The Right Prescription

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Many may still recall Bollywood’s Jumping Jack Jeetendra endorsing male ‘energiser’ Thirty Plus on national television in the 1990s. But few will remember Mumbai’s Ajanta Pharma as the company behind the product. Ajanta, it appears, is only too happy for that to be the case. For it has moved on. And Ajanta’s founding family scion Yogesh Agarwal is making sure there’s no looking back.

For the better part of this decade, Yogesh, 38, has presided over a strategic overhaul of the firm that has seen it shift focus away from over-the-counter (OTC) products such as Thirty Plus (no longer available in India, though exported) to speciality prescription drugs in ophthalmology, dermatology and cardiology in the Indian market. The company also pared down exposure to high-risk markets such as Russia and strengthened its presence in South-east Asia, Africa, and West Asia with a similar product focus. “The specialty focus was a measure to restructure our Indian operations,” says Yogesh. “We firmly believed that Ajanta had the ability to make this transition and become a player focusing on key therapeutic areas.”

With good result, it appears. Total income has more than doubled to Rs 384 crore on a standalone basis from five years ago. In 2009-10, the company grew total income by 18 per cent while net profit rose 33 per cent to Rs 28.54 crore. In the last fiscal, its shares on the Bombay Stock Exchange almost tripled to Rs 182. Some of that also factored in a buyback that the company launched a year ago. “Yogesh is responsible for our turnaround and reorientation,” says Arvind Agarwal, chief financial officer of Ajanta and a spokesperson for the company.

The founding family of Ajanta, the Agarwals, are Marwaris from Bansod village in Maharashtra. Ajanta was founded in 1973 by Yogesh’s uncle Purushottam Agarwal, a pharmacist by training. The company, and Purushottam’s extended family, shifted to Mumbai in 1989.

Starting with ‘Pinkoo’ brand of baby’s gripe water, the company built a portfolio of OTC products. But it lacked the resources to make a big enough splash because OTC products need sustained marketing support. While it spotted the export opportunity early, it burnt its fingers in Russia during the ruble crisis.

Under Yogesh, an MBA from the Johnson & Wales University, US, who joined Ajanta over seven years ago, the company changed its avatar. It began looking at prescription drugs where the doctor is the company’s immediate customer and chose less-competitive areas such as ophthalmology. The company invested in research and development (R&D) of differentiated formulations such as a once-daily version of a thrice-daily tablet to improve patient compliance. “The challenge was to introduce products that are not ‘me-too’,” says Yogesh. “We could tide over that with our R&D efforts.” A majority of the products that it launched in the past three years in the Indian market, for instance, were new drug delivery systems.
 
In spite of its smart rebound under Yogesh, the company just cannot afford to rest on its laurels. For one, Ajanta Pharma is still undersized in an industry where the largest company Ranbaxy tops a billion dollars in revenues. Two, it is now making plans to enter the US market, which can be an expensive exercise. Three, it needs to keep churning out new products in a tighter drug patent regime. Against this backdrop, will the company continue to demonstrate its fitness and vitality well into its 40s?