In an interview to CNBC-TV18 Pranav Amin, Director & President - International Business, Alembic Pharmaceuticals spoke about the company's plan to form a manufacturing joint venture company with Algeria's Adwiya Mami SARL by acquiring around 49 percent equity in the latter. He said that the Algerian market has potential of USD 3 billion and he expects first launch in Q1FY16.
Also Read: Alembic Pharma expects API biz to grow 10% in FY15
Below is the verbatim transcript of Pranav Amin's interview with Ekta Batra & Anuj Singhal on CNBC-TV18.
Anuj: Could you tell us how much revenue you are targeting in the Algerian market because it's a USD 3 billion market. Could you give us any target if you have?
A: We haven't given out a target as yet, but you are right it's a USD 3 billion market and it's an interesting market because there is still a lot of multinational presence there. The local industry is quite nascent so we believe there are opportunities there; there are some barriers to entry, so we believe that's what we hope to build on within the next few years.
Ekta: I do understand that you will be picking up around 49 percent in the joint venture. What would be the investment in the joint venture and any sort of more financial details you could share with us?
A: In terms of an investment and you are right it is 49 percent because in Algeria you are not allowed to pick up more than 49 percent which is one of the barriers of entry. The other barrier of entry as I mentioned in the release is that locally manufactured products do get priority over imports, so if we do have something that we can manufacture locally and distribute then the imports could have little harder time getting into the country.
As regards investment and revenues, we haven't disclosed that as yet. It is still early days. We expect the first launch to be in Q1 FY16 by then this get the plant; it's already a very good plant which will start working on the permissions on the filings and hopefully by Q1 '16 is when we should get idea of revenue.
Ekta: Can you give us a sense in terms of the reason to enter the Algerian market, would it be your first step to possibly enter the African continent maybe a little more aggressively and your entire plan to enter other markets or other emerging markets?
A: Our priority are biggest markets that we look at from the international side is of course the regulated markets, most of our research and development (R&D) focus in terms of product selection, product development goes into the US, Europe, Australia are some of the regulated markets. Having said that we thought that Alembic didn't have any presence in the Middle East and North Africa (MENA) region and we have been studying the market for a while.
There is a lot of political instability as well in lot of these markets. We like Algeria because of the partner that we have there and the benefit that we can get in Algerian market, but our next phase would be definitely look at the entire territory from this operation and see if we can scale it up to the neighbourhood as well. There are interesting markets in Egypt, Morocco and all over northern Africa as well.
Anuj: In the last quarter your growth was essentially driven by domestic branded formulations business. Is that going to be the trend or would you expect international business to also show signs of growth over the next two-three quarters?
A: In the last six quarters or so the international business has grown at quite a rapid pace. We have said in the past few interviews that there was a lot of backlog last year which got covered up. Second, some of the new products haven't got as much traction as we had expected. These are marketed through our partners. International generics should grow. It maybe another quarter or two, it may still be muted until we have a couple of new launches but I believe domestic is doing well and domestic will also continue growing as well.
Ekta: Out of your entire pie maybe one year down the line how much of your business will come in from the domestic business, how much of it will be international and within international how much will it be from the developed markets and maybe emerging markets?
A: We have said in our guidance that domestic we should grow faster than the market as regarding international on CAGR on two year we were expecting about 30 percent. We have already achieved most of those targets in terms of international, so next few quarters may be slower. As regard the emerging markets it is still a small pie for us – that's something that we want to focus on in the future. We are working on some of the branded markets as well where we rejiged our strategy, new products, new product selection. Algeria and the MENA region is still going to be very early. Its Q1 next year when we will start commercial operation so we will get idea from then onwards.
Ekta: Any inorganic plans to enter other markets or organic as such, anything more in the future that we can expect?
A: In terms of markets as I mentioned the North American market, the European market, Brazil and Australia where we are focusing on. We do not have direct presence anywhere but that's what we will be focusing on.
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