Manu Balachandran is a writer for Forbes India, based in Bengaluru. At Forbes India, Manu writes on automobiles, aviation, pharmaceuticals, banking, infrastructure, economy and long profiles among many others. He also moderates many of Forbes India's CEO and CXO events and hosts Capital Ideas, a podcast on the most riveting success stories from the business world. He has previously worked with Quartz, The Economic Times and Business Standard in Mumbai and New Delhi. Manu has a master's degree in journalism from Cardiff University and a degree in economics from the Loyola College. When not chasing stories, he is most likely obsessing over Formula 1 (Read: Lewis Hamilton), historical events and people, or planning long weekend drives from Bengaluru
Dilip Surana, Chairman and managing director, Micro Labs Ltd. Image: Nishant Ratnakar for Forbes India
Until about two decades ago, the Surana family used to live in a rented home in Bengaluru. Not because they were bogged down by some family dispute or because they couldn’t afford to buy a house. After all, by the mid-1990s, they had already established one of India’s best-known pharmaceutical companies, headquartered in Bengaluru, and manufactured the wildly successful Dolopar tablets. The company had also built a portfolio of drugs, ranging from cardiology to diabetes and psychiatry.
The rather frugal life they lived back then was a conscientious choice, largely because of the family patriarch GC Surana’s firm belief that every penny earned from the business deserved to be ploughed back into the company. There was just no scope or time for extravagance or even comfort.
“My mother would pester him to buy a house, and all he would say was okay, but it took him a long time to come around,” says Dilip Surana, GC Surana’s son. “Whatever money he made, he believed that if he invested in Dolopar, it would double. He didn’t like spending money on things like a house or car, and those things never attracted him. It was all about building the business.”
As of October 2021, the Surana brothers, comprising Dilip and Anand Surana, are worth $2.24 billion according to Forbes, making them India’s 94th richest people.
The brothers run Bengaluru-based Micro Labs, founded by their father, GC Surana, which makes drugs for cardiac diseases, diabetes, ophthalmology, dermatology, and pain management, among others. The company, with annual revenues in excess of Rs 4,000 crore, runs 17 manufacturing facilities across the country and also runs operations across 50 countries.
But, what has catapulted them to national fame over the last few months is a small tablet, which costs Rs 30 for a pack of 15, and has emerged as a choice for physicians during the third wave of Covid-19 in the country.
The Dolo-650 tablet, a successor to the Dolopar tablet, contains paracetamol, which prevents the release of prostaglandin, which causes sensations of pain, inflammation, and fever; it also reduces body temperature in cases of fever. By many estimates, Micro Labs has sold over 350 crore tablets of Dolo-650 since the Covid-19 outbreak in 2020, earning revenues of Rs 400 crore in a year.
Micro Labs sold about 7.5 crore strips of Dolo-650 annually before the pandemic began, according to market research firm IQVIA. A year later, that increased to 9.4 crore strips, before touching 14.5 crore strips, almost double the 2019 figure, by the end of 2021.
“This is something that baffles me also,” says Surana, about the soaring popularity of the tablet. “Much of it has to do with the quality of our product. We created a policy of having two suppliers for any critical product. And we are very choosy on the ingredients and the source of ingredients. That’s something my father was particular about, and we never compromised on that.”
That’s perhaps why, since the Covid-19 pandemic began, Micro Labs has seen its revenues and profits skyrocket, and it isn’t likely to subside anytime soon, especially since the tablet has become one of the most common choices of medication for Covid-19 symptoms. Between March 2019 and March 2021, its revenues have jumped 25 percent and profits 244 percent. Almost 60 percent of the company’s revenue comes from the domestic market.
Building Micro Labs
Micro Labs began operations in 1973, with a factory in Madras, now Chennai.
GC Surana, an accountant by profession, had moved to Bangalore from Rajasthan in search of a job and worked as an accountant in a pharma distribution company in the city. “That was his introduction to the pharmaceuticals sector,” says Dilip. A few years later, GC Surana, a Marwari, was ready to set up his own business and became the distribution partner in the southern region for the New Delhi-based pharmaceutical company La Medica.
“That company eventually shut down the business,” Dilip says. “We were already marketing products, so we were exposed to the sector.” With his own savings, and some help from relatives, Surana started Micro Labs in 1973 with five products, including Dolopar, paracetamol, doxycycline, and beamethazone. The company also set up its own factory to manufacture the products.
“At that point in time, there were no patents,” Dilip says. “His focus was on bringing new molecules into the country, and we brought in a lot of molecules. We were also among the first companies to create the concept of divisions, such as cardiology, psychiatry, and diabetology, among others.”
At Micro Labs, Dilip says, his father never compromised on quality, something he reckons as the reason for the company’s phenomenal success. “When we started, everybody preferred manufacturing in-house compared to contract manufacturing today,” he says. “A lot of stress was given to quality from the beginning. My father would never discuss costs in the factory because he believed that might affect the psyche of the workforce and eventually the quality.”
That also meant the company didn’t bother to bring down prices to fight multinationals, and instead kept their prices at par with theirs. “His focus was never to compete on price with the multinationals, but to effectively compete with them on quality,” Dilip says. “It's become our DNA on the domestic side and the export front.”
Dilip joined the business in 1983, before taking up a full-time role in 1987, and has since helped shift the company’s South India-based focus to a pan-India one. His brother Anand joined the business and has been steadily focussed on the international market. The company has a presence in over 50 countries, with ground-level operations in 25. “When Anand joined the business, we were doing very little exports to countries like Sri Lanka, Nigeria, and the Middle East,” Dilip says. “Today, we are into all the regulated markets like the US and Europe, and semi-regulated markets and even nonregulated markets.”
While the company focusses on generic drugs in the regulated markets, Dilip reckons that Micro Labs has been able to carve out a niche for itself even there. “We are very strong in ophthalmology, so that is one area that we focus on in regulated markets,” he says. “In the semi-regulated and nonregulated markets, our whole focus is on value building, to have our own branded products, like in India, with our own field force. So instead of trying to sell only generics, we focus on the same model as in India.” These are mostly in the Africa and CIS regions, comprising Kazakhstan, Kyrgyzstan, Moldova, Russia and Tajikistan.
Today, Micro Labs offers over 400 products spanning cardiology, diabetology, ophthalmology, dermatology, psychiatry, and a range of antibiotics, painkillers, etc. “So practically we're into all the specialties. We are not there in oncology now,” Dilip says.
The Dolo Revolution
Yet, despite all the phenomenal growth across specialties, Dolo-650 continues to be the group’s crown jewel. And much of that is thanks to Dolopar, the tablet the company began operations with.
By the 1990s, Dolopar, an over-the-counter medicine, had become a household name. That had prompted the Suranas to try their hand at something new, especially since the paracetamol market had become congested. In 1993, the company decided to launch Dolo-650, a successor to Dolopar.
“When we launched Dolo-650, the paracetamol segment was a crowded one,” Surana says. “We wanted to differentiate ourselves. At that point, our medical advisors and father believed that we should come out with a 650-milligram dose. Also, unlike in cardiology or diabetology, where 50 brands come out at the same time with products, nobody bothered about the 650-milligram market.”
Back then, most pharmaceutical companies brought out a 500-milligram tablet. Dolo-650, Dilip says, was intended to avoid an overdose of paracetamol tablets. “At the same time, it was more effective, especially for high fever,” he says. The product was sold by prescription, and the company also had to work hard to ensure that the product was prescribed adequately. “GS Surana would make time for every doctor who came to Bangalore and the idea to launch the 650-milligram came from his interactions with a good number of doctors,” says Ashok Jain, an executive director at Micro Labs.
“We had to actually sell the concept of 650-milligram and aggressively ensure that the doctors prescribe it,” Dilip says. “New products with different combinations in the 500-milligram segment were hitting the market. But there was nobody in the 650-milligram market.” In the process, GC Surana, also kept a keen eye on the sales of the drug. “If somebody told him that Dolo-650 didn’t work, he would go back to the factory, ask for the batch number, and hold those responsible if there was a problem,” he adds.
Since then, Dolo-650 has gone on to become a household product in India and was among the most sought-after medicines during the Covid-19 crisis. “Until Covid happened, not many competitors had a 650-milligram variant, and it was only during this time that they came in with a variant of 650-milligram and focussed on the segment,” Dilip says. “Otherwise, we were only two or three companies, and we are one of the major players right from the beginning.”
As a result, the company’s sales doubled, forcing it to start manufacturing Dolo-650 from four of its manufacturing facilities to meet the growing demand. The company has 17 manufacturing facilities across the country, with Dolo-650 being originally manufactured from its facility in Sikkim. “Covid-19 has made people realise the value of the 650-milligram segment,” Dilip says.
Alongside, over the past few years, Micro Labs has also been running a programme called Fever Foundation, initially set up some 13 years ago as Fever Research Academy, involving some top doctors in the country, to understand fevers and their medications. Doctors would fly down to Bengaluru to debate, discuss, and find new ways to treat different types of fevers.
“So, if you really see, a lot of effort by the medical, marketing, and sales team have gone into educating doctors about the kind of fevers and what to use for what kind of fever, and with many of their experiences, they have found 650 milligram to be the right dose in many cases,” adds Jain. India’s pain-relief medication market, comprising paracetamol pills, syrups and intravenous injections, is valued at some Rs100 crore monthly, a fourfold increase since the pandemic started two years ago, according to various estimates.
Yet, challenges remain and will only grow in coming years, as global pharmaceutical companies, including the likes of GSK Consumer Healthcare, which manufactures Calpol and Crocin, get ready to flex their muscles in the Indian market. In addition, the rampant misuse of the medicine can also lead to health troubles. According to Hyderabad-based Yashodha Hospitals, a gap of at least 6 to 8 hours must be maintained between two doses, with adults not consuming more than 3 gram a day. “An overdose of the medicine can cause symptoms such as nausea, vomiting, loss of appetite, darkened colour of urine, and abdominal pain,” says Yashodha Hospitals.
“The only challenge that we faced in the last two years with Dolo-650 was the huge API price increase; it was a threefold,” Dilip says. “Unfortunately, Dolo-650 is in the National List of Essential Medicines, which means there has been no price increase. But it's our flagship brand, and we've got so many blessings from people, which give a different kind of satisfaction.”
Now, apart from the success of Dolo-650, which Dilip reckons won’t taper down much, the company is betting aggressively on its other specialty areas, including cardiology, diabetology and the central nervous system (CNS).
“We want to focus on segments we are good in,” he says. “Initially, for many years, the company worked like a typical restaurant. Whether it's the cook or the ingredients, you needed to get the exact taste and quality. Although we've grown now, the systems have remained the same; the process has increased, the basic principles have remained the same.”
If the recent success at Micro Labs is anything to go by, they are only getting started for the long haul.