Torrent Pharma plans 50% hike in R&D spend, focuses on regulated mkts

Tuesday, May 31, 2016

With an eye on cracking the regulated markets, Ahmedabad-based pharma giant Torrent Pharmaceuticals Ltd is all set to up its game for the big leap. The Rs 6,676 crore company is planning to increase its research and development (R&D) spend by over 50 per cent to about 7-8 per cent of its turnover, and has a strong pipeline of around ten new drug launches in the US market this fiscal.

A Torrent Pharma spokesperson said, "R&D costs will scale up as we are confident in our long term business prospects in our selected geographies and are investing in building a pipeline. We are aiming to raise R&D investment from current levels of close to 4 per cent to a level closer to 7-8 per cent over a period of time."

He further added, "We have close to ten launches in the coming fiscal year and most of them will take place before the end of calendar year 2016." Torrent is one of the few Indian pharma companies which has not been plagued by the US drug regulator and has been largely successful in meeting the compliance standards of the USFDA.

Torrent's R&D spend during the year 2015-16 was up by 28 per cent, from Rs 191 crore in the previous year to Rs 246 crore. Analysts expect that its R&D spend would touch around 7-8 per cent of its its sales turnover this fiscal.

Much of the R&D scale up is to develop products for the highly regulated markets, feel analysts who say of the 10 product launches planned this fiscal for US, most of the products would be in the CNS (central nervous system) and cardiovascular segments.

In fact, in one of its recent reports Crisil has said that given the slowing growth in generics, it is critical that Indian companies look at new avenues such as new drug development and biopharmaceuticals for sustaining growth. "A sharper focus on innovation and R&D is imperative.," said Crisil. It also said that Torrent's R&D focus is currently on cardiology and obesity related drugs.

Unlike companies like Dr Reddy's and Sun Pharma, which derive close to 60 per cent of their revenues from the US market, Torrent currently draws around 30 per cent of its revenues from the US. The company posted a 128 per cent year-on-year jump in its US business during the fourth quarter of FY16 to Rs 514 crore primarily on the back of generic versions of Abilify, Nexium and Detrol.

As far manufacturing capabilities for the regulated markets go, Torrent's Dahej plant which was commissioned late last year (with an investment of around Rs 650 crore) obtained the Establishment Inspection Report (EIR) from USFDA for its plant located at Dahej special economic zone in March this year. Prior to this approval, the Plant has also received approval from EU Germany. It was set up to cater mainly to the regulated international markets such as US, Brazil, Germany. With the approval, this plant is now the third plant of Torrent Pharma to receive USFDA approval, out of its five manufacturing units. The company's other USFDA approved plant include the Plant at Indrad, Gujarat and Pithampur (Indore), Madhya Pradesh.

The first phase of the Dahej SEZ plant has added a capacity for 7,500 million tablets and capsules apart from 25 tonnes per annum of active pharmaceutical ingredients (API). The second phase of development at this 70 acre site is expected to take the capacity up to 14,000 million tablets and capsules apart from 80 tonnes per annum of API. The second phase is expected to start soon. There are plans to expand the Sikkim plant as well as set an integrated plant for API and formulations focussing on the oncology segment.


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