“Investors can certainly expect to hear on IPO in FY21”

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Supriya Lifescience Ltd., with a State-of-the-art US FDA and EU GMP certified facilities at four locations, has a global footprint that extends across 105 countries. The Company is pioneers in therapeutic segments like – Anti-Histamine, Anti-Allergic, Vitamins and Anti- Asthmatic. Continuously recording a CAGR of 22 per cent growth in a highly dynamic and constantly changing industry and market, the Company has been reinventing itself with various innovative products. Its diverse repertoire of Active Pharmaceutical Ingredients includes over 60 products that enjoy the implicit trust of a loyal global clientele. Its consistency in quality, strong regulatory support and on-time delivery has made the Company a preferred destination and reliable source material supplier. Registered in over 35 countries, the Company meets the most demanding quality standards.

Promoted by a dynamic and visionary entrepreneur Mr Satish Wagh, CMD of Supriya Lifescience, the Company has turned out to be a world class enterprise – the reason why investors are waiting it to enter the capital market. Unlike other Indian promoters, Mr Wagh is highly qualified with the perfect blend of technical knowledge and business acumen. He was elected Chairman of the Chemical Export Promotion Council (CHEMECXIL). With his vast and varied experience of over three and a half decades in the Pharmaceutical Industry, Satish Wagh is invited as Guest Lecturer at several reputed academic institutions, including the IIMs, where he inspires, motivates and shares his experience with young business school graduates. Here he, in a formal chat with Indian Economy & Market, shares his vision and the future of Supriya Lifescience.

“Investors can certainly expect to hear on IPO in FY21” 1

The Finance Minister Nirmala Sitharaman has provided a lot of scope to augment the sector Supriya belongs to, like trying to widen the ambit and affordability of healthcare in the country through Mission Indradhanush, expansion of Jan Aushadi Kendra Scheme to all districts etc. What is your view?

As a proud citizen of this country I appreciate all these schemes. It only shows the noble as well as much needed intension of the present government to keep the people of this great nation healthy so that they can reduce their burden of increasing expenses on medicines. However, I must admit that Supriya Lifescience Ltd (SLL) is mainly into exports and as such these schemes have marginal impact on our Company’s performance. We are continuously increasing our footprint outside the country and our endeavor is to supply the best quality and earn the trust of our loyal global clientele. Our diverse repertoire of Active Pharmaceutical Ingredients includes over 60 products. We meet the most demanding quality standards.

Industry expected the government to restore tax benefit offered on R&D. How far it has been taken care of?

In fact, tax benefit provided on Research & Development investment has been reduced. In order to promote investments in R&D, it is essential that tax benefit is reinstated to 200% of investment value.

How you read the Budget of 2020-21?

The budgeted outlay needs to increase to minimum of 3% of GDP, major part of which should go in providing incentives in setting up/expanding bulk drug manufacturing facilities in India as that would alone reduce import of bulk drugs from China which is currently around 70%. The healthcare allocation in the Union Budget 2020-21 is just a modest increase of 5.7% to `67,484 crore from the revised estimate of `63,830 crore in the previous year and falls short of the target of spending 2.5 per cent of GDP on healthcare. It is unfortunate as the allocation for the sector is only just one per cent of GDP. The sector cannot take any major leap forward with such allocation. In the previous budget the increase in healthcare spends was a healthy 15%. So it is disappointing and much below my expectations.

Although the percentage of GDP spent on healthcare is a concern to me, however, I like the announcements like eradication of tuberculosis by 2025, Viability Fund Gap support for hospitals in Tier 2 and 3 cities to meet the requirement for Ayushman Bharat, PPP model hospitals in 112 aspirational districts and making 2,000 essential medicines available through Jana Aushadi stores to common man.

What is the current status on demand and supply front?

The current domestic market size is USD 18bn and export is USD 19bn. Most of the APIs and Key starting materials required are procured from China. We need to have stringent regulatory laws on import of materials.

What steps you’ve planned to explore possibility of enhancing business prospects?

This is a continuous process. Our R&D team and marketing team are working relentlessly in this regard. However, to answer your question, I will specifically point out certain measures that we are focusing upon. First of all, we are going ahead with backward integration. Secondly, we are very serious about import substitution. That will make a lot of change the way we operate. Third area of focus is enhancing customer/market/product base and creating necessary infrastructure to support this.

How Indian pharmaceutical industry can play the Chinese crisis?

Indian Pharma Industry with support of Indian Government should start manufacturing APIs/Intermediates/Starting materials which are currently exclusively sourced from China (eg: Penicillin G). Indian Government will have to support in terms of Capital Investment, Technology & providing incentives/subsidies for such capital intensive projects.

How you see the future outlook of pharma industry?

India has good manufacturing base for manufacturing APIs as well as formulation with many facilities approved by important regulatory authorities like US FDA, EDQM. This is the right time for Government of India to support Pharma Industry by providing tax benefits on R&D investments, incentive on exports, lowering on import duties. With this kind of support Industry can grow from current level of 12% to 20% very comfortably.

Can you provide the latest financial numbers?

The Company has again recorded strong numbers at the end of third quarter. The pace clearly indicates that the Company will be closing its books with a record growth over and above growth rate of the last fiscal. Considering the prevailing economic situation we feel we are on track. If we are able to maintain the kind of growth recorded during the three quarters of this fiscal, I’m sure in current FY 20, we will record more than `335 crore of revenue.

Your focus area for next level of growth?

Our focus area would be, first of all, the import substitution. We feel there is a great scope and our endeavour is to fill the gap with some innovative planning. Secondly, the backward integration and expanding business in regulated market. That is a part of our ongoing process and need of the hour since geo-political situation is changing fast. Third area of focus is adding new APIs to our portfolio. Besides building additional capacities for our key revenue and profit driving APIs, we are adding new APIs into anti-allergy and vitamin segments to foster the growth further. To make things easier we have made sure that our manufacturing site is having regulatory approvals from major drug authorities like US FDA and EDQM. And last, but not the least, building additional infrastructure for R&D as well as production.

Your IPO is being awaited since long? When can investors hope to hear an announcement in this regard?

As the things are moving forward investors can expect to hear on IPO in FY21. However, we expect the market to further stabilize. We have already selected a merchant banker and things are set in place. In fact, we had planned earlier to come out with an IPO to give the strategic private equity investors an exit but that could not materialize. However, although we abandoned the idea but we cleared all the loans.

 

About the author: IE&M Team

Indian Economy & Market is an Indian media and information platform producing data-backed news and analysis on all the vital elements at the intersection of the economy, stock markets, mutual fund, insurance, commodities, currency, technology, startups and business.

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