Shasun Pharma targets Rs 2000 cr turnover in 3 yrs

Shasun Pharmaceuticals Ltd has set a target to double its turnover to Rs 2,000 crore by 2015. 

“We have crossed the milestone of Rs 1,000 crore turnover for the year ended March 31, 2012, and our next target is to double it in next three years. Our plan is to become a billion dollar company in 2020,” said S Abhaya Kumar, managing director. He was speaking to reporters on the occasion of company completing 35 years of existence.

The company, which invested Rs 83 crore last fiscal in its operations, is planning to invest around Rs 250 crore for capacity expansion in 2012-13, including setting up of a multiproduct facility in Visakhapatnam, Andhra Pradesh, and upgrading existing facilities. 

Kumar said they starting last year they were investing considerably into capacity building and other expansion activities. 

It expects the contract research and manufacturing services (Crams) along with active pharmaceutical ingredients (API) business to contribute to the Rs 2,000 target. A large number of products going off patent in 2013, including sevelamer hydrate, sevelamer carbonate and colesevelam molecules for which the company has a first to file advantage to manufacture, would bring in considerable revenue, he added. 

The formulations business under Crams is expected to grow from the current Rs 80 crore to Rs 400 crore, and its UK subsidiary, Shasun Pharma Solutions Ltd that is exclusively for Crams, is expected to clock in around Rs 500 crore in 2014-15 from Rs 350 crore at present. 

The API business is expected to grow from Rs 400 now to Rs 600 crore while the API business for Crams and custom synthesis would go up from Rs 90 crore to Rs 250 crore by the fiscal 2014-15. The upcoming plant at Vizag would generate a business of Rs 300 crore by the time. The biotech business would grow from Rs 3 crore at present to Rs 25 crore. 

By 2015, around 50 per cent of the target revenue would be from API and the rest from Crams. 

The UK entity clocked a net profit of around 6.2 million pound last year, said Kumar. 

The company is also looking at backward integration, including into some of the petroleum products for its products. Its multiproduct manufacturing facility for contract manufacturing services business in the SEZ of pharma park in Vizag, with an investment of over Rs 50 crore, is expected to commence commercial production before December, 2012. 

It recently raised Rs 50 crore through preferential allotment of shares to Caduceus Asia Mauritius Ltd, a subsidiary of US-based healthcare investment firm OrbiMed Advisors, for capacity expansion by diluting around 11.93 per cent stake in the company. OrbiMed's representative is being inducted on the board of Shasun. It was a strategic investment to bring in expertise of OrbiMed into the company, rather than an investment to raise money for Shasun for its future growth, said Kumar. 

Shasun Pharma plans Rs 250cr expansion

In an interview to CNBC-TV18, Abhaya Kumar, managing director of Shasun Pharmaceuticals says, the company has huge expansion plans. "Shasun is on a very high expansion spree now, investing more than Rs 250 crore in Vizag and in other places. We have raised Rs 50 crore," he adds. Below is the edited transcript of his interview with CNBC-TV18's Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video. Q: Can you take us through this placement? Why you needed to do it and whether there is more capital raising or equity capital raising in the offing? A: Right now, we have raised Rs 50 crore because we have huge expansion plans. We wanted to ensure that a global healthcare fund invest in the company. It shows the confidence that global healthcare fund has on the fundamentals of Shasun. So, Shasun is on a very high expansion spree now, investing more than Rs 250 crore in Vizag and in other places. So, overall we see a huge growth in the pharmaceutical outsourcing industry. Q: Does this capital raising have anything to do with API supply facilities that you are doing for the supply of Telaprevir to Vertex? A: We don't talk about the customers, but the plant being built in Vizag is only for supply to various pharmaceutical companies. Q: Can you walk us through how much dilution this particular move has led to for your company? What kind of impact that would have on earnings? A: The total dilution is to the extent of around 11.9%. Our own equity percentage is coming down from 48% to 42%. But the debt/equity ratio is going to improve from 3.93 to 1.51. That is very significant, given the sale of land in Velachery. Q: Even so more than 11% equity dilution is quite high. You mentioned that you have more aggressive capex plans. Will you be looking to raise more money through the course of this calendar or financial year? A: No, we will be able to manage it with our own internal accruals. We don't intend going for any more equity infusion. We will be able to manage with the loans, which we are taking from the bank and from the internal accruals.

Shasun Pharma to launch own branded drugs

City-based manufacturer of active pharmaceutical ingredients and formulations, Shasun Pharmaceuticals, will soon have its own branded products—both over-the-counter products and prescription drugs—in the market.

The company will also brand and market its contract research and manufacturing services (CRAMS), while setting up a new API plant at Vishakhapatnam in Andhra Pradesh.

By lining up a slew of growth initiatives, the company expects 30 per cent growth in its consolidated revenues for this year and next year—moving up from Rs 840 crore in 2010-11 to Rs 1,300 crore by 2012-13.

A leading producer of ibuprofen and derivatives, the company is coming up with a new pain management OTC product. The product will be available in balm, gel and ointment formats and will hit the market in 2012.

“The unique formulation will be a patented product and the clinical trials are on,” said S Abhaya Kumar, managing director of Shasun Pharmaceuticals.

In prescription drugs too, the company will be introducing some branded generics for renal management and diabetes.

The company has 70 process patents. For the marketing of branded products and CRAMS, the company will be spending Rs 10 crore next year.

Further, it will also invest Rs 100 crore in two years on the new manufacturing plant coming up in Vishakhapatnam.

Shasun is looking at various options to improve its leverage like divesting stake with financial investors or seeking external commercial borrowings from banks.

According to Kumar, the company wants to grow its formulation business over the coming years.

“Formulations currently contribute 10 per cent to the total revenue; this should go up to 20 per cent this year. We will be filing five to six ANDAs every year henceforth.”

“In CRAMS, we will also be projecting our capabilities in handling hazardous reactions and complex procedures in the phase II and III trials through road shows and seminars in the US, Japan and China,” he said.

The company will also cut down the production of less profitable products meant for the unregulated markets and focus on high-value products for the regulated markets.