Express Pharma

Alembic Pharma plans Rs 720-crore CAPEX for FY19

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Despite the pricing pressure and buyer consolidation, the company is betting big on the US market

Alembic Pharmaceuticals has earmarked a capital expenditure of Rs 720 crore for this fiscal year to complete existing projects and on maintenance, a senior company official said.

The company had spent about Rs 600 crore of capex in the last fiscal year (FY18).

“We need Rs 600 odd crore to complete the existing projects in FY19. We have four projects under execution at present. We are also spending Rs 120 crore towards maintenance capex,” RK Baheti, Director of Finance and Chief Financial Officer, Alembic Pharmaceuticals said.

“Our efforts to add capabilities are also progressing well. Both the oncology injectable and the general injectable facilities will be ready in FY19. New oral solid dosage facility in Jarod will be ready in the second half of FY19,” said Pranav Amin, Managing Director, Alembic Pharmaceuticals.

The firm had spent Rs 411 crore on research and development (R&D) in FY18, about 13 per cent of total sales, and is planning to scale up this investment.

“We should inch up R&D spend gradually, depending on other projects’ progress, anywhere between Rs 450 crore and Rs 500 crore,” Baheti said, adding around 90 per cent of the R&D spend is towards the US market, where the company will focus on quality and supply chain.

The company’s international formulations business was relatively flat at Rs 1,200 crore in FY18, whereas the US business was flat at Rs 920 crore.

However, despite the pricing pressure and buyer consolidation, the company is betting big on the US market.

“I still feel the US market is an interesting space. We do have pricing pressure. There is still an interesting space. If you do a good job, you can get market share and you can make some good money, still there is a relatively limited competition opportunities,” Amin said.

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