For a Rs 500 crore-plus company specialising in just five major products, to chart a course of becoming an 'Intel Inside' of the global pharmaceutical industry there has to be a different genetic make up in its core competence apart from having a business model that promises the sky. C Krishna Prasad, managing director of Hyderabad-based Granules India Limited, tells B Dasarath Reddy that the company has it all and it is just a matter of gradual progression.
What is the course charted for future growth of the company?
We have products like Paracetamol, Metformin, Ibuprofen and Metacarbamol. Our idea is to get 35-40 per cent of the global market share in every product that we make in the next 4-5 years. We have chosen high volume products where the scale in manufacturing is the key. Today global supply of Paracetamol is 120,000 tonne, Metformin 40,000 tonne and Ibuprofen 35,000 tonne a year. I don't think we get more products of that volume. So we select products having 10,000 to 15,000 tonne supply requirement, a couple of them each year, and become masters in the process.
How do you plan to attain the leadership position?
We have granulations going up from 8,000 tonnes to 18,000 tonnes, tableting from 6 billion to 18 billion and about 20 per cent increase in API capacities. The good thing is that all these capacities are presold. We need to start building additional capacities from next year onwards. We have the advantage of building the capacities in the same premises as regulatory approvals will be automatic except for some routine inspections. In the last five years, we have been growing at 20 per cent year-on-year and this year it will be little above 40 per cent. The company will continue to grow at 30-40 per cent in the next five years.
How do you differentiate yourself from others in terms of scale and efficiency?
People generally go for small batches of granulation of 500 kg to 1 tonne. So they have to test that batch before releasing for tableting and test the tablets again in six small batches. We have introduced a lot size of 6 tonne. If you make six batches of one tonne you have to test all the six batches and also for tablets in six batches. The line clearance has to be given before starting the next batch, which takes almost half a day. If you make one big batch, you are saving six half days. In this way a lot of money and time are saved.
Pharmaceutical formulation ingredients (PFIs) have emerged as the biggest driver of growth for you in recent times?
Nobody makes PFIs in the world and it is the word we coined some 12 years ago. Eighty per cent of the work involved in making a tablet is till the granulation or PFI stage. So, buying a ready made granulation saves space and time in tablet production.
What about the competition in this space?
There is no good or high quality capacity available in the world. No good company in the west compromises on quality. That is where we have this advantage. China, which was considered as a threat, is no longer competitive. India will get the lead again.
Where do you see growth coming from?
All over the world. North America and Europe are growing fast. Latin America, Africa and parts of Asia are markets for PFIs and I see tremendous growth for PFI business in these areas. Whereas the US and Europe are getting converted to tablets Our idea is to be a global leader in whatever we do. It should be like 'Intel Inside' if it is PFIs. If it is a tablet, then you have more than 'Intel Inside'.
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How does the joint venture with Ajinomoto Omnichem fit into the business of a volume player like Granules?
The joint venture project is basically a CRAMS (contract research and manufacturing services) business. We have just laid the foundation stone and in another 12 months or so we will start validation, customer and FDI approvals etc. We don't anticipate any big revenues coming from the JV in the next two years. But the day it takes off, that is going to be a tremendous addition to our revenues.
Do you think touching the Rs 5,000-crore revenue mark by 2017 is possible, that too inorganically?
I see the opportunities that even take us beyond Rs 5,000 crore revenues. It is our conviction that we reach that revenue milestone with our existing business model. But, we also want to grow through JVs and partnerships. If there is good manufacturer of APIs we may invest there. We will be doing marketing JVs in the US and elsewhere.