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Leading contract research and manufacturing services (CRAMS) player Ahmedabad-based Dishman Pharmaceuticals and Chemicals Ltd has completely moved away from Vitamin D3 production and has instead entered a high-margin, low volume category of analogs and cholesterol.
As Vitamin D3 prices crashed in the global markets, especially from China, Dishman decided to stop making it altogether in the current form and rather move to a high margin-low volume product, analogs which fall in the Viamin D category.
J R Vyas, chairman and managing director of Dishman explained, "Vitamin D3 was selling only in the commodity market, that too as feed (animal) and the prices had come down to as low a few dollars for a kg. We thus decided to switch to analogs, and the product that we now make fetches a price of $30,000 a kg."
Dishman is now making another product which is called 25hydroxy and that is converted in to calcifediol. In a recent analyst call, Vyas had said, "What we have done is we have gone to another product which is called 25hydroxy and that is converted in to calcifediol and it has now proven all over the world that vitamin D3 is much less available and it is calcifediol which gets converted in to D3 and that is more important and more sensible and so we have entered in to that."
Dishman Netherlands makes the final analog calcifediol.
While the company did not wish to share the exact margin for the product but said that it was highly profitable. A senior official informed that this has helped the firm to achieve an overall Ebitda of 20-23 per cent on a topline of Rs 200 crore for the segment.
Around 2012, when Vitamin D resin demand globally was around 40 tonnes, Dishman was making around 20 tonnes. The remaining was being made by DSM. Analysts pointed out that while Vitamin D3 prices have crashed due to cheaper Chinese products, however, these are mainly for the animal health market. "None of the other plants which make cheap Vitamin D3 have USFDA approvals, and therefore when one needs it for products for the US market, it is only Dishman and DSM that have FDA approved plants to make it. There also lies an opportunity," said a Mumbai-based analyst who did not wish to be quoted.
Meanwhile, Dishman has also successfully completed the USFDA audit of its Bavla facilities here near Ahmedabad, Vyas said.
