Alkem’s key anti-infective brands are Clavam, Taxim-O and Taxim. In Gastro-intestinal Alkem enjoys market share of 5.6% with brands like Pan and Pan-D. In Pain/ analgesics Alkem commands third-largest market share of 5.0%. In Vitamins/ minerals/ nutrients we had the sixth-largest market share, a company official shared with us citing data from the Red Herring prospectus
Promoted by Mr. Samprada Singh and Mr. Basudeo Singh, company boasts of five brands in top 50. We visited the company’s Baddi facility recently. A touchdown at Chandigarh airport with the sun shining bright on a cool winter morning, a quick snack at the Pinjore Gardens, also known as the Yadavindra Gardens. No we didn’t have the time to stroll past the terraced gardens or Shish Mahal or enjoy the series of fountains and waterfalls. All we had time was to savour a local juice squeezed out of Kinnu even as we debated whether it was more of an orange or sweet lime.
Processes, automation and efficiency were evident even before we began our site visit as the lunch served to us came from Alkem’s in-house kitchen which had automated chappati-making machines and the steam from one unit of cooking was diverted to cook the rice nearby. Having had our fill over a lavish lunch spread dominated by Sarson Ka Saag and an assortment of rotis, we moved into various facilities donning our temporary uniforms to ensure the areas we visit remain as hygienic as they would like it to be. Like most pharma facilities that we have visited, Alkem is on the top to ensure quality, safety and efficacy of products in the domestic and export markets. Quality Management Systems (QMS) complies with various international regulatory and cGMP standards and periodic reviews of systems, practices and documentation are in place across for the manufacturing facilities through regular audits.
Alkem has cemented its presence in intensely competitive and largest therapeutic segment anti infective on back of strong brands like Clavam, Taxim O and Taxim. Though acute segment, which caters to anti-infectives, pain-killers and analgesics among others accounts for large share of domestic formulations, company is also focused on fast growing chronic therapies.
Alkem promoters have had a long standing experience in domestic formulations business with first manufacturing set up in 1978. Despite an intensively competitive scenario in acute therapeutic segments, company has created sizable brands with top 20 accounting for ~54% of domestic revenues in H1 FY16. When I met Mr. Samprada Singh, Chairman, Alkem Laboratories, over a decade ago, he had fondly reminisced how he had started as a retail chemist in 1953. He managed sole distributorship for the Bihar and main accounts were Abbott Labs, E Merck India, Dolphin Labs of Calcutta, BDH etc. “In 1960, I started distribution for these companies and was in this business for about 12 years. Top executives of these pharma companies asked me to start my own pharma company since they saw in me traits of a budding entrepreneur. In 1973, I started Alkem Labs. We started with a small capital of Rs5 lakh. We had a lot of problems initially to raise finances. But our determination saw us through. My brother, B N Singh, who is now the MD of Alkem, was a tremendous source of support.” Click here to read the 2004 interview
The company has taken initiatives to diversify from an India centric revenue base; exports account for 25% of revenues, scaled up mostly through acquisition of US-based Ascend Laboratories from ~12% in FY11.
The company has 14 manufacturing facilities across five locations in India and two manufacturing facilities in the United States. The facilities at Ankleshwar and Mandwa are API manufacturing facilities. The remaining facilities, including those at Daman, Baddi, which we visited and Sikkim, manufacture formulations. The company’s manufacturing facilities are cGMP compliant and have been approved by several regulatory authorities such as the USFDA, the UK-MHRA and TGA Australia.
As we peeked into one of the secure testing rooms from the outside, we are briefed that all products are subjected to extensive stability testing programs to understand the real product behaviour during shelf life. Alkem has over 483 scientists working on various drug products and substances in India and the United States.
Prabhat Agrawal, CEO, Alkem, walked us through a quick presentation informing that for FY15, the domestic and international operations accounted for 74.7% and 25.3%, respectively of net revenues from operations. “Our domestic operations are further divided according to the various therapeutic areas in which we operate. Last fiscal year, we had a portfolio of 736 brands in India and are among the top ten pharmaceutical companies in India in terms of domestic sales for the past 12 years.”
As we pass through the labeling section of various capsules, we are told Alkem’s the significant therapeutic areas in domestic market are anti-infectives, gastro-intestinal, pain and analgesics, and vitamins, minerals and nutrients. These therapeutic areas accounted for 80.7% of our total sales in the domestic market for fiscal year 2015.
Alkem’s key anti-infective brands are Clavam, Taxim-O and Taxim. In Gastro-intestinal Alkem enjoys market share of 5.6% with brands like Pan and Pan-D. In Pain/ analgesics Alkem commands third-largest market share of 5.0%. In Vitamins/ minerals/ nutrients we had the sixth-largest market share, a company official shared with us citing data from the Red Herring prospectus.
In therapeutic areas, some popular names of Alklem are Olkem for hypertension, Donep for Alzheimer’s disease, Glucoryl-M for diabetes, Kojiglo for hyper-pigmentation and Melbild for hypo-pigmentation. All are not manufactured at this facility though.
The company has implemented SAP, to handle sales and distribution transactions, demand planning and sales forecasting process. Barcode technology at warehouses and depots ensure accuracy and efficiency in stock handling. The sales staff are also equipped with sales force automation tools. Little wonder the company has managed to build a strong prescription base for its products and is ranked among the top five companies in terms of prescription generation in fiscal year 2015. IMS Health confirms this as its figures show the company had a 6.8% share of overall prescriptions in India in FY15. Alkem has a strong field force of 5,856 medical representatives and its products were prescribed by an estimated 210,885 prescribers in fiscal year 2015 according to IMS Health.
After a quick view at the coating facilities and capsule filling machines moving with precision we moved out of our stuffy double suits and protective footwear and masks to breathe some fresh air outside the facility. In India, daava and daaru are spoken with the same breath and as we moved on our way to relax the night at Kasauli, our driver quizzed if we had tried the whisky brand Solan No. 1. A quick search on the web showed Solan No. 1 was the best selling Indian whisky for over a century and that the Kasauli distillery and brewery was set up in the late 1820s. We stopped to pick a bottle available at a steal in the local wine shop. Old is gold they say. The strength and sustainability of Alkem’s brands can be gauged by the fact that the average age of its 10 bestselling brands is 17 years. This sustainability and higher than market growth, can only be explained by strong brand loyalty that Alkem has been able to create so far. Let’s wait and watch how Alkem, which has been around for decades, does on the bourses after listing.
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