The Making Of Matrix Labs
Unusual he is. Part of the reason is that Prasad comes from a modest middle class background — his father was an army officer and mother a housewife — and he does not carry the baggage of inheritance. That gave him the stomach to take risks from the beginning. “I have little to lose,” he says.
 |
| Mylan’s headquarters in the US |
|
|
A Master’s degree holder in chemistry (he later did an MBA while at his first job), Prasad started his career as a small-time analytical chemist with Indian Molasses, a New Delhi-based company. In 1993, when his mentor, P.A. Kumaran, then general manager at Indian Molasses, advised him to join pharma manufacturing, he decided to work at Plant Organics, an API supplier in Hyderabad, despite the fact that it was running huge losses. As general manager, he turned Plant Organics around in a year by convincing its largest API buyer Alkem Labs to pay more for the API and assuring greater supplies.
Plant Organics had a loss-making subsidiary called Vorin Labs. In 1995, a group of NRI investors bought out Plant Organics, and asked Prasad to run the show as managing director of Vorin. Vorin began supplying APIs to Ranbaxy, then led by D.S. Brar. Impressed with Prasad’s work, Ranbaxy took 38 per cent stake (they woud later raise it to 51 per cent) in Vorin. It was at this time that Prasad met Malik, who was with Ranbaxy as head (R&D) and, subsequently, on the board of Vorin Labs. Till now, Prasad was still just an employee. In 2000, he took his first leap of faith.
The Andhra Pradesh government had recently disallowed setting up of new plants in Hyderabad. For Prasad, who was bit by the entrepreneurial bug, the only route was to buy an existing plant. He found the perfect company in Herren Drugs and Pharmaceuticals, a Hyderabad-based company that was running into losses. Prasad and a business associate, N. Ravinder, bought the company for a mere Rs 3 crore. That money, too, was not easy to come by. They cobbled it together by borrowing. Prasad got the money at a whopping 48 per cent interest. He continued being managing director, Vorin — Herren was bought in his personal capacity.
Meanwhile, Ranbaxy wanted out because it did not really want a plant in Hyderabad, since its manufacturing was concentrated in the north and at strategic global locations. Prasad bought out Ranbaxy’s stake in Vorin by raising money through bank loans and merged it with Herren. Thus, in March 2001, was born Matrix Laboratories.
Prasad, meanwhile, kept going the extra mile if an opportunity presented itself. Shortly after Matrix was formed, Deepak Chhataraj, regional head (US), Ranbaxy, wanted to launch loratadine, an API for antihistamine. He wanted 3-4 tonnes of the API, but Ranbaxy could produce maximum 1 tonne. Prasad offered to do 3-4 tonnes himself (through Matrix) and without signing a formal agreement, put up a manufacturing block that must have cost him Rs 15 crore-20 crore. It was a large sum for a company of Matrix’s size, the first big order after Vorin and Herren were merged. Ultimately Ranbaxy could not place this order — and Prasad put it down to the travails of entrepreneurship.
Between 2002 and 2004, Matrix acquired a host of smaller Indian companies (see ‘The Matrix Story’ on page 37). Says Prasad: “Each acquisition that we made either added to the capacities or was strategically significant to our growth. The organic route would take too long. We wanted to grow fast.”
In November 2003, Matrix set up joint ventures (in India and Ireland) with two German companies. Sensing an opportunity, by March 2004, private equity players Temasek and Newbridge moved in and picked up a stake of 38 per cent between them. In July 2005, Matrix upped its stake in Explora Laboratories, a Mendrisio, Switzerland-based technology platform company. This acquisition added niche products in the oncology segment to Matrix’s portfolio.
Later that month, Matrix did its biggest acquisition, and the biggest deal by any Indian pharma company at that point — it bought 22 per cent stake for $263 million in Docpharma, a pharmaceutical trading company with a robust marketing and distribution network in western Europe. Says Prasad: “Matrix needed to enter the front end and a European acquisition gave us that. Moving into formulations and finished dosage form was a natural growth path for us.”
In January 2006, Matrix bought a 58 per cent stake in Mchem, a China-based manufacturing company. Mchem makes anti-retroviral APIs and gives Matrix the advantage of lowering prices in the segment using China’s manufacturing advantage.
Then, Matrix entered into two strategic joint ventures with Aspen Pharmacare, South Africa’s largest generic pharma company. Matrix had a strong anti-retroviral portfolio and joining hands with Aspen strengthened it further since together, the two companies had 25 products. It also gave Matrix access to niche, controlled-release products through Aspen’s subsidiary FCC.
Finally, Matrix acquired Concord Biotech in February 2006. None of these were random moves. They were calculated to take the once single product (citalopram) focused API supplier into the league of broad-based generic companies.
Prasad’s aim has always been to take Matrix into the global league. That has been realised with the acquisitions and now the deal with Mylan. With that ends one chapter in a remarkable career. And another begins.
1 | 2
Sensex rises 61 points in opening trade 
