The ingredient for success
As India’s only manufacturer and one of the top few global manufacturers of Vitamin D3, Fermenta Biotech has a very interesting tale to tell. Now, it is looking towards the nutraceuticals segment to fortify its recipe for success By Lakshmipriya Nair
As a kid who was a sucker for stories, I often pestered my grandfather for more and more of them. On one such occasion, I recount him saying that they are all around us, waiting to be identified and heard. This is absolutely true in Fermenta Biotech’s case. As India’s only manufacturer and one of the top few manufacturers as well as suppliers of Vitamin D3 globally. It had a value of $1.80 billion in 2017-18, and is estimated to grow at a CAGR of 11 per cent to touch $2.5 billion by 2020. In fact, DIL, the parent company of Fermenta Biotech, generated 87 per cent of its revenue growth in the last quarter from this Vitamin D3 APIs manufacturing subsidiary. So, how did it all begin?
Born of ambition
1986. Duphar-Interfran, a 35-year old, BSE-listed pharma company, was setting its sights for greater success and broader horizons with a new skipper at its helm. The company, born as International Franchises in 1951, had traversed a splendid voyage under the aegis of its founder, Dr DVK Raju. Strategic collaborations with global partners such as Phillips Duphar NV, Crookes Laboratory UK and Solway Pharma had brought the company many triumphs and made it a known player in the pharma industry with iconic brands such as Crocin and Lacto Calamine under its belt.
But, the new MD, Datla Vasant Kumar, wanted to steer the company through uncharted waters and seek greater depths in his search for newer shores and unfound treasures. He was keen to realign his business and venture into newer segments to accelerate growth. Thus, Fermenta Biotech, a new subsidiary was born. It earliest mandate was to build in-house capabilities for developing nature-based enzymes (catalysts) to produce beta-lactum antibiotics through the enzymatic route. In 1988, two years after it commenced operations with a manufacturing plant in Kullu, the company introduced an enhanced polymer-based PGA enzyme catalyst, its first major achievement. However, though the new subsidiary continued to play an important role in realising the ambitions of its parent firm, the true turn of the tide came much later.
Favoured by luck
2003. A strategic decision was taken to license its bulk drugs business to its subsidiary, Fermenta Biotech. This was two years after Duphar-Interfran became DIL, post the demerger with Solway Pharma. Another year later, it commenced manufacture of cholecalciferol (Vitamin D3) and phenyramidol hydrochloride through a proprietary technology. This proved to be the making of Fermenta Biotech. Though the importance of Vitamin D in fortifying bones have been long known, there was a growing understanding of its various other applications at around the same time that Fermenta Biotech began its manufacturing. The world woke up to the preventive and curative powers of Vitamin D3. For instance, medical researches found linkages between D3 deficiency and chronic conditions like cardio-vascular ailments, diabetes, mental health and infertility. Many medical experts today also believe that mitigating Vitamin D deficiency could play an important role in curbing TB. Thus, it became a crucial ingredient in the formulation of several important medicines and found its way into dietary and nutritional supplements for both, human and animals. As India grew to become the ‘Pharmacy of the World’, the demand for this crucial vitamin continued to increase and DIL’s subsidiary was at the right time and the right place to provide it. Vitamin D3 turned out to be Fermenta Biotech’s gold mine.
Bred with verve and vision
2009. It is the year FBL started exporting Vitamin D3 and launched a novel penicillin G acylase for ß- lactam antibiotic synthesis. This firmly established the company on a growth track and there has been no looking back. Two years later it established a full-fledged facility in Dahej, Gujarat for the manufacture of its most favourite ingredient. Slowly and gradually it went to increase its share in the global market through strategic investments to ramp up manufacturing and meet the increasing demand for Vitamin D3.
Prashant Nagre, CEO, Fermenta Biotech, informs how at around the same time, the company made a conscious resolution — to never turn away a customer, no matter how small or large be quantity. He points out that this was a decision that served them very well as it helped them build very vital and long-term bonds with their consumers. It also aided Fermenta Biotech to tap the market that their global competitors left unserved as they were more geared on supplying only larger quantities.
Today, FBL has established itself as a global leader and a trusted brand in the manufacture of Vitamin D3 and enzyme technologies for beta lactams synthesis. The company is also an expert in integrated biotechnology solutions such as enzymes for antibiotic synthesis and other niche APIs. It has pioneered next generation PGA enzyme technologies for Amoxicillin, Ampicillin, Cephalexin and Cefadroxil. It has over 200 customers across 50 countries with a global distribution network for a wide range of applications such as pharma products, dietary and nutritional supplements, food, animal nutrition and rodenticides. An old maxim states, ‘Good luck is when opportunity meets preparation’. FBL has proven it right.
Coming of age
2017. DIL raised its holding in FBL from 70.15 per cent to 91.2 per cent by buying back 21.05 per cent of the equity capital from Evolvence India Life Sciences Fund. The company informs that this move will help FBL increase its financial strength and enhance the flexibility for the amalgamated entity. FBL also received a confirmation of the quality of product through a Certificate of Suitability (CEP) from the European Directorate for the Quality of Medicines (EDQM) for the Dahej facility. The company also holds several accreditations and certifications from various international regulatory bodies including US FDA, CEP-EDQM, WHO-GMP, HACCP, FSSC 22000, BRC, Halal, AVA, Vegan and others.
Not just the brand, but its leadership too has been making news for the right reasons. In 2018, FBL’s CEO Prashant Nagre received the Best CEO of the Year award as part of Pride of Maharashtra Awards 2018, under the manufacturing category (Pharmaceuticals). It was initiated by the Maharashtra Industrial and Economic Development Association (MIEDA). It was also recognised at the India Pharma Awards 2018 in three categories: Excellence in CSR for companies with turnover less than Rs 500 crores, Pharma International Excellence, Excellence in Export Promotion. Fermenta Biotech’s financials also reveal that its performance in 9MFY19, surpassed previous year’s figures in terms of revenue and profitability. Vitamin D3 revenues also witnessed an overall growth of 54 per cent in 9MFY19 on a YoY basis. Its revenue (including other income) stood at Rs 313 crores for 9M FY19 as against Rs 204 crores in 9M FY18 up by 53 per cent YoY.All of these signal that FBL is truly coming into its own.
Set to soar
Now, FBL, set up to fulfill the ambitions of another company, is an entity with huge aspirations of its own. The most important one is to leverage their leadership position as a Vitamin D3 manufacturer and become a key player in the growing segment of neutraceuticals. Nagre reveals, “Strategically, Fermenta is positioning itself as a nutraceutical ingredients manufacturer, by entering into the nutrition vertical through not only value added variants of Vitamin D3, but also new products in the vitamin and mineral supplements segment.” With this goal in its sight, FBL is making strategic investments in capacity expansion, increasing its global footprint, digitisation initiatives for operational excellence, customer proximity measures and product quality assurance.
In January this year, as part of it long-term capacity expansion plans, it entered into a 99-year lease agreement to acquire about 40,000 sq mt of land from the Gujarat Industrial Development Corporation (GIDC) authority, Ankleshwar, Sayakha. The company intends to commence manufacturing by end of 2020. “Our new plant at Sayakha is a step forward in growing organically in order to facilitate product extensions and new product roll outs,” informs Nagre.
FBL has also been investing investing in technology to optimise its process parameters, moderate costs and enhance efficiency. To cite a few examples, the company uses SalesForce, a CRM module across the globe to enhance service provided to customers and improve sales operations. A SAP-enabled ERP, encompassing various modules viz., financial accounting and controlling, sales and distribution, operations, material management and quality, implemented in record time with zero down-time is used to bring in netter operational efficiencies.
The company is ramping up its R&D activities too. It has two R&D centres, at Thane and Kullu. It has also entered into international collaborations with renowned institues such National Institute of Nutrition (NIN), Institute of Chemical Technology (ICT), Central Food Technological Research Institute (CFTRI) and Annamalai University to expand and fortify their product portfolios.
All this is geared to build and enhance FBL’s strong, value-added portfolio of preformulation ingredients, antioxidants, natural colors, water-soluble variants of fat-soluble vitamins, functional ingredients for food and beverage fortification and smart minerals for sports nutrition. The company informs that it has plans to get into strategic alliances with global partners and utilise new-age technologies to gain a competitive advantage in processes such as microencapsulation, chelation, smart minerals and water soluble formats to more value to their clients in the nutraceutical space. Clearly, FBL has charted out a new path to progress and has embarked on it with a clear roadmap in hand. But, will it be able to continue its success saga? Will it be able to recreate history? We will have to wait and watch.