2019-08-11_Business_Today

The biggest initial challenge for Pankaj Patel was

raising working capital. His limit was `20 crore, but no

bank was willing to fund him. So, he sold assets to raise

`5-10 crore in tranches to ensure liquidity. A year later,

banks were queuing to fund him. He closed down the

diagnostic business and chose to focus on the domestic

market when many Indian companies were export-

ing to other countries. “We were a small company and

decided to focus only on the local market with mainly

cardiovascular, respiratory and

gastroenterology drugs. The plan

was to get into exports once we

reached a size of `1,000 crore,

which we achieved by 2000.”

In 2000, Zydus Cadila en-

tered into a strategic alliance

with Ambalal Sarabhai Enter-

prises to integrate the animal

healthcare business of both the

groups and create Sarabhai

Zydus Animal Health. A year

later, Zydus acquired German

Remedies to boost its presence

in India. Later in 2007, Cadila

Healthcare acquired the entire

stake of Sarabhai Zydus Animal

Health and also bought derma-

tology company Liva Healthcare.

Sharvil Patel set up a target of

‘Healthy Billion’ to propel Zydus

into the billion dollar revenue

club. The target was achieved in

2011. Zydus created a new listed
      company in consumer healthcare
      business, Zydus Wellness, which
      holds popular brands such as
      Sugar Free and Nutralite, with
      revenues of about 500 crore. Last year, it acquired Heinz India for4,595 crore to get brands like
      Glucon-D, Complan, Nycil and
      Sampriti. The acquisition will
      make Zydus Wellness a `2,000
      crore-plus company.
      But all may not go as planned
      for Zydus. One plant in Ahmed-
      abad was found short of manu-
      facturing standards of the USFDA. The company is now
      trying to fix it. Similarly, the biosimilar sales guidelines
      in the US and Europe are not yet clear though their cur-
      rent plans exclude these geographies. A bigger concern
      is if the Lipaglyn US trial results, that are to come out
      by the end of this year, are negative. As of now, however,
      Zydus investors have faith in Pankaj and Sharvil Patel’s
      quest for new drugs.

@pb_pbjayan

“Since the beginning, I was very clear Zydus will
pursue drug research and that will be the core for our
grow th,” says Pankaj Patel.

Pumping in Cash
A lot of Zydus’s new ventures are based on its healthy
financial performance. In 2018/19, Cadila Healthcare’s
consolidated revenues were 13,367 crore, up from 12,068 crore the previous year, with a net profit of
1,849 crore (1,776 crore). Of this, 49 per
cent revenues came from the US, followed
by 28 per cent from India. The company has
been consistently growing revenues at over
20 per cent for the past two decades. In the
past 15 years, EBITDA has been growing at
18 per cent CAGR.
While most Indian companies were
struggling in the US market due to chan-
nel consolidation and increased regulatory
scrutiny, Zydus was more or less insulated
and had $900 million sales last year, grow-
ing at a CAGR of 21 per cent in three years.
In the last two years, Zydus has received the
most US FDA drug approvals for any com-
pany — 120. It has already launched 150-
plus products in the US market; a similar
number of drugs are pending for approval. It
plans to file 40-60 abbreviated new drug ap-
plications (ANDAs) every year for traditional
generics and specialty high-value and diffi-
cult to make complex generics. “For the next
three years, in the current model of business,
we don’t foresee any fundamental issue that
can hamper growth in the US market and we
should grow at over 10 per cent for sure,” says
Sharvil Patel.
The pharma company holds strong in In-
dia as well; in the past five years, its domestic
business has grown at a CAGR of 9 per cent.
“Despite challenges like price control, mar-
gin pressure and other policy interventions
in the domestic market, we are sure to grow
at over 10-12 per cent in the coming years
with specialty and new biologic launches,”
says Sharvil Patel.
While Zydus enjoys a strong balance
sheet, especially when compared with the
pharma sector in India, it wasn’t always so.

Strong Pick-up
“The turning point was when Zydus was formed – a
brand new company to start from a legacy of 40 years. It
was a big challenge,” says the 66-year-old Pankaj Patel.
The two promoters of Cadila – Ramanbhai B. Patel and
I.A. Modi – decided to split in 1995. One became Ca-
dila Pharmaceuticals and the Patels named their ` 200
crore-business Zydus Cadila (Cadila Healthcare).

BIOSIMILAR AND

VACCINE PIPELINE

Zydus Cadila expects

these businesses to

grow to $500 million

by 2024/25

BIOSIMILARS

ALREADY LAUNCHED:

FN-2b Hepatitis B and C;

PEG-IFN Hepatitis B and C;

PTH Osteoporosis; G-CSF

Oncology; PEGG-CSF

Oncology; EPO Onco/

Nephro; Adalimumab

Inflammation; Trastuzumab

Oncology; Bevacizumab

Oncology; Peg Asparagase

Oncology; r-FSH Fertility

VACCINES ALREADY

LAUNCHED:

Measles; Tetanus toxoid;

DTwP; MMR; Tetravalent

Influenza; Typhoid

polysaccharide; Conjugate

Vaccine for Typhoid;

Varicella; Anti rabies;

Tetanus (Adsorbed) I.P.

CORPORATE > ZYDUS CADILA

August 11 I 2019 I BUSINESS TODAY I 65