Spotlight

En route to acquire…

Wanbury has achieved significant progress over the years and has several initiatives lined up. Ashok Shinkar, Director, Corporate Finance, Wanbury talks to Garima Arora on the company's inorganic route to development.

"We are looking to increase our global footprint in terms of our formulation business. Domestically, we are looking at the formulation side. We have around 25 products in the pipeline" - Ashok Shinkar Director, Corporate Finance Wanbury

In an era where 'buy or sell out' seems to be the norm of the day, it is a constant strife to emerge victorious in the race to acquire. This trend has been triggered by topline and bottomline advantages that mergers and acquisitions seem to offer and few understood this as much as Wanbury.

The company which is the biggest producer of Metfromin (a product used in diabetes management) is on an acquisition spree. "We are looking to grow the inorganic way," said Shinkar, speaking on the company's latest acquisition of Cantabria, a Spanish generic company. Cantabria has a well-diversified network of sales and distribution in Spain and comes with no additional burden of a manufacturing unit. The acquisition in the Spanish generic market, which has a CAGR of 20 percent, would provide a thrust to the existing growth trajectory of the company. Cantabria owns over 17 brands spread over various therapeutic sectors and focuses on creating brands from generics. The company either purchases or attains contracts for dossiers (marketing rights) from third parties. It also licenses products from innovators such as Novartis. Some of the key drugs in the Cantabria kitty include Ancivin, Deflazacort, Gabatur, Varidasa, Imunoferon, Emeproton, Hiperlex, Reca, Kenesil and Dolodo.

Wanbury believes that the Cantabria business will provide them an excellent platform for growth in Europe since its existing product sales are stable and profitable. Cantabria has a line up of products for immediate launch thus putting it on a reasonable growth trajectory. Wanbury's association with Cantabria would strengthen future product introductions as well as serve as an entry point for the rest of Europe by enabling Cantabria to launch products or provide dossier sales in other parts of Europe. At the same time, Warbury, through Cantabria, would be able to exploit the domestic Spanish market and serve as a product developer for other companies in Spain and parts of Europe. This will add a new source of income and reducing costs. Also, new product development at Wanbury or outsourcing of products from India, would reduce time to market in the future and considerably reduce costs, thus making the business more competitive and profitable. Manufacturing site transfer to India would further reduce the cost of existing products of Cantabria. Few products of the Cantabria could also be cross-sold in India.

Shoppers don’t stop

Doctor Organic Chemical (DOCL), a company under distress with an asset in the form of a pre-approved USFDA manufacturing plant, found a taker in Wanbury earlier this year. The company, together with its promoter group has acquired 51 percent of share capital of DOCL. The main attraction was DOCL's Patalganga plant which has multi-product USFDA approval and more specifically, approval for Metformin HCL. The plant at Venkatarayapuram, Tanuku in Andhra Pradesh was approved by USFDA for the manufacture of non-sterile APIs. However, more importantly, DOCL has a Certificate of Suitability (CoS) allowing the company to sell Metformin HCL and Tramadol to European countries within the EDQM's jurisdiction. DOCL has a CoS for Ibuprofen as well. On consolidation, Wanbury would be in a position to sell Mefenamic Acid, Ibuprofen and Glucosamine immediately.

The purchase also lets the company achieve a balance between bulk drugs and formulations. Their bulk drug portfolio was growing faster and DOCL acquisition assisted the company in terms of product launches and expansions. "We envisage our revenue from bulk drugs would to grow up to Rs 400 crore in the next four to five years. But as far as our formulations division is concerned, we were looking at around Rs 150 crore. So we preferred to balance that," said Shinkar.

Earlier last year, another interesting pick by Wanbury was that of Pharmaceutical Products of India (PPIL). The company announced its proposed acquisition of bulk drug manufacturer PPIL in 2005. PPIL has two API facilities one at Patalganga in Maharashtra, which is unfinished and has been built to USFDA standards.

The other is at Tarapur in Maharashtra. It also has a formulation facility in Navi Mumbai. Listing the benefits of the PPIL deal, Shinkar pointed out that of PPIL's two large API units, one was conveniently located close to one of Warbury's existing units, so there were obvious synergies. In addition, Warbury also gets a tax cover. Wanbury is hoping to get USFDA approval for the Tarapur plant as well.

Recipe for success

The recipe for any blockbuster is to always get your ingredients right. And Wanbury did just that. The company has a diversified customer base, coupled with strong relationships with leading generic pharmaceutical manufacturers. This is supported by in-house technical competence, a product pipeline backed by strong process research, and a successful track record of acquisitions and their integration in both APIs and formulation businesses. Brewing this all together is a team of experienced and professional managers.

Conscience Marketing

"Business has only two functions—marketing and innovation," according to writer Milan Kundera. However, Wanbury has found a third aspect to doing business—the role of ethics. The company has, through the years, chosen the ethical route to advertise and market its products. The company has about 300 marketing representatives spread across the country, who typically visit doctors and educate them about the need of a particular pharmaceutical product. And it is based on the doctor's prescription that medicines sell. Wanbury focuses mainly on the training of these marketing representatives. As far as educating patients is concerned, the company believes it happens through the doctors themselves. Besides the company conducts activities of telemedicine (involving doctors in giving services to distant and far off places). Outlining the company's branding initiatives, Shinkar said, "For formulations, the company clearly believes in brand building through ethical marketing strategies. Whereas as far as bulk drugs are concerned, we remain nimble footed and do our best in providing good services to the customer. This is coupled with good availability and timely readiness of products for customers," said

The price is right

Pricing one's products competitively is intrinsic to most successful marketing strategies. Hence it is not surprising that pricing policy is an important aspect of Wanbury's marketing agenda as well. The company is the largest producer of Metformin, catering to almost 25 percent of demand worldwide. When Wanbury entered the market, the drug was priced at around $20 a kg. The company had fairly large margins, as they were capable of providing the same product at $12 per kg.

From Stern to bow

Wanbury is engaged in the manufacture and export of generic APIs and in the marketing and sale of generic finished dosage of pharmaceutical products to the Indian pharmaceutical market. The company presently exports APIs to across 50 countries with a particular focus on marketing to pharmaceutical manufacturers operating in regulated markets. The company plans to expand its sales of generic APIs to regulated markets such as those in the United States and Europe through leverage of its existing relationships with leading generic players in these markets and through widening its product base and capacity by means of increasing product research and through corporate acquisitions. The company has a presence in India in the formulation segment business where its focus is on branded ethical or prescription products. The market capitalisation on the BSE and NSE as on April 20, 2007 was Rs 1,448.48 million and Rs 1,432.32 million, respectively.

The future is here and the future is bright. "We are looking to increase our global footprint in terms of our formulation business. Domestically, we are looking at the formulation side. We have around 25 products in the pipeline," said Shinkar. Another aspect that the company is keen on exploring is contract manufacturing through the DOCL plant.

Wanbury has a niche presence in the sale of paediatrics, gynaecology, orthopaedics and ENT segment with over 22 brands. The company is looking to target more niche markets like these as they add tremendous value to their product portfolio. "In domestic formulations we are looking at adding niche products in niche therapeutic areas. We are adding small divisions that will add a lot of value to our product line. For example, Osteolife, which is a product in the osteoporosis category has been showing phenomenal results," says Shinkar.

The Indian pharmaceutical industry, which earlier operated in a protectionist sort of regime, is now openly exploring new avenues. With the process expertise and cost advantages that India has to offer, most indigenous companies are choosing the inorganic way of expansion as a quick way to grow. Wanbury seems to have made a head start and could well lead the charge into the international arena, at least in the near future.

garima.arora@expressindia.com