Charak Pharmaceuticals holds the distinction of being one of the top ten Ayurvedic Drug Manufacturing companies in India. In 1947, visionary brothers Mr D.N. Shroff and Dr. S.N. Shroff set up Charak Pharma Pvt. Ltd drawing inspiration from one of the most authoritative sources on ayurveda "The Charak Samhita" compiled by the sage Charaka Circa 1000 BC. Currently, Charak has an impressive product portfolio ranging from men?s and women?s disorders as well as products for children and also possesses remedies for most major skin ailments. Charak also has a range of Herbal Animal Healthcare products.
Mr. Pulin Shroff?s innings at Charak Pharma started a little over 5 years ago as Director Marketing and he is currently the Managing Director at Charak Pharma Pvt. Ltd. Having spent over 9 years in pharma and healthcare, Pulin?s knowledge in the field ensures that he possesses a solid comprehension of the industry. An award holder in all three distinctions (bronze, silver and gold) from the Duke of Edinburgh?s Award Scheme (DEAS), Mr. Pulin also holds an MBA Degree in Marketing.
In an interview with Hirawati Pethe of India Infoline Ltd, Mr. Shroff talks to us about Charak?s future endeavors and gives insights on the ayurvedic industry. "Our company?s vision is to become a Rs2bn company in the next 5 years majorly fuelled by the company?s Indian operations." says Mr. Shroff
Can you briefly tell us about the various businesses of the company? Major therapeutic segments of operation and the company?s flagship products.
Charak as an organization is 57 years old. We are currently into the third generation of promoters taking the business forward. We expect to clock a turnover of Rs1bn this year in various therapeutic segments and products. Basically, the philosophy of the company revolves around manufacturing and marketing ayurvedic, natural and herbal products in India and around the world. Our main business comes from India and we are more focussed towards ethical promotion of our products through doctors and prescription sales. 99% of our products are through prescription sales while a small 1% is OTC (over the counter). Our main therapeutic segments are gynecology, physicians, gastroentorology and general practitioners. Our flagship product is M2 tone in the gynecology segment and Livomyn in the gastroenterology segment.
Could you tell us something about export revenues? Which countries do you export to and which are the main export products?
About 20% of are turnover comes from the export market. We export to countries such as Ukraine, Russia. European countries such as Italy, Germany. Our products also go to the south east Asian countries such as Malaysia and some African countries. Currently exports comprise products in the anti diabetic, sinusitis and migraine segments. Further, cough syrups to Ukraine and Russia have a market of about Rs40mn.
What are your plans to enter regulated markets?
We are trying to expand our presence in the west to the USA, etc. In regulated markets, the limitation is that product registration for a medicinal drug takes far longer. We are therefore exploring the dietary supplement route to enter these markets. Dietary supplements do not require regulatory approval for marketing the product therefore once its established that a product is a dietary supplement, it can be easily marketed to the regulated markets. We are developing a huge range of products, dietary supplements and cosmetics, which will find wide acceptance in the west.
Could you tell us something about Charak Clinic/Charak Panchkarma Centre?
That?s a new venture we have entered into and presently have four clinics two in Mumbai, one in Rajasthan and one in Karnataka. A Panchkarma centre is a full-fledged health centre with in-house trained therapists and doctors providing facilities such as Basti, Virechan etc, etc. Medicines are prescribed and people come there on a regular basis. We will see how the clinics perform and accordingly add more in the future.
The idea behind setting up clinics was that as an authentic ayurvedic organization, it will be unfair to say that take only medicines. Ayurveda recognizes Panchkarma as a major medium to treat chronic diseases. Further, Panchkarma focuses on cleansing the body from toxins enabling a faster and permanent recovery.
Could you through some light on the R&D activities under taken by the company?
We are a completely research oriented and quality conscious company. Both our plants are ISO and WHO certified. This is significant as it helps to deal with the taboo that ayurvedic medicines are made in ?garages? and ?other non quality oriented set ups? hence this is a step forward for us to establish that we provide ayurvedic medicines in a most contemporary and acceptable form to the modern day people and doctor community. Our company also monitors the heavy metal content in ayurvedic medicines, which is perceived wrongly to be high in Ayurvedic products. So our products are safe to consume in the long run.
What is the R&D budget of the company? What is the R&D personnel strength?
We have divided our R&D activities into two segments, one is formula generation which is integral to our business. We have a panel of 20 experienced doctors who work on the development of formula in the segments identified by our marketing team. Once the formula is ready we enter the product development stage where the colour,taste form of the product is worked on.
Last year, we incurred a capital expenditure of Rs25lakhs on our product development laboratory to upgrade our tablet and syrup manufacturing facility. We also incurred another Rs25lakhs on revenue expenditure to undertake faster batches for clinical trials, making samples, etc. We have a separate budget for clinical trials of about Rs50lakhs and about 8-10 of our products are regularly being tried in medical colleges and allopathic doctors. We have seen this trend in R&D expenditure since the last two years and it is likely to continue as today the demand for new products is high and growth is driven by new products and new therapeutic segments.
What are the various stages that a product undergoes from the stage of devising a formula and marketing the finished product?
Once the formula is ready and product development is completed, the product is tested for toxicity on animals after which the product enters clinical trial stage. We undertake placebo based double-blinded tests and the trial is conducted on a group of about 100 human beings. If the product is successful in the clinical trials we take it to the final stage of obtaining the necessary approvals. In India, we need to obtain the state FDA approval of the state in which the drug is manufactured. Each state FDA has a technical committee headed by the State FDA head which meets once a month for granting approvals. The products are required to have undergone clinical trials and toxicology tests before they are presented to the committee. Once approved, the company obtains license to manufacture. However, no separate marketing license is required for Ayurvedic products.
What kind of a distribution network do you have for your products?
We have a field force of 500 medical representatives who visit the various doctors in the various therapeutic segments that we cater to. Our objective is to increase the size of this field force to about 1,000 in the next 4-5 years in different categories.
In India, we operate in different states and in every state we have a C&F operation. We distribute are products through them on company billing. Entrepreneurs come forward to stock our products through the C&F agent. Further down the line, we have about 1,500 stockiest and about one-lakh chemists who stock our products all over the country.
How is the pricing of ayurvedic products different from allopathic products and what are its advantages over an allopathic product?
Ayurvedic products are more expensive than allopathy as they need to be consumed in larger doses and over a longer timeframe. However ayurveda has no side affects and cures permanently in most cases. In the current times, chronic and lifestyle diseases such a diabetes, cholesterol, malaria, tuberculosis, etc are on the rise and ayurveda has better solution to offer vis-a-vis its allopathic counterpart.
What has been the overall growth strategy and direction adopted by the company? Going forward what are the topline and bottomline growth targets of the company?
Our company?s vision is to become a Rs2bn company in the next 5 years majorly fuelled by the company?s Indian operations. About Rs1.4bn of revenues will come from India driven by increased number of products, field force and number of divisions. We expect revenues of about Rs50mn from contract manufacturing segment this year.
What growth are you expecting over the next 2-3 years? Which segments would drive this growth?
We are entering new segments such as cardiovascular, respiratory, dermatology, which are chronic lifestyle segments and hold good growth potential. This year we introduced products in the respiratory segment in December and next year we will launch products in the dermatology segments. Extensive research and clinical trials have been undertaken prior to the launch these products and the results have been very exciting. We have also looked at women healthcare segment and we currently have a strategic tie- up with Novartis where we are developing and manufacturing products for them and they market it in India. We are focussing on similar contract manufacturing opportunities, which will be undertaken at our factories in Silvassa and Himachal Pradesh which have huge capacities for capsules, syrups and tablets.
This year, domestic pharmaceutical market witnessed low growth. How has this impacted your company?
The industry has grown by 7% out of which 5% growth came from launch of new products. However this has not affected our growth. We have been growing at 10-12% in India and exports have grown by about 30-35%. We expect to maintain these growth levels in the future.
Where are your plants located?
Our main plant is in Silvasa and we have one around Delhi. We are also setting up a new plant in Baddi in Himachal Pradesh which will start operations in April next year.
Who are your competitors?
Our main competitors in ethical promotion market are Dabur, Himalaya, Zandu. However we are not competing with them in the OTC market. We may enter this market by undertaking contract manufacturing of OTC products.
Will the implementation of the product patent regime impact your company in any way?
With the implementation of the product patent regime, no company will be allowed to manufacture allopathic as well as ayurvedic products in the same factory. Hence such companies will approach us for ayurvedic products and we see huge potential there.
Are you planning on an IPO in the near future?
In our five-year strategy for the company all the capital and revenue expenditure is funded from internal accruals and we see no need of raising resources through an IPO in the near future.