Mankind’s Next Force
RC Juneja’s Mankind Pharma ranks fifth in India’s pharma market but can he take it beyond flagship brand Manforce? Mankind Pharma began almost 20 years ago with marketing at its core, sourcing medicines and selling them primarily in tier II and III cities. Though this model was not practised then, its success story was reason enough for its competitors who had not looked at the immense potential of rural and semi-urban areas, to follow suit years later.
The company known for its OTC sexual wellness products, particularly ‘Manforce’ which is a Rs 350 crore brand today, has exhibited phenomenal growth with revenues to the tune of Rs 3000 plus crore in FY2014-15, up from Rs 3.7 crore in FY1995-96. For the month ending March 2015, the company ranked fourth by value and fifth by revenue as per IMS Health Market reflection report. The coming years will see it getting even bigger, if trends are to be believed.
Not just OTC
According to IMS Health, top 30 pharmaceutical companies in India are looking at nutraceuticals as an avenue for future growth. Not only is this is a reflection of an increased awareness of health and well being among Indians, it also a result of higher disposable incomes and the willingness to spend on dietary supplements as is evident by sites such as healthkart.com.
Mankind Pharma too does not want to remain far behind. It aims to increase its revenues from nutraceuticals to Rs 500 crore (from Rs 300 crore) by end 2015 adding them to the pipeline of chronic cardiovascular diseases and diabetic management drugs.
Pitches in Sheetal Arora, Managing Director, Mankind Pharma, “In the the last few years, the acute segment, including antibiotics has done well, but now the focus is shifting to lifestyle diseases, and this segment has been a major contributor to our revenues in the last five years. The future is nutraceuticals.” The chronic segment contributed just 0.5 per cent of the revenues before the company shifted base to Delhi in 2002 when the first drug for high blood pressure was launched. This was followed with drugs for diabetes, asthma, neurology and psychiatry disorders.
80 per cent of the products launched in the last two years have been in this category and he believes growth will come in the next two years. The segment grew in the range of 80-100 per cent over the last year and currently contributes approximately nine per cent to the revenues. His enthusiasm is matched by Arjun Juneja, Director of Operations, Mankind Pharma, who believes that with India home to a huge diabetic population that is growing exponentially every year, the market for nutritional supplements for pre-diabetics is also set to increase and presents a tremendous scope.
“We launched multivitamin supplement HealthOk in the market last year which is almost a Rs 75 crore brand by this year. I count it as our breakthrough in nutraceuticals,” he reaffirms. He is of the opinion that the Indian nutraceuticals market is evolving, guidelines and regulatory framework will be critical to its growth. “I don’t see the industry going down anytime in the future,” he stresses. Even as regulations in India are evolving, Arora believes that emerging countries including India have immense potential that needs to be tapped. He particularly cites the example of Myanmar and Kenya.
OTC currently constitutes 10 per cent of the company’s revenues with seven to eight products in the market, with plans to introduce one to two products every year. Arora adds that most of the products in the acute segment – antibiotics, antifungals etc – are in demand with me-too brands launched by the company as well. Cardio and diabetes management together contribute 15-18 per cent of their revenues and they hope to gain another two per cent on this in the coming years. However, for the the future, he sees growth coming from niche brands in the gynaecology, cosmetics and OTC segment. There’ll be a renewed focus on healthcare oriented OTC products such as Prega News, Manforce and Unwanted 72, well known brands from the company which together make eight per cent of the revenue. Adds Arjun Juneja, “Immediate expansion would be in the infertility segment which is catching up with the increase in the number of IVF clinics. The drugs are in the development phase and should hit the market in another three months.”
Mankind Pharma has traditionally been a domestic company with more than 90 per cent of the revenues coming from domestic sales. Exports comprise a measly one per cent of the company revenues. “We entered Sri Lanka three years back and have been aggressively entering foreign markets since the past two years. We hope to generate revenues of Rs 150 – 200 crores from exports in the next three years,” Arora says emphatically. However, today it has established its presence in 15 countries including Africa, CIS and South-East Asia. Most of these markets are non regulated or semi-regulated markets. The company is aggressively looking at increasing its share of exports in the coming few years. Exports to African countries started last year and it is now selling drugs in Tanzania, Kenya, Zambia, Uganda and Ethiopia. Regulated markets are also on the radar in the next two to three years.
Expanding its domestic footprint is not far on the agenda. With close to a 1000 products across 14 segments and a strong hold on marketing, the company is well positioned as a potential partner for MNCs looking at launching their products in the Indian market. Thus it is only a matter of time when the right opportunity arrives.
“There are certain patented molecules that we cannot launch in India without the consent of MNCs, so we are seeking tie-ups to facilitate that process,” clarifies Founder and Chairman and Managing Director, RC Juneja.
It has also been reported that local companies with niche focus are much sought after with a view to further increase its reach, with upto Rs 500 crore earmarked for the same. There were also reports of private equity fund ChrysCapital Investment Advisors India looking to sell its stake in the company. While there haven’t been plausible developments to this effect, Mankind Pharma has definitely created a buzz both among investors and local pharma companies alike.
While it explores newer markets as well as expands its domestic reach, efforts are on on the R&D front too. The company invests five per cent of its revenues in R&D and has invested Rs 150 crores this year.
Elaborates Arjun Juneja, “The basic idea when we started our R&D centre was to develop complex molecules such as new chemical entities, (NCEs). In the last two-three years, we have made considerable progress. Dydrogesterone, is a hormonal steroid that is only made by Abbott in the entire world. There has been no generic company that has been able to make this so far, however we have been able to crack it about a year back and are still in the process of doing the clinical studies etc We hope to launch it in the market by the end of this year, this would be one major breakthrough.” The R&D division involves formulation development, product development, new entities development and a biotechnology R&D centre set up 30 kms away from Manesar.
He informs that the scientific team is also working on new drug delivery systems (NDDS), as well as NCEs especially in the field of diabetes. “There are a lot of gliptins (DPP4 inhibitors) that have come in the market for diabetes treatment, we are working on another concept which is similar to this, but is a novel molecule,” he adds.
Work on biosimilars is also underway. “Biosimilars is an $80 billion dollar market poised to grow further. Biotechnology and biosimilars is where the the future of pharmaceutical research is. We have started our research on biosimilars and maybe in the next three to four years, we’ll be able to launch two to three biosimilars,” he says confidently.
The road ahead
The company which started with 40 medical representatives, is gearing up towards an ambitious future by adding to its field strength which is close to 11,000 now. Of this, 1000 were added in 2014-15 and this number would be increased further on. Pitches in founder Juneja, “We have increased our field strength dramatically, we need to do that to increase coverage.” Known for its reverse approach, stationing its medical representatives in the areas surrounding Delhi in its formative years, Mankind Pharma now is looking at greater reach in the metros. 60 per cent of its revenues still come from tier-II, tier-III cities, but the management hopes that in the near future it’ll come more from metros, with tier-I cities becoming metros and tier-II becoming tier-I.
Two new API manufacturing facilities are also coming up in Rajasthan, one in Udaipur and the other in Sotanala, near Jaipur which will be established in another one and a half years. “In a small two-acre plant, we are putting up Rs 50 crores and we’ll start production in September this year. We expect Rs 75-100 crores of our revenues in 2016-17 to come from APIs. We will try to manufacture all those molecules that we import from China and other countries at lower prices here,” elaborates Juneja senior. This puts the number of manufacturing facilities to 15 including three facilities in Paonta Sahib, of which one is under expansion. Arjun Juneja says that the products manufactured in API units will be developed at the R&D centre. Majority of them would be used inhouse, as well as reduce the cost of APIs to reduce cost of formulations.
The founder that he is looking at revenues of Rs 4200 crores in the coming year. So can companies today afford to be in a niche segment and survive or do they need to expand their product basket?
Juneja senior’s answers this with foresight. “It is a double edged sword. We have to expand our product basket in view of the increasing competition, to ensure our existence in the market and consistent growth. The market is much more dynamic today,” he says. He rules out the thought of the company coming up with an IPO anytime in the future. Affordability has been at the centre of Mankind Pharma’s strategy with most of their brands being 35-40 per cent less than the competitors. Branded generics are coming up, although Mankind Pharma is not into it.
The future looks promising for the company which seems to be sharpening its claws to face the future in a dynamic industry such as pharma. There is no one approach, it realises, even as it hangs onto its traditional practices while keeping a close eye on the future. So while brands like Manforce, PregaNews and Unwanted72 will continue to fetch revenues, investments in R&D will ensure that it is able to leverage the next frontiers in biotechnology to meet the demands of the future. Marketing has been its forte from the beginning, however, the plunge into novel products reveals a desire to much more than just a marketing company, it is heading towards innovation. This would be interesting to watch as it unfolds in the future.