Hyderabad-based Neuland Laboratories Limited (NLL), the Rs 230 crore API manufacturing and contract research company, is looking at posting double digit profit and crossing Rs 300 crore turnover in the fiscal year 2008-09 with an eye on more joint ventures with international players this year.
NLL, having its core business in manufacturing Active Pharmaceutical Ingredients (API), bulk drugs and contract research services, posted a turnover of Rs 230 core turnover in FY 2007-08 with a net profit of Rs 10.5 crore.
It grew at 20-25 percent y-o-y for the last five years.
Speaking to Business Standard, Saharsh Rao Davuluri, vice-president, corporate planning & development, NLL said,“This year we expect to cross Rs 300 crore and post a robust profit growth as well.”
Davuluri pointed out that although the demand from the consumer side has not seen any shortfall because of the downturn, some of NLL’s clients across North America and Europe have become more stringent and there is some pricing pressure on the generic side.
“Despite this we don't foresee any issue in realising the growth target with all our expansion plans on track. Growth of more than 20 percent is definitely on cards,” he said.
Interestingly, despite the global meltdown, 85 per cent of the NLL’s sales this year came from exports to highly regulated markets like North America and Europe and Japan which are its major markets.
North America contributed 40-50 per cent of NLL’s total business, Europe 30 percent and Japan another 20-30 percent.
In a bid to expand its product offering and to become an end-to end service provider for the pharma sector, NLL recently entered into a 70:30 joint venture with North Carolina-based CATO Research to form Cato Research Neuland India Limited (CRNIL) which would be conducting phase 2 and 3 of clinical trials for global pharma companies.
Commenting on the tie-up Davuluri said, “The joint venture with CATO is strategic. We want to diversify our product portfolio to include clinical research and clinical trial, which is one area where Indian pharma companies can make a lot of business. We have the infrastructure but we need to have the expertise. We thought of leveraging it and we wanted to find a strategic partner who had no presence in India and CATO proved the right choice. We are open to more such collaborations.”
The company invested close to Rs 100 crore over the last two years to increase its manufacturing capacity from 600 tons to 2000 tons per annum and set up an exclusive 40,000 square feet state-of-the art R&D centre in Hyderabad. This include a Rs 40 crore investment in the new R&D facility.
“I don't see that kind of investments this fiscal, because we have heavily invested in expansion keeping in mind the demand situation for the next 2-3 years. We need to realise our business plans. This year the focus will be on CRAMS both for drug discoveries and generic companies, clinical research and the new JV,” said Davuluri.
The company is also looking at setting up its third manufacturing facility in India next year, a decision on the location of which is yet to be taken. It is most likely to be in Andhra Pradesh, he added.
Almost 80 per cent of NLL’s business comes from API manufacturing and balance 20 percent from CRAMS.
NLL formed a 100 per cent wholly owned subsidiary company in Japan last year called Neuland Laboraties KK. “Our Japanese subsidiary has been fully incorporated, we hope to get a big push in to the highly regulated $64 billion Japanese pharma market,” said Davuluri. From 2002, to expand its product offering after getting USFDA certification of cGMP in manufacturing APIs, Peptides and others, NLL forayed into Contract Research Manufacturing, drug discovery and drug development for global pharma companies.
