Unichem Laboratories: Steering through change

Founded in pre-independence India, in 1944, Unichem Laboratories was steered through the initial years by its founder Amrut Mody, a recognised stalwart in the then fledgling Indian pharmaceutical industry. It listed on the BSE in 1962, and since then has grown from strength to strength. The founder’s efforts won him a Padma Bhushan in 1972 but by then he had already passed the baton on to the next generation to his son, Dr Prakash Mody.

Pithampur—formulation facility	Sikkim—formulation facility

Dr Prakash Mody

Dr Mody continues to be at the helm, as the promoter and highest equity holder of Unichem Laboratories. As the Chairman and Managing Director, he finds himself, facing a different set of challenges than his father—some of which threaten the very future of this industry. And he is not alone in this struggle.

Industry issues

Dilip Kunkolienkar

Dilip Kunkolienkar, Vice President, Chairman’s Office, Unichem Laboratories while sharing the issues which the company is currently facing said, “Today, as an individual company, we see that there are several issues which are hampering our growth and is being reflected in our performance. Out of many issues, pricing policy is one among the three key challenges, which we consider as a major one.”

“Besides the pricing issue, other issues are the ongoing attempts to impose TRIPS Plus IPR regime, which have been driven by myths and unfounded apprehensions without any basis. We want the government to protect the current IPR regime that is consistent with the TRIPS Agreement; upgrade the drug regulatory regime, to meet today’s international business requirements; and ensure a balanced pricing policy that will ensure access, availability and good health of the industry,” said Kunkolienkar.

He raised his concern about the recent announcement on FDA User Fees, which may burden the mid-sized companies who do not have their operations in the US. He continues, “Globally, we have eight manufacturing facilities of which seven are in India and one packaging facility in Baldoyle, Ireland. From these facilities, so far we have filed 23 ANDAs. Out of these, we have received 11 approvals from the US FDA. Seven have been launched in the US market and another 20 to 25 are at various stages of the completion for filings.”

Kunkolienkar explained the gist of the raised concern which many small companies or mid-sized companies are going to face. He said, “Companies  which aim to file 10 DMFs or ANDAs per year will have to pay hefty amounts. They first have to shell out fees for these applications and wait for over 30 months for approval. Then they will be able to sell their products and return-on- investment will begin even later.”

Ghaziabad—formulation facility	Baddi—formulation facility

Expanding product kitty

But these evolving regulations have not stopped the Unichem Laboratories management from planning for the future. The company has coped with change in the past and will do so in the future as well.

Illustrating this, Kunkolienkar revealed how the company has managed to optimise its resources to meet the challenges. The company first had to adapt itself from a domestic presence to a generic player with international ability, moving to becoming an exporter of Active Pharmaceutical Ingredients (API) and formulation to developed countries as well as having its own presence in some important markets. It has also tried to make its global presence in major generic markets of the world.

Today, Unichem Laboratories has more than 250 branded products in the domestic market. It continues to launch its products domestically based on its therapeutic focus. The medical representatives of Unichem Laboratories are efficient and help to capture approximately 50 per cent of the total Unichem domestic pharma market share in terms of the value in India. In order to have a stronger presence, the company has earmarked a strong product pipeline registration for international markets. Kunkolienkar mentioned that products which are at various stages of development are essentially generic in nature and the focus is on the developed markets such as the US and Europe.

Goa Bioscience centre	Pithampur—API facility

Approvals in the pipeline

Currently, Unichem Laboratories has made significant investments in building its infrastructure to support international business. It has facilities for backward synthesis of API, finished formulations, as well as capabilities for research and development (R&D).

Kunkolienkar elaborated, “We have more than 500 product registrations across the world. There are more than 500 regulatory filings such as DMFs, EDMFs, e-CTDs, ACTDs etc. 23 ANDAs have been filed with the US FDA and the company plans to file 20 to 25 in the next two years. Our 11 ANDAs have been approved by the US FDA and we have launched seven products in the US market. We have fully-owned subsidiaries in the UK, the US, Brazil, South Africa and Ireland. Currently, international operations contribute approximately 35 per cent to the consolidated revenues and we are expecting to increase this to 40 per cent in the next two years. Given the growth opportunities in the domestic market, the contribution from international operations will not exceed 40 per cent.”

Roha—API facility	Goa formulation facility

Growth projections

Kunkolienkar spoke about the company’s inorganic growth possibilities and said that they are certainly looking for inorganic growth opportunities in existing therapeutic segments. He said, “We believe that this will enhance our presence significantly. However, there are not too many interesting targets as of now. With regard to the international markets, we are open to look at interesting opportunities.”

“Our focus is to grow in both the domestic as well as the international markets. We will be actively focusing on improving core strengths in the domestic market, essentially chronic care therapeutic segments. To improve our existing market share, we plan to launch differentiated products to address unmet medical needs and gain traction with patients/customers. On the international front, we are aiming to increase our contribution in consolidated revenues, focus on profitability, launch more products aggressively and cover as many as markets including the emerging ones,” said Kunkolienkar

This will not only increase positive cash flows for inorganic opportunities both in domestic pharma space and international markets but also make the company more competitive in both the markets. Sharing financial details of the company he said that for financial year 2011-12, the  standalone income was at ` 803 crore and to keep the momentum growth from the current fiscal, they are expecting a growth of 15 to 20 per cent.

Clearly Unichem Laboratories will most likely steer through the change and emerge stronger.

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