Shantha Bio plans to set up Rs 90cr facility

New facility to manufacture viral vaccines

Hyderabad-based Shantha Biotechnics Limited plans to construct a new facility on the outskirts of the city for the manufacture of viral vaccines against diseases like measles and mumps and rubella (MMR). The company is investing Rs 90 crore in the new facility.

Speaking to Business Standard, Varaprasad Reddy, managing director of Shantha Biotechnics Limited, said, "As part of a strategy to be present across the vaccine spectrum, we are going in for this new facility. The ground-breaking ceremony would be held on February 17 and we expect to go into production in January 2006."

According to Reddy, the new facility will also be developing vaccines using monoclonal antibodies, other recombinant proteins and will also include a fill and finish facility. The company is also setting up a separate research and development centre.

"After the expansion, the company will be a comprehensive vaccine manufacturer, spanning bacterial and viral vaccines and monoclonal antibodies," Reddy said.

The company is considering private placement as one possibility to raise the required funds to meet the expansion needs. "If we get the right valuation we would then go in for the option or else we can also take the debt route, because our debt equity ratio is low at 1:0.48, which will allow us to raise the funds required for the expansion plan," Reddy said.

JM Morgan Stanley and SBI Mutual Fund have a 10 per cent stake in the company and according to him both of them had acquired their stake in Shantha Biotechnics at Rs 500 per share in 2000.

Regarding the company's long-pending proposal to tap the capital market, he said, "If we maintain the trend of doubling our revenue, that is Rs 65 crore in the first half of 2005-06, we will be going in for a public issue later in 2005-06," he said.

Shantha expects to post revenues of Rs 65 crore in the current financial year. "The past three years have been very difficult because of the massive drop in prices by vaccine manufacturers. Last year our revenue was Rs 32 crore and this year we hope to double our revenue because exports have been strong and are contributing around 85 per cent of the turnover," he said.

Reddy said that the approval given to Shanvac-B, the company's Hepatitis-B vaccine, by the World Health Organisation (WHO) helped the vaccine's exports.

"Unicef sources around 40 per cent of its vaccine requirement from the company. Apart from Unicef, we export Shanvac-B to 22 countries, which is ironical because we had developed Shanvac-B to make it available cheaply in the domestic market," he said.

Shantha is also planning to launch a combination vaccine of Hepatitis and DPT by March this year. "Apart from this, the company also plans to launch Hepatitis C Virus (HCV) and HIV diagnostic kits by March," he said.