Thread by @_BizBites

Ajanta Pharmaceuticals comeback journey led by the second generation Agarwal Brothers- Yogesh and Rajesh has been incredible.

Time for a thread 🧵👇

#fintwit #wednesdaythought

Set up in 1973 by three brothers, Mannalal, Purushottam and Madhusudan Agrawal—had been incurring huge losses for many years.

In June 2000, @AjantaPharmaLtd was trading at just Rs 24 per share with negligible interest from investors.

In 2001-2002, it reported a consolidated loss of Rs 1 crore and by the following year, it was reeling under a debt burden of Rs 130 crore.

Ajanta Pharma needed a shot of its own medicine, an energizer like 30-Plus.

It found its antidote in the new generation of Agrawals: Mannalal’s sons, Yogesh and Rajesh.

Together, Rajesh and his older brother Yogesh, 43, changed Ajanta’s trajectory by focusing on the ‘specialty’ generic drug market and putting an end to the company’s legacy businesses.

This was a risky move, but it has paid off well.

@AjantaPharmaLtd is a very small player in a market full of giants such as Sun Pharma.

Yogesh and Rajesh knew they lacked the financial muscle to compete with the ‘big boys’ in the $31 billion Indian pharmaceutical market.

Some of these giants have single generic drug brands that are worth more than @AjantaPharmaLtd's entire operating profit!

Instead, they focused on launching first-of-its-kind generic drugs.

By 2014-15, @AjantaPharmaLtd reported one of the highest EBITDA margins in the pharmaceutical sector at 34 percent.

The company has managed to achieve all this with a small presence in the US market, which is the golden goose.

A third of @AjantaPharmaLtd's sales comes from India, and the rest from emerging countries in Asia and Africa.

Its products are sold in 35 countries, including Iraq, Nigeria, Cameroon and the Philippines.

The Agrawals brought about this turnaround by changing their strategy and focusing only on specialty generic drugs, identifying the right segments, products and markets, and taking a risk to borrow further so that they could invest in research and development.

Rajesh after his joining, chalked out a new business model: @AjantaPharmaLtd would make generic drugs that were unique in their formulation and dosages, and create specialty brands in four areas.

These areas were ophthalmology, dermatology, cardiovascular and pain management.

It was Yogesh who convinced the company’s lenders in 2003 to open their wallets.

@AjantaPharmaLtd needed funds to invest in new R&D and manufacturing facilities.

Initially, the bankers were apprehensive.

In early 2003, @AjantaPharmaLtd's lenders, including officials from the @TheOfficialSBI and @IndiaEximBank, gathered at a room in the @TajHotels in south Mumbai to hear Yogesh out.

He made a presentation for an hour-and-a-half.

The investors stepped out to discuss the plan.

About 45 minutes later, they said they believed in Yogesh & were willing to extend the loan facility.

With a strategy & funds in place, @AjantaPharmaLtd has built a Rs 418 crore-business in India & is ranked 36 out of the top 300 companies in the Indian pharmaceutical market.

Today, it stands net debt-free, with a cash reserve of around Rs 100 crore.

Around 70% of @AjantaPharmaLtd's portfolio comprises products that it has made available for the first time in India, either in the way they were formulated or in terms of their delivery mechanism.

Examples of first-to-market products by @AjantaPharmaLtd include Gatifloxacin, eye solution available only as an oral dosage. @AjantaPharmaLtd launched its eye drops.

Met XL, cardio drug available in dosages of three capsules a day till a one time dose per day was launched.

Since 2004, it has gradually been expanding to more emerging markets in Africa and Asia which Yogesh oversees.

@AjantaPharmaLtd is the first Indian generic drug-maker to secure pre-qualification from the @WHO for its anti-malarial drug.

This means that international agencies like @UNICEF can procure such drugs from @AjantaPharmaLtd as part of their global health care initiatives.

In the international markets, it has registered 1,445 brands, and is in the process of registering another 1,609.

All this wouldn’t have been possible without investing in R&D & manufacturing capacity.

After convincing the lenders about the strategy, the next step was to build a team that was aligned to the new vision.

@AjantaPharmaLtd built the new team from their existing employee base.

Its workforce has evolved to keep up with the times.

Before it changed its business model, @AjantaPharmaLtd had some 600 medical representatives in its domestic pharmaceutical business team.

Today, it has around 3,000 medical representatives in India, each doing an average business of Rs 15-20 lakh per year.

It is little wonder, then, that @AjantaPharmaLtd finds itself in that phase of its life cycle where it is a ripe target for a takeover.

For more info head on to: 👇

🔗forbesindia.com/article/super-…