Neuland Labs to set up R&D facility

City-based Neuland Laboratories Limited plans to set up a completely integrated research and development (R&D) facility during the current financial year.

D R Rao, chairman and managing director of Neuland Laboratories Limited, told Business Standard that work was underway to locate a suitable land, which would take a couple of months.

"It is too premature to give the investments that would go into the new R&D facility, but we expect that a decent amount of investment would be required as the facility is required to meet the long-term goals of the company," Rao said. "Once the plans are formalised, it would take around nine months for the new plant to start operations," he added.

According to Rao, optimum utilisation of capacities at the production facilities at Pashamylaram and Bonthapally resulted in the company's turnover growing considerably.

He said that the key drivers during the previous fiscal were Ciprofloxacin, Ramipril and Mirtazapine. Sales of these products grew to Rs 60.43 crore from Rs 24.19 crore in 2002-03.

Rao said that around 72 per cent of the total turnover was from exports of which 60 per cent exports were to the regulated markets of the US and Europe. "The net foreign exchange earnings grew by 82.4 per cent to Rs 49.47 crore from Rs 27.12 crore," Rao said.

"The US Food and Drug Administration (FDA) has recently inspected the Bonthapally facility and we are expecting the approval soon. Once approved it would open up opportunities to market products like Ramipril, Maleate and others in the US once the patents expire by around 2008," Rao said.

According to him, the turnover this year would be between Rs 180 crore and Rs 190 crore mainly because of the export of Ciprofloxacin, whose patent has expired. The company is also setting up an office in the US.

"We have already began the preliminaries and expect to commence business in the second quarter of 2004-05," Rao said. "We are also in the process of expanding operations in Western European countries," he added.

The company, which at present has a portfolio of 20 products, is planning to widen its base during the current financial year. "The company has identified nine new molecules and the work is underway," Rao said.

Neuland Laboratories for the financial year ended March 31, 2004, recorded a 49.7 per cent growth in turnover to Rs 147.06 crore from Rs 98.25 crore it achieved the previous year.

Of these, international sales accounted for Rs 100.71 crore. The profit before tax and depreciation increased to Rs 16.53 crore from Rs 3.85 crore in the previous year, however the company recorded a net loss of Rs 2.51 crore on account of exceptional items.

During the previous fiscal sale of active pharmaceutical ingredients (APIs) and intermediates were up 49 per cent over the previous year as compared to the industry average of 20 per cent. At present, the company supplies APIs to over 75 countries across the world.