In conversation with Nikhil Chopra, CEO and Whole-Time Director, J.B. Chemicals and Pharmaceuticals Ltd

Progressive policies by the government can help increase the growth trajectory of the Indian pharmaceutical sector, believes Nikhil Chopra, CEO and Whole-time Director, J.B. Chemicals and Pharmaceuticals Ltd.

What is your outlook on the Indian pharmaceutical sector, particularly the hypertension drug segment and medicated lozenges segment? 

The Indian pharmaceutical sector will continue to remain buoyant due to low per capita consumption, improved focus on good health and rising incomes. We foresee Indian Pharmaceutical Market (IPM) growth to be double-digit for the next few years. Progressive policies by the government can help increase the growth trajectory. Being the leaders in hypertension, it's still a huge unmet need to be serviced and we remain optimistic about the segment. This will be one of the faster-growing segments in the Indian pharma market. Our endeavour in the IPM will be to record market-beating growth consistently. We are among the top 5 manufacturers globally for medicated lozenges. There is a huge unmet need in different segments of the pharma market. We have increased our R&D spending on medicated lozenges and you will see JB introducing new products in different segments of the market, thereby expanding the medicated lozenges market in India and globally. 

For Q2FY22, JB recorded revenue of Rs 593 crore, registering a growth of 34 per cent. Q2FY22 profit after tax stood at Rs 98 crore, up by 32 per cent. What factors have contributed the most to help you outperform?  

We managed to sustain revenue momentum even in the second quarter. Domestic formulations business reported 38 per cent growth in the second quarter consistently outpacing IPM growth and our covered market growth. As per IQVIA Dec MAT 21 data, JB is the fastest growing pharmaceutical company among the top 30 companies for CY-2021. Our international business revenue grew at 36 per cent in the second quarter. The higher growth reflected in reported numbers is due to the lower base impact of Q2FY21, where some revenue got deferred to Q3FY21. Headwinds continue for international markets due to COVID uncertainties and logistics challenges.

Can you shed some light on the outlook for JB’s growth post the acquisition of brands and related assets from Sanzyme, a leading player in the probiotics and hormones segment? What is the overall growth trend for the probiotics market going forward and what beneficial synergies will be created post-acquisition?  

The acquisition will mark JB’s entry into the fast-growing probiotics, therapeutic nutraceuticals and reproductive health market with an attractive set of brands. JB will be amongst the top five probiotics players, in a segment that is growing at over 15 per cent. This category creates synergies with its strong prescriber base in gastroenterology and nephrology segments. Leading brands in the category like Sporlac, Lobun, Oxalo, Pubergen and Gynogen will now be part of the JB franchise. This is our first acquisition and allows us to expand our presence into new therapeutic areas and new addressable opportunities in the Indian pharmaceutical market. This is in line with our stated objective of building big brands through category leaders. Sanzyme has been a pioneer in the probiotics segment and we wish to build further on this legacy  

With inflation leading to a rise in input costs, what cost optimization measures are you implementing to safeguard profit margins?   

The inflation in input costs has been significant for the pharmaceutical industry and this has put pressure on gross margins for the entire industry. We at JB have put a tight leash on all expenditures especially discretionary. We have already begun to implement cost efficiencies and cost control measures across all our spheres of operations.  

What is your earnings outlook for the upcoming quarter?  

 We continue to maintain that the focus will be on market-beating growth for the India market and to sustain operating margins before ESOP charges in the 26 to 27 per cent range for FY 2021-22.