Indies Pharma taking on new debt to fund product and global growth
Pharmaceutical distributor Indies Pharma Jamaica Limited, which reported in its April second-quarter financials that it had paid off all debts, is considering a return to its banks for loan capital to finance what founder and CEO Dr Guna Muppuri describes as “spectacular” expansion plans.
The plans involve not just the rollout of some 150 new drugs over the next 24 months, but also consideration of an overseas expansion once the Jamaican home market has been fully built out.
In an interview with the Financial Gleaner at Indies Pharma’s Montego Bay headquarters, Muppuri confirmed that the company was “in talks” as it determined how best to finance the next phase of its development. He declined to provide details of those discussions, but said that the company was in a healthy financial position to take on new debt, having repaid all previous borrowings during its second quarter.
Muppuri says Sagicor Bank has been a banking partner to Indies Pharma from its early days when the bank was RBC Royal Bank, then rebranded RBTT.
“Sagicor has played a pivotal role in our growth from the early stages,” he said, adding that the Bioprist Group also has banking relations with National Commercial Bank and First Global Bank.
Indies Pharma, registered since 2003, develops and markets a range of prescription and over-the-counter pharmaceuticals in Jamaica. It is part of the Bioprist Group that is also into property development and business process outsourcing. The company, which listed on the junior stock market last year, posted gross profits of almost $393 million and $138 million of net profit for year ending October 2018 on the back of $636 million in annual sales.
Indies generated $197 million in revenues for the second quarter to April 2019, up 29 per cent. Its three-month gross profit hit $133 million, compared with $95.3 million a year earlier.
The pharmaceutical business was built on Muppuri’s plan to develop and market one drug, Clopigogrel, which is sold locally as Thrombolat, for the prevention of heart attack and stroke from blood vessel clots in persons with heart disease.
His intention was to mobilise his drug- manufacturing contacts in India, his country of origin and that of his wife and company co-founder, Vishnu Muppuri, to make the drug available in Jamaica at a reasonable price.
A general physician practising in the parish of Hanover at the time, Muppuri says he asked his wife to agree to the deferment of his plans to pursue specialist training in the United States for one year, in order to work on the drug development. That one year has mushroomed into more than 15 for the Muppuris, who brought their first drugs to market in 2005.
“We had six basic drugs to start out with in 2005. Today we have 400-plus approvals at hand, out of which we have 175 being sold on the market. We have 154 products in the pipeline at various levels of approval in Jamaica,” said Muppuri.
Needing more strength in liquid capital to fully exploit the home market in Jamaica and possibly expand into the Caribbean, the entrepreneur says the approach will be a double-barrel one, employing a mixed model of reinvesting earnings and taking on some debt.
With a five-year timeline for expansion and bringing new products to market month after month, Muppuri says the focus over the next year will be on organic growth.
“The basket is getting bigger and market share expanding. We are building our home base. Our products have not reached the maturity stage here. We are increasing our products range, and market size,” he told the Financial Gleaner. “If we focus on that we are very positive that we will be able to get close to five to 10 per cent of the market share. Currently, we are about two to per cent of the market share.”
Convinced that organic growth in Jamaica can deliver spectacular net profits, the company CEO adds that as the business builds cash flow and reserves, it is also looking to acquisitions, expansions, and greater levels of investment in research and development.
Trained at the S.V. University School of Medicine in the city of Tirupati in India’s southeastern state of Andhra Pradesh, Muppuri practised medicine in Jamaica between 1992 to 2011, and then he decided to focus on the business on a full-time basis. In 1997, he relocated from Kingston to the town of Lucea in Hanover, where he established a private practice.
He says he entered business to become a game changer.
“I am a new-age entrepreneur. I look for things beyond the horizon,” he said. “There is a lot of surprises to come. Of course, there are risks in it. Those are calculated risks.”
Muppuri says his wife and business partner plays a major role in risk management in the business, having been, from the outset, the more conservative person who probes and analyses all his plans and investment decisions.
As for the structure of the drug operation, Muppuri indicates that his management style is hands-on.
“We don’t have any middlemen. I cherry-pick my drug lines, I identify the manufacturers. Because of my connections in India, I deal directly with the owners and I go there personally and do the plant audits, have meetings with the research and development teams. I design my packages and I micromanage the entire development process of the dossier for each drug,” he said. “The controls are very strong in the entire development process.”
He is particularly keen on efforts to develop more drug combinations to be able to treat multiple ailments with one prescription, a preoccupation which, he says, has earned him the nickname “the drug cocktail king”.
“The drug combination is so critical. It cuts the expense of patients having to be buying and taking several different medications that they cannot afford,” he said.
In addition to cutting expenses, these formulations are said to increase therapeutic benefit and the confidence of patients to take medications. “Initially, I brought a few cocktails into the country and they became blockbusters for us. So that’s one area of specialty which made us stand out as a unique company. Even though we are small, we are like pitbulls in the market.”
The businessman says his ultimate plan is to establish Indies Pharma as a truly Jamaican brand with global presence, in much the same way as Red Stripe, Appleton, Sandals and Usain Bolt are global Jamaican icons.
Success so far, he stressed, has not come easily. He recounted the multiple acts of discouragement and rejections he received in the early days, including from regulatory agencies in Jamaica.
Muppuri shared an early encounter where, having made an appointment at the Ministry of Health, he was made to stand while being spoken to quite disrespectfully. He was further admonished by a regulatory official not to bring his entire family from India to Jamaica to work in the business, as the Chinese do. While having felt humiliated, he says he was also made stronger by those experiences.
Today, Indies Pharma has a staff of 75, a team of about 20 medical and sales representatives, and a growing delivery fleet. Bioprist Group owns about 78 per cent of the company, and all employees are shareholders, having been assisted by the Muppuris to purchase shares in last year’s initial public offering.