Over a decade in financial journalism, I have specialized in covering news that matters to India Inc. and its stakeholders, including developments at India's largest corporations and and MNCs. The subject of my writing has been analysis of strategy, financial performance, M&A and fundraising activity, consumption behaviour and emerging trends in management and leadership. Industry verticals that I have written on include oil & gas, power, infra, metals & mining, auto, telecom, FMCG & retail, and start-ups. I also play the role of an editorial lead for proprietary events like the Forbes India Leadership Award and the Forbes India CEO Dialogues. An alumnus of Asian College of Journalism, Chennai and Jadavpur University, Kolkata, I have worked for publications such as Mint, The Financial Express and The Indian Express before this.
The skyline of Vadodara, Gujarat’s third largest city and the seat of the erstwhile princely state of Baroda, is transforming, slowly but surely. Spacious independent houses, neatly arranged in rows, have begun co-existing with clusters of residential towers springing up in different parts of the city, which is home to several affluent Gujarati entrepreneurs.
The Alembic Group, a business house promoted by the Amin family, is contributing to this evolution of the city’s landscape in no small measure. After all, the conglomerate —led by patriarch Chirayu Amin (cricket lovers will also know him as the interim chairman of the Indian Premier League in 2010, following the unceremonious exit of Lalit Modi as well as a former BCCI vice president)—owns over 100 acres of land in the city and is gradually developing portions of it into premium residential projects.
Though the group’s real estate venture has nothing to do with its flagship listed pharmaceuticals business, the towering vertical structures are metaphoric of the equally vertical growth exhibited by Alembic Pharmaceuticals Ltd —one of India’s fastest growing generic drug makers.
Amin, 69, and his forefathers laid the foundation of the 109-year-old Alembic’s modern-day pharma business by manufacturing and selling everything from tinctures and alcohol to vitamins, penicillin and then active pharma ingredients (API) over the years. And now the next generation—his sons Pranav, 41, and Shaunak, 38—are helping the company achieve its unrealised potential by transforming a commodity API business that “was going nowhere,” according to Pranav, into a domestic and international generic formulations play.
In doing so, the brothers have had to reimagine the way their family-owned legacy business functioned and think out-of-the-box to catch up with competitors who enjoyed a headstart in the international generics business.
Sitting in Alembic’s group headquarters in Vadodara, Amin senior, a cricket administrator by passion and former president of the Vadodara Cricket Association, tells Forbes India that around 12 years back, the company decided that it needed to “rejuvenate itself” and venture into international regulated markets, including the US and Europe. While the groundwork for this had already begun, it was up to Pranav and Shaunak to carry the agenda forward when they joined the family business.
“Pranav and Shaunak joined the business around 2003 after completing their education,” says Amin, who is Alembic Pharma’s chairman. “Ultimately, in 2008-2009, after they developed enough confidence and competency, I thought we should allow them to run the business as they had energy and new ideas; and we were not very happy with the performance of the professionals who were in charge at that time.”
Consequently, elder brother Pranav, who completed his MBA from Thunderbird, The American Graduate School of International Management, assumed charge of Alembic Pharma’s international business, while Shaunak, an economics grad from the University of Massachusetts, took over the reins of the domestic branded formulations business. Both are managing directors.
The pursuit of transforming Alembic Pharma from an API-driven business to a formulations-led drug maker was aided by the acquisition of Dabur India’s domestic cardiology, gastrointestinal and gynaecology brands in 2007. The transaction, which is the company’s only acquisition to date, took place at a consideration of around Rs 170 crore, which was just two-and-a-half times the acquired entity’s sales at that time. “The acquisition was very timely and at a decent price,” says RK Baheti, Alembic Pharma’s chief financial officer. “It gave us entry into segments where we weren’t present earlier, as well as key relationships with customers and vendors.”
Before that, Alembic Pharma’s domestic pharmaceuticals division was mostly making drugs for acute therapies such as anti-infective medicines; it had some popular brands in India, including antibiotics such as Azithral and Althrocin, and Glycodin cough syrup. But Pranav and Shaunak realised that acute therapies were not likely to be the future of the company, given rising competition and pricing pressure. The acquisition of the portfolio of drugs from Dabur paved the way for Alembic Pharma to enter the lifestyle and specialty drugs segment in the domestic market. The impact of this shift is evident in the numbers: In FY16, Alembic Pharma’s domestic branded formulations business grew by 13 percent year-on-year to Rs 1,104 crore (a third of Alembic Pharma’s overall revenues), and driven by the specialty segment revenues which were up by over 20 percent compared to a mere 4 percent in the acute segment. In FY12, specialty drugs constituted only 46 percent of sales from the domestic business. This has risen to 60 percent in FY16.
Growth also led to organisational restructuring. Till 2010, there was only one company listed on the bourses called Alembic Ltd, which housed all of the group’s assets, including commodity API, Indian and international formulations, as well as real estate. As the formulations-driven pharma business began to expand, the company’s promoters decided that it was time to create a structure that would ensure single-minded focus on growing that business without sacrificing management bandwidth or allowing external factors to intrude. Consequently, Alembic Pharma was carved out as a separate listed entity in 2010. Alembic Ltd continues to be a separate listed company with real estate development as its main business—this is led by Udit, Pranav and Shaunak’s youngest brother.