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The Rs 654-crore drug-maker Granules India is not worried at being a late entrant in the contract research and manufacturing (CRAM) business.
Through its equally-partnered venture with Ajinomoto OmniChem, Granules is set to work with innovative companies on products that are still to come off patent-protection.
“We are not a late entrant, since the joint-venture partner has a history in CRAMS,” says Granules Chief Executive Bhaskar Krishna Arumugam. “If we were doing it all from scratch, it would have been too much of a risk,” he says. In fact, it is a good way to enter, since, the partner company has its customer relationships, marketing team and credibility, he adds.
The plant, making products for the alliance, will be completed by September next, and operations will start in the first six months of 2014, he says.
The CRAMS space is different and at the opposite end of the spectrum that Granules usually operates in, says Arumugam.
Traditionally a maker of active pharmaceutical ingredients (API), the cornerstone of the company’s business, Granules also makes pharmaceutical formulation intermediates (PFI) and finished medicine forms (formulations).
In fact, Granules charted its own course with PFIs. Since APIs, the ingredients compressed to make a finished medicine, are sometimes difficult to bind together due to physical and chemical characteristics, these ingredients are treated with fillers to form granules to improve functionality. And this read-to-mix PFI combination is then made into the final medicine.
Granules changed the way the game was played by pushing the concept of commercialising PFIs so customers could outsource the expensive process to a dedicated manufacturer, explains Vijay Ramanavarapu, Granules’ Strategic Sourcing-Head.
Granules Executive Director Harsha Chigurupati points out that API, PFI and formulations contribute almost equally to company revenues at 32, 35 and 33 per cent, respectively.
Opportunities
Granules focuses on niche products in the late-stage of their life cycle, not attractive to big generic drug makers, says Arumugam, adding, the advantage for Granules comes “when you go in with the right technology”.
Chinese competition
On the oft heard complaints from API producers, regarding commoditisation of the market and Chinese competition, he says Granules steered clear of the commodity-mindset.
The company focused on partnerships with customers (as opposed to mere transactions), besides aiming to be among the top three in a segment, as against being one in several targeting the same product.
As for Chinese companies, they expanded their presence on an undervalued exchange rate, favourable credit terms and low-labour costs. These advantages are eroding, affecting Chinese competitiveness and benefiting Indian players, he added.
jyothi.datta@thehindu.co.in
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