Profit

NSE Symbol: | BSE Code: | ISIN: | Sector:

  • Add to Portfolio
  • Add to Watchlist
  • Add to Alert
  • Add to Message
Add to Portfolio
NSE
558.15
Change Change %
-1.55 -0.28%

Updated:06 Dec, 2019, 11:44 AM IST

BSE
558.00
Change Change %
-1.40 -0.25%

Updated:06 Dec, 2019, 11:57 AM IST

Ten minutes with the management  

"Our transformational efforts have only started yielding results. The best is yet to come." 

Dear Shareholders,

IN ANY BUSINESS, COMPETITIVE ADVANTAGE IS APPRAISED THROUGH THE ABILITYTO REPORT PROFITABLE GROWTH, WHEREBY A PERCENTAGE INCREASE IN REVENUES IS EXCEEDED BY A LARGER PERCENTAGE INCREASE IN PROFITS. THIS REALITY INDICATES AN IMPROVEMENT IN OVERALL COMPETENCE, TRANSLATING INTO SUPERIOR VALUE FOR OUR STAKEHOLDERS. 

I am pleased to report that this is precisely what we achieved in 2012–13. Our revenues grew 4%, while our EBIDTA grew 16% and net profit climbed 27% over the previous year. This indicates that we reported an improvement in the quality of our revenues, which immediately translated into higher margins and profits, kickstarting a virtuous cycle that we expect will continue to translate into enhanced organisational value.

Overview

The superior results reported by the Company represent an important inflection point in the Company's transformation journey that we embarked upon a few years ago.

Even as recent as 2009–10, acute therapies dominated our revenue basket. Research efforts were yet to add to the product basket, hence marketing remained a challenge. As a result, global presence was restricted to emerging markets. Gradually, Alembic was yielding its market position.

Alembic set out to reinvent its sectoral presence. The Company plugged key senior positions with young professionals. The research and marketing teams worked in tandem. The Company began to address unmet needs. The therapeutic coverage was widened. Complex products with high entry barriers were developed. A new regulatory filing effectiveness graduated the Company from being just another player in regulated markets to among the select few to enter segments following genericisation.

This is the result: we outperformed the average growth of the domestic formulations segment; we grew our speciality business significantly higher than the segment average; we enjoy 21–month exclusivity for a product in the US; we transformed from a domestic player into a global pharmaceutical entity.

Strengthening the business

Even as we reported superior numbers in 2012–13, we strengthened the business through various initiatives.

1. We received the USFDA approval for our NDA Desvenlafaxine Base Extended Release, a bioequivalent version of the innovator drug Pristiq by Pfizer: We engaged Ranbaxy to market this product in the US.

2. We filed two dossiers for complex products in Europe with high growth potential. We entered into a number of marketing alliances to accelerate sales and make it possible to replace the low–margin contract–manufacturing business with our own profitable products.

3. We established a presence in Australia (through a subsidiary) to outlicense ready Market Authorisation to multiple customers. As a first step, we launched two cardiovascular products in the last quarter of 2012–13. We started filings in Brazil, which should generate attractive revenue next year.

4. We filed new product registrations in Ukraine, Vietnam, Uganda and Kenya for branded formulations, which should translate into revenues starting 2013–14.

These initiatives will increase and broad–base global revenues, de–risking the Company from an overdependence on a single geography.

Going ahead

In the pharmaceutical industry success gravitates to companies that extend from relatively simple and crowded product spaces towards complex niche marked by higher product realisations. At Alembic, we expect to accelerate our growth through the following initiatives:

International generics

The US: We increased our ANDA filings of complex products where the returns shall justify the development and filing expenses; we hope to continue to work on such opportunities over the medium–term. We expect to launch 8–10 products in 2013–14.

Europe: We intend to increase the number of dossiers filed from two in 2012–13 to 10 (all complex products) in 2013–14 and emerge as the only generic player in Europe for a particular product. The additional business shall replace our low–margin contract manufacturing business, expanding margins.

Other markets: We plan to file about five or six dossiers in Brazil in 2013–14. We expect to establish an office in Brazil to accelerate filings and provide ready dossiers to customers.

In line with a need for wider and deeper marketing initiatives, we invested Rs. 11,000 lac and commissioned a new formulations unit, increasing our annual tablet manufacturing capacity to 5 billion.

As a result of these initiatives, we expect Alembic to generate an annual revenue increment of 30–35% per annum over the next two years and emerge as an increasingly global organisation.

Branded formulations

India: We are building on our robust Indian foundation through the proposed launch of more than 20 products a year comprising line extensions in existing therapeutic segments and addition of new therapeutic segments. In 2013–14, we expect to reinforce our position in the gastroenterology space.

Emerging markets: We made significant inroads in emerging markets, filing more than 20 dossiers in South East Africa, Africa and CIS nations and expect these efforts to yield results by end–2014.

APIs

In the API business, we intend to exit low margin products and graduate to new profitable products with sizeable potential. This strategy has been vindicated through our growing product development volumes: we generated revenues of Rs.2,500 lac in 2012–13 from the sale of development quantities to clients against less than Rs.500 lac from this segment a couple of years ago, showcasing our ability to develop new products in line with evolving client requirements. We also secured approvals from large global formulators as the primary/secondary API source, which should generate attractive returns going forward.

Message to shareholders

The message that I want to send out is that Alembic is a transformed company with the first visible signs of this positive change reflected in its financials and prospects of better days ahead as the Company's volume–value strategy plays out across markets. We are optimistic that this interplay will translate into superior value in the hands of all those who own shares in our Company.

Warm regards,

Chirayu Amin

Chairman and Managing Director 

Top