Spotlight

Leading the way

Shasun means leadership in Hindi. True to its name, the company, Shasun Chemicals and Drugs Limited aims to be the leader in the CRAMS segment. Sonal Shukla finds out

Formulation facility in Pondicherry

A clear vision and a well defined objective can work wonders for an ambitious company. It sure did for Shasun Chemicals and Drugs Limited (SCDL), the Chennai-based bulk and contract research solution major. The acquisition of Rhodia Pharma's custom synthesis business through its wholly owned subsidiary in UK is a step towards achieving its objective to expand in the CRAMS (Contract Research and Manufacturing Services) space. Expanding the customer base by offering services needed by them, even if it translates into tapping newer segments, is a magic pill that Shasun preferred to swallow for a quantum jump in its growth. The evident policy to focus and expand through contract research and custom manufacturing is seen as a logical extension of this global vision for the company.

The planned approach

Planning is the key to success. This is what Shasun believes in. Even though it has a strong presence in the manufacturing of APIs, Shasun plans to concentrate on bulk drugs going off patent between 2006 and 2010. For this, the company is implementing a three-pronged strategy. The first approach highlights feeding its own product pipeline with more products in the coming years, in addition to the existing Ibuprofen, Ranitidine and Nizatidine. The second aspect suggests a clear bend towards supporting contract manufacturing on formulations side. The company's track record boasts of agreements with Glenmark pharmaceuticals, USA and Alpharma already, wherein, it plans to develop and manufacture select formulations for both. Over the long term, Shasun is looking at similar agreements with prominent generic supplying companies in the European markets. The third is to focus on existing contracts in the CRAMS segment on the API and the intermediate side, along with signing new strategic deals with innovators for manufacturing exclusive products for them.

Vimal Kumar Joint Managing Director

A vertically integrated company in its approach, Shasun has put up a formulation capability on the forward integration front. Moreover, at the backend, it has recently expanded its research and development capacity. The company has also taken a clear stand of not indulging in the drug discovery market to avoid conflict with its vision to not compete with its customers. "At the same time we are not averse of getting into drug discovery for a specific customer requirement," clarifies Vimal Kumar, Joint Managing Director of Shasun.

As a vertically integrated company, Shasun can offer all kind of capabilities to innovator and pharmaceutical companies encapsulating services like contract research and CRAMS level synthesis. The company has taken a long leap in the last few years from just being an API manufacturer to setting up of its own R&D in 1998 and evolving into contract research and custom synthesis business from 2000.

CRAMS the way

The company is entering into the CRAMS arena from being a mere supplier of API's. "Shasun's focus is not only on its own generic business but also largely on the custom synthesis and contract manufacturing, which would become a major part of the business in the future," opines Kumar. Being just a supplier of API's would confine the company to the generic space. Shasun's philosophy of not competing with the innovator companies or not challenging their patents, propelled the need to increase the capabilities and product size.

Shasun's acquisition of the custom synthesis business of Rhodia pharma is said to be a step towards developing its global presence in API's, custom synthesis and contract manufacturing. The acquisition will give the company a wider customer base and better standing to offer its client services throughout the drug life cycle. With a view to have full ownership, Shasun decided to take control of the entire plant which consists of Rhodia's UK manufacturing sites in England and Scotland. In this business model, where the WOS becomes the controlling company, it is viewed as a vehicle for investing in future acquisitions. "In CRAMS space, one must realise that by the time one develops a relationship with a customer and get the commercial product out, it can take anywhere between two to four years," explains Kumar. "Whereas this acquisition has given us a readymade opportunity to build a commercial relationship with the customers, we haven't dealt with before," he further adds. This acquisition has offered the company an opportunity to enter into the relationship at the early stage of the drug life cycle. The CRAMS contribution is expected to increase to about 50 percent (combined turnover) by the fiscal year 2008 with the generic exports to start contributing to revenues from 2008.

The API business

Shasun's three major products in the API segments, namely Ibuprofen, Nizatidine and Ranitidine are the revenue source for the company in this segment. Today, the company is the largest producer of Ibuprofen in the world. It caters to 50 percent of the domestic market and enjoys the 10 to 15 percent growth rate in the US market. Ibuprofen was introduced by the company as its second product in the market in 1986. This was in the early years, when the company's only focus was on API manufacturing, mainly in the domestic market. Shasun observed a growth opportunity for the API and desires to introduce Iburofen derivatives in the market soon.

The company is also the leading supplier of Ranitidine to the innovator companies in the regulated markets. It has got 90 percent of worlds share in the production of Nizatidine with Eli Lilly being its major customer. As a leading supplier of CGMP pharmaceutical ingredients and intermediaries, the company has got production facilities in Pondicherry and Cuddalore. The company has also cited the plans of minimum six to seven DMF filing each year. "Today 85 percent of the revenue comes from the API segment for Shasun India. But over the next three years, I see it going down to 45 percent and almost 45 percent coming from CRAMS space," opines Kumar. With CRAMS in picture, Shasun believes that it is a focused area with assured business, good margins and life of the product at least for ten years down the line.

Research rules

All the talks on CRAMS, does not put research on the backburner. Research is a guiding force for Shasun's objective to expand its capabilities in all its existing segments, especially in protein processing solutions. As soon as the products are developed in the labs, Shasun intends to commercialise them with contract operations in the near future. The company's research facility in Chennai undertakes contract research under FTE (full time equivalent model) and under custom synthesis model.

Shasun prefers to work for big innovator and pharmaceutical companies. The FTE model is where an individual scientist is hired by the innovator company and who works under its direction. This has given Shasun the opportunity to develop the capabilities of individual scientists. It has also given the company an insight on how its innovator companies think about new drugs.

Shasun's upcoming knowledge management centre, a modern USFDA and EU compliant centre coming up at Keelakottaiyur has expanded the R&D capacity of the company's already existing research centre. Through this KMC, Shasun plans to focus not only on FTE model but also on its own research model for generic companies worldwide. Shasun's alliance with Austin Chemicals and Eastman Chemical Company has helped in strengthening the R&D frontiers.

Marketing tactics

Shasun was among the first few companies to enter regulated markets. The company's first USFDA approval came in 1991, when very few companies like Ranbaxy achieved that stature. "The company was an early entrant into the developed markets. Given the fact that US market is big for any product, our focus remains on regulated markets, " says Kumar.

Shasun is also hoping to expand in the South American and Russian markets to tap the generic opportunity in these markets. “Shasun is not dividing its focus on the basis of domestic or international markets. We are concentrating on the base of our capability to provide our services as a good partner, be it domestic or international markets,” asserts Kumar. The company does not want to restrict itself to international players but also estimates to enter contract space with domestic manufacturers in the near future.

What lies ahead

The strategy in future for the bulk drug business will be to offer finished dosage forms without divulging in development of its own brands. Whereas, formulations business will focus on multiple products for contract manufacturing.

The global vision of the company remains intact, that is, to be the leader and a preferred partner in the custom synthesis and contract manufacturing business, as well as generic formulations. Furthermore, with the Rhodia acquisition, which is the 'in thing', the company doesn't seem to be very far from achieving it.

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