General views of drugs (Photographer: Brent Lewin/Bloomberg)

Alembic Pharma Plans Rs 720-Crore Capital Expenditure For 2018-19

Alembic Pharmaceuticals Ltd. has earmarked a capital expenditure of Rs 720 crore for this financial year to complete existing projects and on maintenance, a senior company official said.

The company had spent about Rs 600 crore of capex in the last financial year.

“We need Rs 600 odd crore to complete the existing projects in 2018-19. We have four projects under execution at present. We are also spending Rs 120 crore towards maintenance capex,” Alembic Pharmaceuticals’ Director-Finance and Chief Financial Officer RK Baheti said at a recent investors’ conference call.

The company has six formulation and three API manufacturing facilities. It manufactures general oral solids in the unit at Panelav near Vadodara, Gujarat, and is in the process of putting up oncology oral solids and injectable oncology facilities at the same location.

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The pharma firm has filed 12 ANDAs or abbreviated new drug applications, during the March quarter, taking the total filings in 2017-18 to 26.

Our efforts to add capabilities are also progressing well. Both the oncology injectable and the general injectable facilities will be ready this financial year. New oral solid dosage facility in Jarod will be ready in the second half of 2018-19
Pranav Amin, Managing Director, Alembic Pharmaceuticals

The firm had spent Rs 411 crore on research and development in 2017-18, about 13 percent of total sales, and is planning to scale up this investment.

“We should inch up R&D spend gradually, depending on other projects’ progress, anywhere between Rs 450 crore and Rs 500 crore,” Baheti said, adding around 90 percent of the research and development spend is towards the U.S. market, where the company will focus on quality and supply chain.

The company’s international formulations business was relatively flat at Rs 1,200 crore in 2017-18, whereas the U.S. business was flat at Rs 920 crore.

However, despite the pricing pressure and buyer consolidation, the company is betting big on the U.S. market.

“I still feel the U.S. market is an exciting space. We do have pricing pressure. There is still an exciting space. If you do a good job, you can get market share and you can make some good money. There are relatively limited competition opportunities,” Amin said.

The company reported a net profit of Rs 412.63 crore in 2017-18, against Rs 403.16 crore in the year-ago period, while its consolidated revenue from operations stood at Rs 3,130.81 crore, against Rs 3,134.61 crore.

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