Financial Daily from THE HINDU group of publications
Saturday, Dec 21, 2002
Hikal puts biotech plans on hold
HYDERABAD, Dec. 20
HIKAL Ltd, the Mumbai-based, Rs 116-crore agrochemical and pharma company has decided to temporarily put on hold its diversification plans into biotechnology and instead grow in pharmaceuticals.
"After spending a year scouting for tie-ups and exploring the market, we found that the opportunities were not encouraging in India and hence the decision to delay the company's biotech plans," Mr Jai Hiremath, the Managing Director, told Business Line here.
The company had identified bioinformatics, contract manufacture of biopharmaceuticals and launching of products for healthcare and hygiene as focus areas. Tie-ups with world-class companies and utilising the capabilities of the research institutions and universities within the country were the preferred options.
"We now intend to revisit biotechnology after a year or two. In the meantime, with an overall growth of over 10 per cent annually, Hikal wants to increase its presence in the pharma sector, especially in the intermediaries, Active Pharmaceutical Ingredients (APIs) and contract research," Mr Hiremath, who was in Hyderabad in connection with the CHEMCON-2002 said.
Hikal has invested up to Rs 30 crore in the R&D centre at Bangalore, which it acquired from Wintac, Bangalore, formerly known as Recon Ltd. The thrust of this centre would be to undertake contract research and we have already forged a long-term tie-up with a large US generics company for an active ingredient, he said.
The R&D centre and the API plant are due for inspection by the US Food and Drug Administration (USFDA) in the first quarter of 2003 and once we get the approval we will enter the lucrative US market. In addition plans are to explore opportunities in Europe and Japan for contract research, Mr Hiremath said.
The company has also separated the R&D activity consequent to the acquisition and investments in the Bangalore centre. While pharma would be the focus of Bangalore, the R&D for agrochemicals, the core-business of Hikal would be carried out in Maharashtra, he said.
Hikal, with manufacturing plants in Mahad and Taloja in Maharashtra and Panoli Gujarat is also the world's leading manufacturer of Thiabendazole (TBZ) - a post harvest fungicide. With exports of agrochemicals being the mainstay, the company has projected turnover of Rs 300 crore in the next five years from the export markets from the current level of around Rs 100 crore.
Another major initiative taken by the company is the decision to source raw materials, especially intermediates from China. Hikal is looking at tie-ups with Chinese companies for long-term supply arrangement. It makes sense to collaborate with the Chinese than compete in view of the raw material and labour cost differentials, Mr Hiremath said.
With its emphasis on quality and environment, Hikal has set up a stand-alone waste disposal incinerator in Dombivili, about 50 km from Mumbai to handle industrial wastes. The company has offered to handle wastes generated by other industries in the area on contractual basis.
The company plans to spends 3-4 per cent of turnover on R&D and invests up to 20 per cent on safety and environmental issues. It is setting up the `Thermal oxidiser' incinerators at its Panoli manufacturing plant in Gujarat also.
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