New Delhi: JB Chemicals and Pharmaceuticals Ltd has set aside ₹1,500 crore for acquisitions in the near-to-medium term to grow the company’s India and contract development businesses, chief executive officer Nikhil Chopra said in an interview.
“India is contributing around 53% to the overall company, and 12% is contributed by the CDMO (contract development and manufacturing organization), which combined is 65%, and we want to take it up to 80% by FY27. Chronic segment, which contributes about 55% of the Indian business, is our major area of focus for acquisitions as we intend to take that contribution to 60%,” Chopra added.
“As our team continues to evaluate possible acquisition opportunities, there is no set amount for acquisitions that we have set aside, but we can go up to leveraging 1.5 times our EBITDA, which is close to ₹1,500 crore.”
The company’s revenues from domestic business grew by 11% to ₹481 crore in Q2FY24, largely led by the performance in the chronic segment. Domestic business has remained resilient even during the period when the acute segment had relatively softer demand as products for acute diseases remain seasonally dependent.
“Our chronic part of the business is growing at a better pace as compared to the market by around 10%. And I believe that this is the area which is going to drive the growth in the coming time. Because early diagnosis, quality medicines, products, patent products, products getting off patent, available at quality companies, I think that is what is going to drive,” he added. “Given the country’s population, that number is only going to increase as more and more people, young or ageing, become more likely to be a victim of chronic diseases. The chronic part of the business is only going to grow. The contribution is only going to come up.”
The company expects to grow at a faster pace than the market, with the Indian market expected to grow around 8-12%, he added.
Ever since KKR took a majority stake in the pharma company in 2020, it has gone out and increased its portfolio of hypertension, heart failure, probiotics, and paediatric treatments to 60% from the 25% it was before the acquisition. The portfolio was earlier dominated by legacy products such as Metrogyl, Nicardia, Rantac, Chopra added.
The company’s international business generated revenue of ₹401 crore during the September quarter, up 7% from a year earlier on the back of good performance in the CDMO business, which recorded revenues of ₹115 crore, marking a 5% growth. The company has seen exponential growth in the CDMO business, and it intends to increase the contribution by CDMO to overall business from the current 12% to 20% by this year while growing the CDMO business to $100 million from $50 million last year.
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Updated: 09 Nov 2023, 12:12 AM IST