Known as the ‘Sinarest company’, Mumbai-based Centaur Pharma has proved that super brands can be nurtured by mid-sized pharma companies as well. Express Pharma analyses how the company took on more established pharmaceutical companies to create ‘Made in India’ super brands in the hyper competitive anti-cold space. Not just in India, but in some overseas markets as well. But can Centaur Pharma replicate this success? By Viveka Roychowdhury
How do you value a brand bagging two prescriptions every second? A brand accounting for 60 million prescriptions a year? Probably the only brand to have bagged the Brand of the Year award for five years in succession at the AIOCD-AWACS Awards in Marketing Excellence?
This is Sinarest, the flagship brand of Mumbai-based Centaur Pharma, which claims to be India’s No.1 anti-cold brand since 1996. In fact it is the No 1 in Cambodia and Uganda as well.
Established in 1978, the company today is ranked a modest 34th by prescriptions (SMSRC) and ranked 50th by sales as per AWACS. The ranking may be low, but the company has 17 brands ranked No. 1 in their segments. Centaur is India’s fourth-largest ophthalmic company by prescriptions with a market share of 24 per cent. Besides the domestic market, the company exports to 110 countries in five continents.
Centaur Pharma is also the country’s largest and the world’s third-largest manufacturer of psychotropic active pharmaceuticals ingredients (API) with facilities conforming to global regulators spanning US FDA, EUGMP/ANSM (France), TGA, PMDA (Japan), KFDA (Korea), ANVISA (Brazil), COFEPRIS (Mexico) and WHO-GMP standards. Centaur Pharma’s API formulations plant situated in Ambernath, Maharashtra is also an US FDA approved plant. In addition, Centaur Pharma also has two WHO-GMP approved formulations facilities in Goa. A new fixed dosage formulations facility in Tuem, Goa is to be commissioned by 2021.
Starting small
But the Sinarest saga started in rented facilities in Kalina, then a small suburb of Mumbai. The founder, Shivanand Sawant, Chairman and Managing Director, recalls that in around 1972-73, the German principals of his company, Indo Pharma, decided to exit the country. He vowed that he’d rather turn an entrepreneur than search for another job. Centaur Pharma thus took shape in 1978. The name is an allusion to the legendary centaurs, the half man-half horse beings from Greek mythology, known to be gifted in healing and medicine.
As Indo Pharma wound up operations, Centaur Pharma started with manufacturing contracts with E.Merck, Boehringer, Boots and German Remedies. The company soon outgrew the Kalina facility and set up a formulation unit in Goa in 18 months flat, a record for that time. As Sawant confesses, there was no strategy other than to be self-employed and build his retirement corpus. He planned was to pull out after two decades either via an IPO or selling stakes.
In 1999-2000, the company came close to finalising a sellout. Sawant recalls how negotiations went up to very advanced levels with two MNC pharma companies before the deals fell through. On another occasion, there was an offer to buy the Sinarest brand but Sawant refused to sell the brand with which the company was identified. The bid for Sinarest perhaps made him realise that the company had created enough value. And all the painstaking efforts over the years to build such brands would be wasted if he sold out.
He then shelved all plans to sellout and with the help of ex-colleagues and friends from the Indo-Pharma days, drew up a more strategic long term blueprint for the company. He decided to invest in a new manufacturing location, in Pune this time, with a focus on exports. Today, the company’s revenues are a balanced mix of domestic sales (52 per cent) and overseas (48 per cent).
The current business spread between the four main revenue streams is dominated by pharma (50 per cent) followed by CRAM (26 per cent), API (23 per cent), and CRO (1 per cent). Revenues in FY2018-19 were Rs 667.25 crores while net worth was Rs 334.32 crores. EBITA was Rs 178.96, with earning to revenue of 27 per cent. The debt equity ratio was 0.10 while return on equity was 34.20 per cent. Revenue projection for current year (FY2019-20) is Rs 750 crores.
Second generation in the saddle
Today, Sawant is emphatic that there is no intention of selling out. While his brother Dr Shreekant Sawant, who was was earlier working with Ciba Geigy heads the API team, the second generation is now involved with the company at senior roles. (See box: GenNext at Centaur Pharma) His eldest daughter, Dr Smita Phal, is a doctor with an MD in clinical pharmacology and an MSc Biotechnology from Scotland. As a Director, she handles the international business.
The second daughter Rakhi Kadam, a commerce graduate with a law degree specialisation in IPR is Director- Legal and is responsible for IP and legal matters. Supriya Desai, the youngest daughter, is a BSc Tech from UDCT, has a Masters in Marketing Management from Narsee Monjee Institute of Management Studies followed by an MS in pharmaceutical science from the University of Missouri, US. She is general manager operations, with overall responsibility of the Pune facility.
Sawant’s ex colleague’s son, Dr Amit Rangnekar joined the company straight after his graduation, worked his way up the ranks and is today vice president, supply chain management.
Most employees at the senior levels have spent decades in Centaur Pharma. For instance, Rangnekar narrates how Ajay Kumar Handa, who is today president, heading marketing and HR for the domestic business, has been with the company for three decades.
He joined as a medical representative and rose up the ranks. He