Think long term
L Kishore Babu June 3, 2013Divi's Laboratories has transformed over the past 18 years. From being just a research outfit, the company now has multiple manufacturing facilities for niche pharmaceutical ingredients in the generic and custom synthesis segments with strong presence in advanced markets.
When India signed to be a member of the World Trade Organization's convention on patents in 1995, Divi's realised the potential of working in the patent-compliant regime. The company conformed to intellectual property from the inception of its manufacturing operations in 1995.
The company started off making only patent-expired active ingredients. After proving its skills in process chemistry, the company began making ingredients for patented products under custom synthesis for overseas pharmaceutical innovators.
#Revenue: Rs 1,864 crore, up 42%
#Net Profit: Rs 533 crore, up 25%
(Figures for 2011/12; Source: Annual Reports)
#Added eight products to its product portfolio
#Reduced the working capital cycle to 250 days in 2011/12 from 339 days in 2009/10
Although the industry had time until 2005 to conform to the new patent regime, we consciously avoided short-term temptations. This gave us the early-entry advantage. Over the years, the relationship with large pharmaceutical companies grew and resulted in good business for us in the custom synthesis space.
The past two years have seen significant investment towards capacity additions at Divi's special economic zone in Visakhapatnam where we have also set up a unit for several new products. The focus on cost efficiency and objective capacity expansion over the years helped the company to be debt-free and competitive. The focus has also been on niche products and exports to advanced markets.
L. Kishore Babu is CFO of Divi's Labs. He has been adjudged Best CFO in the category - Best Transformation Agent (medium).