Spotlight

The synergy

Strides Arcolab's has been making news with its entry into pharmaceutical spaces, most of which have largely been unexplored. Behind these accomplishments lies a strategy of sound partnerships. Vanessa Mahapatra finds out.

"We focussed on attaining a critical size and expanding to get into as many markets as we could" - Arun Kumar Vice-Chairman and Managing Director Strides Arcolabs

An inexorable spirit to take up challenges marks the success of Strides Arcolab. Even though challenges involve risks and costs, the drive to conquer niche markets led Strides to work out a strategy to materialise its colossal projects. Strides' new strategy and belief is "leadership through partnering" aimed at enhancing its reach, strength and competitiveness. "Our philosophy on partnering is based on the fact that we are a 500 plus crore company. Yet in the global space, we are still a small company," observes Arun Kumar, Vice-Chairman and Managing Director. The partnerships are executed to avoid sales, marketing and litigation costs.

Climbing the ladder

At the time of inception, Strides did not have a very well defined strategy in place. "We focussed on attaining a critical size and expanding to get into as many markets as we could," reminisces Kumar. The genesis of the company was marked by Kumar's vision of an Indian company successfully entering the international space, especially since there were very few players in the dosage processing business. "The idea, then, was just surviving on a daily basis. We never had a profound strategy until 2000," he adds. The company was conceptualised with the notion to be a focussed international player. It was only in 2000 that the company decided to focus on niche pharmaceuticals with high-end technology and manufacturing skills so as to stand out as a global company with regional strategies. It was then that the company forayed into partnerships, particularly product partnerships.

Symbiosis

The ethos of partnering essentially cropped from the company's focus on niche products, which incur high margins. This called for value-addition to the existing capabilities and enhanced competence. Therefore, to build up its position as a leader, Strides meticulously chooses its partners. The selection is done on the basis of the partner's global standing vis-à-vis key skills, R&D, manufacturing capabilities and practices, in addition to the company's vision and attitude. It is a symbiotic relationship as Strides concurrently aligns its product innovation, manufacturing and operational capacities with its partners' needs. "We have something called value partnership, which goes beyond supply agreement. Here, we leverage our technology to our partner and take equities in these companies. We have five such partnerships in the world," informs Kumar reiterating the synergy between Strides and its partners. He adds that such partnerships help in de-risking since both the companies share risks. These endeavours have enabled Strides to infiltrate different geographies, so much so that now, it has marketing presence in 60 countries.

In addition to this, it has 13 manufacturing plants in India, USA, Italy, Poland, Brazil and Mexico. Referring to the company's wide reach, Kumar adds, "In Latin America, we are the largest Indian pharmaceutical company. We also have a very strong operational base in Africa, Europe and North America."

Conquering niches

Ever since it worked upon its clear-cut strategies, the company has been making news all over the world. Strides is a strong player in the soft gelatin business. "Most of the soft gelatin producers in the world are into neutraceuticals business and we chose to be a prescription oriented player, although it is very difficult," he says. Strides chose to tread the difficult path despite the requirement of high level regulatory approvals in the prescription oriented soft gel business because it saw profits in the long run.

Yet again, keeping up with the tradition of venturing into exigent markets, Strides laid foundations for entering the hospital market by manufacturing sterile injectables. "In 2000, we standardised this business further because it is difficult to manufacture sterile injectables and this is also considered a very difficult business model," reports Kumar. The fact that there weren't any players in India in the sterile injectables space, motivated Strides to take it up. On entering the Latin American market, Strides began its sterile business activities and the experience propelled it to convert the model into a global strategy.

Apart from specialising in soft gelatin and sterile injectables, Strides has a wide spectrum of pharmaceutical products, OTC and neutraceuticals to its credit. It also manufactures speciality chemicals and a variety of APIs. A strong product pipeline and R&D innovation has brought the company to a point where it boasts of about 30 patent files. Strides also has all the major approvals like MHRA, MCC and TGA in place.

Above and beyond

Through its global initiatives towards the promotion of ARVs, anti-tubercular and anti-malarial products, Strides is the answer to the worldwide cry for hope to these wide spread diseases. The so-called ATM business has spread out and benefits from the Strides broad marketing network. These products are promoted through partnerships with global organisations like UNICEF, UNDP, Global TB Drug Facility and The Clinton Foundation.

Thus, clear-cut strategies and its belief in partnering has helped Strides to attain an average growth of 30-35 percent per year. However, this is not the end of the road for the company. A lot of challenges still remain. Kumar visualises that the growth of the company lies in understanding the value of partnerships. He further aims at continuing to expand the business in niche areas and attain the status of a dominant player in those areas. The accreditation and accolades that it has received on its way to success are a jewel in the crown. "We have won the national award for exports from the Government of India for chemicals and the Ernst and Young award for Life Sciences," Kumar claims. He himself has won the Entrepreneur of India award in 2000.

Any problems?

No road is a bed of roses. Were there any hurdles on the way? "We have never faced any major problems in any of the markets as we work differently," says Kumar. "Only once we had some issues concerning exchange rates fluctuations in Brazil," he adds. This resulted in a huge financial loss to the company for the first time. However, just like a Phoenix, Strides rose from its ashes by refocusing its business and improving its pipeline and capacities. As always Strides scored. "We stayed in that market because we believed in it. After correction, we are now the fifth largest company in Brazil," he asserts. The management is more vigilant. Nevertheless, there are everyday challenges like commitments and deadlines that have to be met. Additionally, the company has to deal with attrition rates in the technical and operational area. Kumar takes it in the positive stride, "These kind of challenges are normal and common in everyday life of an organisation. So, we work out strategies to ensure that these don't affect us."

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