Industry Insights from Mr. Nikhil Chopra, CEO & Whole Time Director, JB Pharma in Pharma Bio World – June 2024 Edition

Brief us about the overview of the Pharma industry?

The Indian pharmaceutical industry is experiencing a dynamic transformation, driven by a relentless focus on quality and safety. This commitment is crucial for maintaining our position as a global leader.

Innovation plays a central role in this transformation. This ensures the highest standards of quality throughout the entire drug development and delivery process. Additionally by embracing cutting-edge technologies, we can significantly enhance patient safety, monitoring and pharmacovigilance practices.

The future holds immense promise for the Indian pharma industry. Emerging trends like personalized medicine, which tailors treatments to individual patient profiles, and the development of biosimilars, which make advanced therapies more accessible, present exciting opportunities. By tackling existing challenges and leveraging these trends, we can further solidify India's position as a global leader in quality, innovation, and patient safety.

This exciting transformation positions the Indian pharmaceutical industry for a projected growth rate of around 15% over the next six years, reaching a value of $130 billion, according to gvt reports.

What are the Opportunities and challenges do you see for Indian pharma in India & globally?

The industry stands as a formidable force on the global stage, brimming with opportunities for further expansion. Domestically, India's burgeoning population and increasing incomes are driving a significant surge in demand for affordable healthcare, creating a vast market for Indian pharma companies to sell their generic drugs. Internationally, India is already the largest manufacturer and exporter of generic drugs, and as patents for many branded drugs expire, Indian companies are well-positioned to provide more affordable alternatives. Additionally, the trend of foreign pharma companies increasingly outsourcing research and manufacturing to India, due to its cost-effective and skilled workforce, presents a substantial opportunity for Indian firms to broaden their service offerings in Contract Development and Manufacturing Services. Furthermore, the Indian government's push for investment in biotechnology and innovation, particularly in biosimilar drugs, could spark a new wave of advancements from Indian pharma companies.

While it enjoys a strong position, navigating its future growth requires addressing certain hurdles. To truly thrive, the industry needs a more robust intellectual property (IP) framework. Stronger IP laws will incentivize innovation, crucial for developing new drugs. Geopolitical tensions and disruptions like the Red Sea crisis further complicate matters by disrupting global supply chains. Despite these obstacles, the Indian pharma industry remains remarkably resilient and adaptable. By addressing these challenges head-on, the industry can solidify its path as the ‘Pharmacy of the world’

What are the major priorities for the company’s growth going ahead? How many products are you looking to expand in therapeutics areas?

At JB Pharma, we're charting a course for sustained growth with a focus on two key pillars:

1. Therapeutic Area Expansion:

●????? We will maintain our leadership position in cardiology, specifically focusing on hypertension, heart failure, and lipid-lowering treatments. This successful segment will continue to be a cornerstone of our growth.

●????? We are actively expanding into adjacent therapeutic areas like diuretics etc. This expansion will be achieved through a combination of strategic acquisitions and organic product development.

2. Innovation and New Product Launches:

●????? We are committed to a robust pipeline of new product introductions, aiming to launch 6-8 new products annually in the Indian market. These new offerings will significantly contribute to our revenue growth.

●????? Recent launches like Ranraft for acid reflux and Sporlac Eva, a women's health probiotic, exemplify our commitment to innovation and addressing unmet medical needs.

How do you see domestic business in terms of chronic portfolio? What growth do you see for Chronic business?

Our domestic business is witnessing exciting developments, particularly in the chronic segment.? We're strategically prioritizing cardiology, heart failure, hypertension, and lipids within the chronic portfolio. This focus has yielded impressive results. All five of our major brands – Nicardia, Cilacar, Rantac, Metrogyl, and Cilacar-T – are now ranked within the top 150 brands nationally.

In the cardiology segment itself, a $3 billion market, JB Pharma has achieved significant growth. We've climbed from the 13th position to the 8th position within just three years. This rapid ascent makes us the fastest growing company in cardiology among the top 10 players in India, with our cardiology revenue exceeding Rs 1,000 crore in the calendar year 2024, as per IQVR

Looking ahead, we're optimistic about the continued growth potential of our chronic portfolio. We'll maintain our focus on strategic expansion, product development, and market leadership in this crucial segment to ensure JB Pharma remains a leading provider of chronic care solutions in India

What are your plans for CDMO business? What growth do you see for CDMO business?

The CDMO business is a strategic engine for JB Pharma's future. We're targeting ambitious growth, aiming to double our current $50 million revenue to $100 million within 3-5 years. This translates to a significant contribution to our international business, potentially reaching over 50% from its current 27%.

To achieve this, we're making strategic investments:

●????? Doubling Lozenge Capacity: We're expanding manufacturing from 1 billion to 2 billion dosages annually, anticipating a surge in demand for high-quality lozenges. Looking ahead, we also aim to diversify our lozenge portfolio into categories of sleep disorders, pain management, immunity-boosters and anti-inflammatory

●????? Global Market Expansion: We have successfully expanded into four European countries and aim to cover the entire region by the second half of the next fiscal year.? Additionally, we plan to commercialize lozenges in the Middle East and Southeast Asia later in the year. From the second half of this fiscal year through December 2026, JB will complete its entry into the Brazilian market

These strategic partnerships and targeted market expansion, coupled with increased capacity, solidify our position as a key player in the global CDMO landscape.

What growth do you see for ophthalmology business? Brief us about your new product launches?

Our recent acquisition of a Novartis ophthalmology portfolio presents exciting growth opportunities. We are confident in achieving double-digit growth in this segment, significantly outpacing the overall market growth rate.

The next few months would also see new products in ophthalmology around dry-eyes, antioxidants and in the biologics segment (through licensing deals). We have expanded the original team of 65 people who joined us through the acquisition to a robust 100 members. We plan to continue this strategic growth moving forward.

What were the major drivers for growth for Q4? What is your outlook on margins?

JB Pharma delivered a strong Q4 with a 22% rise in domestic revenue, driven by growth in chronic therapies. Our CDMO business also achieved a significant milestone, reaching Rs 100 crore in revenue for the first time in any fourth quarter.

Our focus on chronic therapies, product mix optimization, and efficiency improvements will drive overall gross margins to 65% and EBITDA margins of 26-28% in the coming years. We're also seeing positive margin improvements in our South African business.

Looking ahead, we are well-positioned for continued growth with a strong domestic base, an expanding international presence, and a commitment to delivering strong margins for our shareholders.

What is your revenue growth for FY25?

JB Pharma is charting an ambitious course for FY25, aiming to exceed our target of 12-14% revenue growth. This growth will be fuelled by a strategic focus on expanding our chronic medicine segment, with the goal of increasing its contribution to a dominant 60% of our overall domestic revenue. We see this solidifying our position as a leader in the crucial chronic care market, while India remains a core focus for JB Pharma. Leveraging our existing strengths and strategic focus, we'll continue driving robust domestic growth. These strategic priorities, coupled with our unwavering commitment to quality and innovation, position JB Pharma for a successful FY25, achieving ambitious revenue targets and continuing to deliver high-quality medicines to millions of patients across the globe.