Providing Best Of Pharma Products

·          Please take us through the journey of GRANULES INDIA so far?

Granules India Limited (GIL) is a pharmaceutical company based out of Hyderabad. It was incorporated in 1984 as “Triton Laboratories” that manufactured paracetamol Active Pharmaceutical Ingredients (API). Granules was founded in 1991 and initially primarily served as a trading company for Triton Laboratories. Later, Triton Laboratories amalgamated into Granules India. In 1995, Granules completed its IPO and listed its stock on the BSE and NSE.

It began paracetamol PFI manufacturing in 1994. Soon the company expanded its PFI business to its other APIs and started exporting its products. As a logical step forward in the pharma value chain, we have embarked into manufacturing of Finished Dosages in 2010.  

Over the years, the company has transformed from being a bulk manufacturer of simple formulation APIs to becoming a fully forward integrated firm, a pioneer in the Pharmaceutical Formulation Intermediary (PFI) and setting high standards of operational excellence in world-class manufacturing facilities that caters to needs of the consumers in over 75 countries.

The Granules we see today is quite different from how it appeared when the venture started. Granules currently supplies active pharmaceutical ingredients, pharmaceutical formulation intermediates and finished dosages.

Granules boasts of the world’s largest PFI facility in the world with an industry batch size. The total PFI capacity is 18400 tons. The high volume facilities offer customers security in case their business needs enhancement. Additionally, the company aims to increase its scale via partnerships as well. The company’s first JV is Granules-Biocause, a partnership with Hubei Biocause, one of the world’s largest Ibuprofen companies. This partnership brings supply security by providing Ibuprofen APIs, which further converts into PFI and FDs in our Hyderabad facility. Granules’ most recent JV, Granules OmniChem, was formed in 2011 through a partnership with Ajinomoto OmniChem of Belgium.  The JV focuses on high-value APIs in therapeutic segments including cardiovascular, oncology and central nervous system.

Our vertically integrated business model has created a leadership position for the company in the sales of several off-patent drugs. We have a strong presence in ‘first-line of-defence’ products such as Paracetamol, Ibuprofen and Metformin. While, all there verticals contribute to the top line of the company with largest share coming from API segment, the future trend is moving towards FDs with creating lasting relationship with global generic players and brand leaders. To augment our offerings to customers in FD space, we have acquired Auctus Pharma in 2014 which has given us access to a multi-product manufacturing facility in Vizag and 12 APIs. More or less at the same time we have established our own R&D centre at Hyderabad spread across 10,000 sq. feet area with an objective to continuously add newer products in our basket. We are also filling many ANDAs in this direction both in OTC and Rx category.

In the last 5 years, Granules has seen an unprecedented growth. This company is progressing speedily in revenue building, improving margins, and institutionalising. During this journey it has added capacities which fit into base business philosophy of “High Volume steady business”, and has also created the platform to go deeper into “Low volume High Margin” space.

Today, our key customers include some of the largest global pharma players in over 75 countries. As of FY2015, GIL has a revenue of INR 1293 crores; revenue growth of 18% compared to FY2014; and CAGR for 5 years is 23%.

 What is your perspective on value creation for your different stakeholders? What are the challenges faced and strategies adopted by you for emerging among the top value creating companies today?

The Value is created over a period of time, based on the effectiveness and efficiency of deliverables to investors, customers, employees and the stake holders.

We leverage cutting-edge science and technology with a firm commitment to ensure good health for all. Our integrated model for manufacturing APIs, PFIs and FDs makes it possible to provide products across the value chain, which enhances competitiveness and value. This is how customers are serviced in all the segments that can be catered to. Owning the ANDA’s also saves time and cost to the end consumer.

Adding on to this quality is a key driver in our manufacturing process. The team devotes considerable interest to cost reduction by changing directions and reagents after obtaining regulatory conformity.

Over the years, we have emerged as a knowledge-driven, R&D focused and multi-product organisation. We have invested relevant resources to build a world-class infrastructure for APIs, PFIs and FDs formulations which actually drives value for the company.

To meet growing global outsourcing opportunities, Granules has restructured its business model in line with the ongoing industry evolution from process to value added research outsourcing.

The result is that Granules, which was commissioned in 1991 to merely trade in APIs, is today an integrated pharmaceutical outsourcing group with a presence across the complete industry value chain, which extends from the manufacturing of APIs to PFIs to finished dosages at one level, and towards providing R&D and regulatory services at the other.
[PAGE BREAK]

Granules has been successfully able to overcome all the challenges. Getting the right set of quality workforce is a biggest challenge for any organisation, it becomes even tougher for a focused sector like pharmaceuticals.  However, we at Granules India try to work on this too, by providing the right kind of training and development for our work force.

·         Going forward, what do you think the major growth driving factors for your company are going to be

As a company, Granules India’s key value proposition lies in providing the best of products.We continue to produce high-quality APIs in-house and gradually shift the business from low-margin APIs to high-margin formulations. Our focus is on expanding our product offering with high value APIs and to get integrated in the future with formulations.

We emphasise on regulated markets which will help operating margins expand. Our tradition is to uphold strict adherence to quality management systems through robust processes.

The joint -ventures and acquisitions of plants are seen as a retail strategy. The joint-venture will create opportunities for us to penetrate into more complex formulations and boost our technological know-how. The best example to this is the Virginia plant in USA.

·         Higher capacity utilisation – for exiting products

·         Enhanced product portfolio – 10 ANDA fillings

·         GPI (Virginia plant) for complex product development and has strategical importance for long-term play

·         GCH – Direct retail strategy

·         CRAMS business

·         Where do you see your company in five years down the line?

Our company is in the midst of an evolution. We have built a strong base business that will continue to grow as it gains defensible market share while expanding profit margins as more of the business comes from formulations and quality conscious customers.

While we are currently synonymous with large-volume products, we have taken several steps to move into more complex offerings. In FY15, we decided to shift our FD strategy in the U.S. by directly offering our products to end customers including retail chains instead of selling to distributors and repackers. This is a step forward.

In order to take our company to the upper echelon of the industry, we are focussing on building our human capital so that we can execute our strategy. We have strengthened our management team with executives who have an established track record within the industry.

In addition, we are developing our broader team by ensuring their career aspirations are in-line with their roles. We are also working to instil a corporate culture that enables employees to take initiative.

By leveraging our senior executives’ expertise, and rewarding employees for innovative solutions, we believe our company will be able to seize lucrative opportunities.

We are excited for the future because we have strengthened our fundamentals and have taken several new exciting steps, which will change our company’s growth trajectory.

·         The United States government reportedly made it mandatory for Active Pharmaceutical Ingredients to be manufactured locally. What is your take on this?

The reported rule, at this point is vague and there are not enough details for us to really understand what the implications could be. So, we will have to wait until we get the full details of what this regulation actually is before we can reach some kind of a conclusion. Nonetheless, I think that rule is applicable to APIs which will be supplied only for the US government business and not essentially for the US market. Today, majority of APIs are imported from India and China and switching it to local manufacturing cannot be done overnight as it takes two to three years to setup a good quality plant and then another year or so for approval. So, there will be an acute short supply of the products that are exported to the US government and the prices of the drugs will be increased manifold.