By Shardul Notial
Branded formulation manufacturer Eris Lifesciences now aims to grow dermatology by 20 percent to 25 percent per year. This follows the recent acquisition of a 100 per cent stake in Mumbai-based domestic formulation company Ocnet Healthcare for Rs 650 crore.
The acquisition, which now gives the company a 87% share in the Rs 55,000 crore chronic market, will be a big boost for the Eris Lifesciences specialty franchise.
“With Eris now having a presence in the top seven therapeutic fields of Cardiovascular, Oral Anti-Diabetes, Insulin, Dermatology, Neuropsychiatry and Women’s Health, the company’s profile is complete. Now, in each case, they have seized it, despite obstacles we can scarcely imagine. “
In an exclusive interview with Dr. The Financial Express Online, Krishnakumar Explains that the company is growing at an annual rate of 15 percent to 16 percent in the therapies and neuropsychiatry, such as cardiology and diabetes. We are seeing a growth of more than 25 percent in women’s health. Our goal is to grow the dermatology business from 20 percent to 25 percent annually.
Excerpt:How will the acquisition of Ocnet Healthcare affect the Eris business and how will it be integrated into the current business portfolio?
Eris Lifesciences is now 15 years old. From the beginning, our DNA has been that we are a special company. The money of a particular company is doubled. One is that we will be in chronic therapy. Second, we will primarily target medical population specialists.
In India, the chronic care market is worth between Rs 55,000 crore and Rs 60,000 crore. The biggest part of chronic is cardiovascular and then oral anti-diabetes, insulin, neuropsychiatry and dermatology.
On Oknet, we’ve got a platform with very lucrative business in multiple numbers. One is that its revenue is around Rs 200 crore, which is the right size. About 65 percent of the company owns a dermatology business. The dermatology business is around Rs 130 crore and the overall topline is Rs 200 crore. If I look at the prescription profile, Oknet practices dermatologists in India with about 50 percent of its prescriptions. There are about 11,000 practicing dermatologists across India. Oaknet covers almost all of them. We can use this base to build on it and take it further.
In dermatology, there are two broad categories. One is called Medical Dermatology. Medical dermatology is primarily for itching, rashes, psoriasis and skin infections. In a tropical country like India, this division can grow from 8 percent to 10 percent annually. There is also an exciting and new emerging department called Cosmetology. These include high-value skin preparations such as collagen and minoxidil used for hair growth. These are semi-OTC type preparations. However, the prescription still has to come from the doctor and it is these dermatologists who write the prescription for cosmetology.
So, on the one hand, you have a business that is like a steady growth business, growing at a rate of 8 percent to 10 percent per year and creating good cash flow. And then you have cosmetology where we can launch lots of new products and grow business fast. This is a dual opportunity that we will focus on.
What is the size of Ocnet in the overall market?
Oaknet is among the top 10 companies in the dermatology market. The overall skin disease market is around Rs 8,000 to 10,000 crore. If you look at the Indian dermatology market, 90 to 95 percent of it is still medical dermatology.
What are the other unused areas of Eris growth and what are the revenue estimates?
On Oaknet, the company has given an estimate that from Rs 200 crore, we will take it to Rs 250 crore in the next two years. The company will launch many new products. We will take a number of initiatives to focus on alternative sourcing systems to improve field force productivity and reduce the cost of products sold. We will apply the standard making levers available at our disposal and push for effective efficiency.
Tell us about the competition in the dermatology department?
The main names in the dermatology market are Sun Pharma, Glenmark and Hegde and Hegde.