Mumbai-based JB Chemicals & Pharmaceuticals Ltd (JBCPL), which sold out its major Russian & CIS countries business, is betting on its domestic business and plans for major expansions.
The company has closed a $260-million deal with Cilag GmbH International, a wholly-owned subsidiary of Johnson & Johnson’s (JNJ), by selling its entire over-the-counter business in Russia & CIS countries.
Speaking to Business Standard, Pranabh Mody, president, JBCPL, said: “Our next focus will be on the domestic market, which grows at 15 per cent annually. We have immediate plans to expand our sales force in India and the present capacity of plants. We are eyeing more revenue from the contract manufacturing business.”
Mody, the next generation helmsman, is son of D B Mody, the whole time director, and brother of J B Mody, chairman, JBCPL. JB Chemicals is owned by three brothers — J B Mody, D B Mody and Shirish Mody. Bharat Mehta, the son-in-law of J B Mody, is a director in the company.
“It will take another 60-90 days to receive the cash and we have not decided about the allocation of further investments with the money. By the end of this year, we will come out with a proper plan for the investments,” Mody added.
At present, the domestic pharmaceutical business contributes 30 per cent of the overall business and the rest of the world about 15 per cent. Russia & CIS countries contributed 50 per cent of JBCPL’s business. The company plans to strengthen its Indian product basket with in-licensing global brands in therapeutic areas of cardiovascular, orthopedics and gastroenterology.
Strengthening its presence in India, JBCPL is setting up another division of gynaecology and dental care by hiring 100 sales representatives soon. “We have currently 800 representatives in India and there is enough room for growth following our expansions.”
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JBCPL’s lozenges manufacturing plant at Daman and injectable making plant at Panoli is used at 70-80 per cent of their capacity. The company is expanding to use these plants at full capacity and will invest Rs 30-40 crore to set up a new plant to tap the growing need for contract manufacturing.
Currently, revenue from contract manufacturing stands at around $10 million and the company is expected to raise the figure to $50 million in the next three years.
In Russia & CIS countries, JBCPL still holds 30 per cent of the business through branded generic sales, though it sold out OTC drugs. The company is expected to receive approval for three or four more products in the generic space. “Apart from the generic business, we are exploring the possibility of forming alliances with other Indian pharma firms in Russia to market their drugs in Russia through our existing sales force. We have already started talks and will enter the agreement soon,” Mody said.
On Monday, the board of directors of JB Chemicals granted its approval to sell its Russia/CIS OTC business to Cilag GmbH International, a wholly-owned subsidiary of Johnson & Johnson’s for Rs 939 crore. The board has also approved the sale of worldwide rights and registrations of three OTC brands (Doktor Mom, Rinza and Fitovit) to Cilag, for an additional consideration of Rs 6 crore.
Cilag‘s affiliate, Johnson & Johnson LLC, has also entered into a contract with the company’s wholly-owned subsidiary situated in Russia for buying its OTC inventory and receivables for $47 million.
In the Russian market, JB Chemicals is among the top three Indian companies after Ranbaxy and Dr Reddy’s. Its flagship brands, Doktor Mom, Rinza and Metrogyl, account for about 90 per cent of its total sales in the region. On consolidated basis, the company’s net profit rose 17.3 per cent to Rs 139 on a 17.6 per cent rise in net sales to Rs 872 crore in the year ended March 2011 compared to the year-ago period.