When was the mid-course correction?
Two years ago, we felt the margin from supply chain business was under pressure.
We decided to deploy capital in life sciences, which was more profitable and would help in creating more shareholder value. Our revenue in the 2014 fiscal year was higher than in 2015. However, in 2015, we decided to correct the mix of business.
What is the margin now?
Currently, it is 22 per cent of the EBIDTA. Two years ago, with 15-16 per cent, we couldn’t do with just turnover on declining margins. It would not have helped in creating of shareholder value. So, we took a leap.
What’s the revenue mix?
Today, 75 per cent of the revenue is from life sciences; 22 per cent from supply chain and 3 per cent from other businesses. The life sciences business may become even more dominant, and we may even become a pure life sciences player.
You started as a civil servant, became a specialist in SCM, but are now fully focussed on life sciences? Why did you leave your core competency?
It is important to recognise what will create shareholder value and act accordingly. My core competency was in supply chain. But, now my responsibility as Managing Director is to create shareholder value.
What made you choose life sciences?
It has a lot of domain centricity and enormous amount of entry barriers. It is at the confluence of both core science and IT.
When we entered the life sciences sector, we were looking more at IT. Somewhere along the line, we got involved in the core science. We started making regulatory submissions, started doing clinical data management and safety reporting. We felt that the value addition we were making to the customer was enormous. We need to be a niche and highly specialised company in life sciences.
Does the US continue to be a strong market?
The US is our lifeline, contributing 75 per cent to our revenue; Europe about 15 per cent, and countries like Singapore, Korea and Australia the remaining 10 per cent. Our demand environment is pushed by regulators. Once the regulator gives instructions, pharma companies have no choice but to comply. Is there any new domain that you have added?
We have added three new domains. One is regenerating medicine or stem cell therapy.
The second is biosimilar, which is going to be a big domain in the future. Out of the top ten selling drugs in 2005, only one was biologic and nine were chemical compounds. In 2015, six were biologic and four were chemical compounds.
What generic is to innovator chemical compound, biosimilar is to biologic. As biologics come off patents, biosimilars will be very important in addressing the issue. The third is diagnostic imaging and non-interventional studies. These are our areas of focus and there will be new vistas driving growth over the next five years.
How would you describe India as a market?
Currently, the market is for generic companies and that too for their regulatory submissions abroad. There are too many companies involved in clinical trials.
What is your order book?
For the first time, it crossed $100 million as on March 31.
What are your expectations for 2016-17?
Our organic growth will be 20-23 per cent. On top of that, if we come across any inorganic opportunity, we will look at it in the life sciences sector.
Pharm.D @ SRIPMS-CBE-TN