Lincoln Pharmaceutical has plans to launch grow its Life Cycle Disease portfolio: Mahendra Patel, MD

Mahendra Patel, Managing Director, Lincoln Pharmaceuticals Ltd, talks about the acquisition of the plant at Mehsana, Gujarat, Q1FY22 numbers, geographical challenges, the amalgamation of Lincoln Parenteral and Lincoln Pharmaceuticals, M&A Opportunities and product pipeline among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:

Q: Congratulations on the new acquisition of a plant. Tell us about this acquisition, what kind of products will be manufactured here, what will its revenue contribution and how the acquisition will be funded?

A: We have acquired a plant that will manufacture a tablet, capsule, dry syrup and dry power injections. These all products will be from the Cephalosporin group. Cephalosporin is one type of antibiotic, which is not manufactured in a normal plant, so, the general plant is different and the Cephalosporin plant is different. So, we can’t manufacture these products in the present plant. Looking at the business and the export, we thought that if we will buy the plant within three to four months, we will be in the market with many products of Cephalosporin. Cephalosporin is a different rank of antibiotic products and the investment we are targeting is nearly Rs 30 crore in terms of acquiring and expansion into the injectable area, which we are developing. The source of investment is concerned then we are planning for internal accruals and we are not borrowing anything from anywhere.

Q: Is it true that the plant is expected to contribute sales of around Rs 150 crore in the next 3 years?

A: Yes, it will have a contribution of Rs 150 crore because we are already doing a business of around Rs 150 crore but those products are manufactured outside. So, we have the readymade business and as the number of products, its range and registration in everything that we are doing currently. Currently, we are working around 60 countries and these products will also be registered at other places with which our business will automatically grow with the same customers. So, Rs 150 that we are targeting in the next three years will be achieved and we believe that it will be done. In addition, there is no burden as the running cost is not that high. 

Q: Your Q1FY22 numbers were quite good on both YoY and QoQ basis and there was a good improvement in margin and revenue. What led to this growth and going forward what is your guidance in terms of performance? Also, what is your view on export markets?

A: Domestic contribution was quite good in the last quarter results. Our domestic contribution increased nearly by 145% compared to the same quarter of last year. In domestic, doctors’ prescriptions were not available due to CORONA and faced losses. In front of the same, this year, we grew well in domestic with the same expenditure and same things. So, the bottom line and top line have improved due to the domestic business. As far as exports are concerned, steady growth is going on at a continuous pace and the expected growth of 10-20% is also happening in it. This is the way we are going. 

Q: Do you see challenges from any particular geography or any market that is not performing and what kind of order inflow is expected from a particular market? Also, tell us about the markets that are performing well?

A: We are getting export business from advanced countries, i.e., we are getting orders from Canada, the UK and very soon we will get business from other regulated countries. With this, the volume of the business will increase and margins will stay strong. So, this is our next step of the business line. For instance, registration with the EU has provided automatic access to Canada and the UK. Looking at all these, in terms of geographical, you can understand that we will enter into the regulated countries and are also entering and we also have orders with us.

Q: NCLT has approved the amalgamation of Lincoln Parenteral and Lincoln Pharmaceuticals. Can you take us through the synergies of the merger?

A: It was a kind of merger in which Lincoln Pharma was already holding 98.5% stakes. The merger will improve the day-to-day operational efficiency, bring cost-effectiveness and synergy of products will be created. These things will bring a better movement in the work and create synergy in terms of efficiency, number of people, manpower and government hurdles. So, the amalgamation will be better for Lincoln in the future.

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Q: The last time when we spoke you said that the sales of Vitamin C tablets have increased. What is the kind of demand and what is your outlook on it? Also, last time, you said that you have a focus on hormonal products and are looking forward to some M&A opportunities. So, going forward, will you have an eye on more M&A opportunities?

A: Demand for Vitamin C is not in that much demand as it used to be at the time of CORONA or six months back from today. Even the demand is not scalable, so there will be a 20-30% decline in the business from its peak. If seen, there is a change in the lifestyle as gradually people are not consuming it, due to which growth is absent in Vitamin C. But, a lot of products of cardiac and diabetes is available in the domestic market. So, we are doing good in the domestic market due to other products. As far as the acquisition is concerned, it is so that eat as much as you can digest, so, we have made this acquisition and also have the business of Cephalosporin and we will make it happen. Secondly, as far as the hormonal product plan is concerned, it is in the pipeline and will also be announced anytime but it will be done soon.

Q: Tell us about the portfolio and the product launches for the next 6 months?

A: Through your channel, this is the first time when I am talking about the acquisition of the Cephalosporin plant publicly. As far as products are concerned, we are increasing the number of products in life cycle diseases like diabetes, cardiac and cholesterol and we are focusing more on it. Technically, the words are long but in a broader way, we have added 5-6 products in diabetes and 4-5 products in cardiac in our portfolio. Gradually, we are also increasing that portfolio. In lifestyle disease, people, generally, need products daily and it should be cost-effective and we are moving in the same direction.