heartburn).
 

Singh recalls that five years after the two brothers started the business, they had bought a piece of land at Taloja, on the outskirts of Mumbai, to set up their first manufacturing plant. The site is now an R&D centre.
 

Indeed, Alkem’s past also holds the key to its future.