Natco to set up Rs 10cr facility

Company to focus on anti-cancer APIs

City-based Natco Pharma Limited plans to use a portion of the money raised from its recent foreign currency convertible bonds (FCCBs) to construct a new facility for manufacturing anticancer (cytotoxic) active pharmaceutical ingredients (APIs) at an investment of Rs 10 crore.

Speaking to Business Standard, Rajeev Nannapaneni, chief operating officer, Natco Pharma Limited, said, "The company's strategy is to concentrate on entering niche markets and one of the area is cytotoxic APIs where not many players are present."

According to him, the company plans to set up the facility either in Andhra Pradesh or near Chennai and expects commercial production to commence by mid 2006.

He said that the funds required for the expansion would be raised from the recent issue of foreign currency convertible bonds (FCCBs) aggregating to Rs 58.7 crore ($13.5 million).

Natco had issued the FCCBs on December 30, 2004, with an offer price of $10,000 per bond to 1,350 subscribers. The bonds would be listed on the Luxembourg Stock Exchange and the Bank of New York would be the trustee for the bonds.

The company is also looking at having a peptide API unit at Mekaguda, in Mahaboobnagar district. "We would be going in for four new blocks for the APIs with an investment of Rs 20 crore. The commercial production at the new facility is expected to begin in 12 months," Nannapaneni said.

The company also plans to go in for a United States Food and Drug Administration (USFDA) approval for its formulation plant located at Kothur in Mahaboobnagar.

"The process of upgradation started a year back and the process is expected to be completed in the next six months. We expect the concerned authorities to inspect the plant during the first half of next year," Nannapaneni said.

According to him, the finished dosage plant at present caters only to the domestic market but with the patent regime coming in the opportunity is immense. "The plant is already approved by MHRA, the UK health authority, and also the Danish health ministry. Once it is USFDA approved, we plan to export the products to the regulated markets also," he said.

He also said that expenditure connected with the filing of Drug Master Files (DMFs) and Abbreviated New Drug Applications (ANDAs) would be met from the FCCB issue. According to Nannapaneni, the company has allocated Rs 10 crore for the filing of new ANDAs.

Natco expects the turnover for the current financial year to grow 20.27 per cent to touch Rs 185 crore from Rs 153.82 crore last year.

"The export turnover for the last financial year was around Rs 76 crore (50 per cent of the total turnover) and in the next two years we expect it to contribute around 70 per cent to 80 per cent of the company's total turnover," he said.

The company plans to launch one more drug in the oncology segment in next few weeks. "The overall plan is to have around 25 to 30 new launches ever year across the various segments that the company is into and the first in the series would be launched shortly," Nannapaneni said.