Sun seeks global alliances

PHARMACEUTICALS - III

Vadodara-based Sun Pharmaceuticals is looking for an international partner to take on the challenges in the patent era commencing from January 1, 2005.

The country's leading speciality pharmaceuticals and bulk active company has recently launched a foreign currency convertible bonds (FCCB) issue to raise $75 million "" taking the aggregate size of the FCCB issue to $350 million "" to fuel its acquisition plans in the US market.

"We plans internationalise our business. Currently, along with our US subsidiary (Caraco Pharma Labs), international markets account for 34 per cent of our turnover. We intend to increase this to over 50 per cent in the next few years," Dilip Shanghvi, chairman and managing director, Sun Pharmaceutical, said.

The company aims to generate over 50 per cent of its revenues from the international markets in the next few years.

It has also enhanced its spending on research and development (R&D) to Rs 75 crore for the current financial year. "We have active programmes in drug discovery and dosage form development that have entered or are close to entering clinical trials in Europe. These projects will earn us intellectual property from across markets. Our plan is to take these projects as far ahead in clinical trials as possible and then work with an international partner," Shanghvi said.

"In addition to the Rs 300 crore that we have invested in research so far, we have increased our annual research spend to Rs 75 crore for 2004-2005 and 2005-2006, with over 40 per cent of this earmarked for innovation based work," he added.

The company commissioned two new research centres that add 250,000 square feet of research floor area, with 400 scientists. Last March, the R&D spend as a percentage of sales was about 11 per cent due to the commissioning of these centres. However, this ratio should stabilise at over 7 per cent on an ongoing basis.

Asked about the company's plan to collaborate with a global life science major, Shanghvi said: "Depending on the research projects, there has been interest in Indian companies in the past. Our intent is to take our research projects as far ahead as possible "" at least beyond phase 2 "" and then seek a partner so that maximum value can be created for the company."

"Current products that are based on pre-1995 products will continue to reach the market. For post-1995-based products, where therapy alternatives are available and a current patient base is stabilised, the usage pattern may not change much as India will remain a price sensitive market," he added.

Sun Pharma has its formulation plants at Vapi, Silvasa, Jammu, Dadra, Halol, Bulk and active plants at Panoli, Ahmednagar, Chennai, Ankleshwar, Kharkadi (Phlox Pharma plant , BIFR approval awaited). The additional capacity expansion will be completed in this financial year at Panoli and Halol plants.