Anupam Rasayan eyes US, Europe pharma push after Bliss deal, one-third revenue from drugs

Milan: Specialty chemicals maker Anupam Rasayan India Ltd expects pharmaceuticals to account for roughly one-third of group revenue within three years, as it leverages at its newly acquired Bliss GVS Pharma to sell finished drugs and contract manufacturing services in the US and Europe, CEO Gopal Agrawal said on Wednesday.

"Supply chain independence is one of the biggest things customers look for today," Agrawal told PTI in an interview at CPHI Milan, a three-day global pharmaceutical business-to-business event.

The Gujarat-based listed company, which began as an agrochemicals supplier, has grown its pharma business from almost nil to about Rs 300 crore in sales over the past five years by making Key Starting Materials (KSMs) that replace Chinese imports. Pharma now makes up about 20 per cent of its revenue.


"In five years, pharma, which was practically zero for us, this year would be almost Rs 300 crore," he said.

The Rs 1,750 crore Bliss acquisition, completed on September 28, adds finished-dose formulation capability to Anupam's portfolio.

"It's very rare for one company to have KSM, intermediates, API and formulation," Agrawal said.

"More and more customers want a complete supply chain solution rather than just buying a product. If someone makes an API but imports the intermediate or KSM, that isn't true diversification."

Anupam already supplies KSMs to global customers, which pass them to Indian API makers. Going forward, Anupam will supply the KSM and Bliss will handle further processing, offering what Agrawal called an "integrated CDMO (Contract Development and Manufacturing Organisation) play" to customers in the US and Europe.

Agrawal said the United States would be the first priority, followed by Europe, with Japan to come later.

Bliss, whose business is largely in Africa, is running at only about 30 per cent capacity utilisation, which Agrawal described as a ready platform for the group's expansion. He said there was headroom to reach 70-80 per cent utilisation over a couple of years or more, before any significant new capacity would be needed.

Agrawal said the main risk was execution rather than demand or regulation, adding that the company has no customer concentration and that all required approvals were in place.

"All the basic foundation has already been laid, which is in terms of plant certification, and that takes the maximum time in the pharma business," he said.

Bliss's plants already hold USF DA and EU GMP certifications, and some products are already approved, he said and added that Contract development and manufacturing sales in the United States could start as early as this year.

"Demand isn't the problem, production is," he said, noting that the pharma business is sold by only two people.

Pharma sales are made against orders rather than long-term contracts, unlike the agro and performance materials businesses, where about 70-75 per cent of overall business is under 5-7 year contracts, he said.

"As long as I can produce, selling is not a problem."

Agrawal said Bliss sells under its own brands in Africa, where most Indian drugmakers offer white-label, which Agrawal called a major selling point that lets its products command a premium. He said there is no customer concentration, and that curbing duplicate products in the market would itself translate into sales.

Bliss had revenue of about Rs 1,000 crore last year. Agrawal said the current quarterly run rate points to Rs 1,200-1,300 crore, but declined to give guidance because Bliss is a listed company. Its EBITDA margin was about 23-24 per cent over the last six months.

Some Active Pharmaceutical Ingredient (API) capacity will be added using Bliss's internal accruals and cash of more than Rs 200 crore, with no fresh funds needed from the parent. "There is enough and more internal accrual which is available to fund that," he said.

Only 15-20 per cent of the acquisition cost was funded through debt, with the rest from Class B shares and optionally convertible debentures, and the deal is earnings-per-share accretive from day one, he said.

Anupam has about 90-100 molecules in various stages at the parent level, plus another 60-70 across subsidiaries Bliss, Jayhawk and TANFAC.

The group has commercialised eight to ten products a year over the last five to seven years, and Bliss is expected to add four or five a year from a pipeline of 50-60. Pharma is expected to grow faster than agrochemicals, he added.