In an interview to ET, Pranav Amin, MD of Alembic Pharmaceuticals, said while the company will stay focused on the US business, it will be more cost-conscious and cherry-pick the right products.
In FY24, Alembic plans to launch 20 products in the US.
“We will balance ourselves out. If we think a product is not viable and has long gestation, we’ll reallocate our R&D resources. Same way if a product doesn’t make sense commercially, we are okay to walk out. We’re not going to sell for the sake of just selling,” Amin said.
Amin says the price erosion still persists but there are signs of moderation in the last 3-6 months.”It really depends on how robust the supply chain and quality compliance are – that’s what matters in the US,” Amin added.The Vadodara-based drug maker, which has been around for over a century, is a late entrant in the US market. It has more than made up for it. It has been investing ₹700-750 crore per annum, representing around 12% of revenue, to build a complex pipeline of products encompassing dermatology, ophthalmology, injectables, oncology injectables, and oncology oral solids.It has invested more than ₹1,800 crore to build three new USFDA-compliant facilities to manufacture these products.
Alembic’s US business growth has been hampered for the last two years by oversupply and steep price erosion of its products in the US market, which for certain products is as high as 30-40% per year. This comes at a time when even the cost of raw materials and freight charges have shot up pulling down profitability. The US business, which was contributing 37-40% of revenues has dropped to 28% of overall revenues. Alembic ended FY23 with revenues of ₹5,653 crore.
“Barring the last two years, the US business has done exceedingly well, thrown up a lot of cash. Now, it comes to how do we grow in this market,” Amin said.
