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Bafna Pharma: Where dreams turn to reality

From a proprietary concern to a public limited company to the recent Initial Public Offering (IPO), Chennai based Bafna Pharmaceuticals has come a long way. K. Deepalakshmi tracks the journey

Bafna Mahaveer Chand, Chairman & Managing Director, Bafna

Dreams and ambitions go in the wake of any new venture. Bafna Pharmaceuticals dreamt of making their presence felt in the global pharma market. And today they are standing on the verge of seeing their dreams turn into reality. The company, which earned a net profit of Rs 129.24 lakh in nine months of financial year (FY) 2007-08, recently went in for an Initial Public Offering(IPO). "We will become a Rs 500 crore company by 2013," says Bafna Mahaveer Chand, Chairman & Managing Director, Bafna Pharmaceuticals.

Early days

Bafna Pharmaceuticals was launched in 1981 as a proprietary concern. In 1984, the manufacturing facility of the company was set up in Madhavaram, Chennai. Though the plant was initially into manufacturing tablets, it gradually expanded to a capsules and oral syrup facility. Today, however, the plant functions as a purely export oriented unit.

The focus was on institutional supply, followed by generic formulations. "We used to work three shifts a day for institutional supply, but couldn't earn much from it," says Chand. This prompted him to explore the international market and they began to register their products and venture into the non-regulated market.

A major breakthrough came when Bafna bagged a manufacturing contract from Croslands Generic Division. "The company was later taken over by Ranbaxy, but we continued supplying to them," recalls Chand. Around this time, Bafna was converted into a Public Limited company. Says Chand: "I knew that in the long run, we would not be able to sustain Bafna as a proprietary concern."

Going places

In 1995, the company was renamed Bafna Pharmaceuticals . The same year it received WHO Good Manufacturing Practices (GMP) certification. In 2001, Bafna entered the Sri Lankan market with generic formulations. The market proved profitable and today the company has registered 57 products in Sri Lanka. In 2005 Bafna received the 'Best Supplier Award' from the State Pharmaceutical Corporation of Sri Lanka. Their success in the island nation gave Bafna the confidence to explore their options in other nations too and the company was soon eyeing the African market. "We are looking for more accreditations in African countries," says Chand, whose company manufactures 126 products including 27 lifestyle drugs and also holds 336 licenses in its name. Currently Bafna exports its products to Ghana, Laos and Ukraine and is planning to expand its presence in other African countries.

Domestic market

From R to L: Bafna Mahavir Chand,CMD, announcing details of the company's forthcoming IPO, Rajendra Kanoongo, President, MBD, Ashika Capital and B Madhuprasad, Vice Chairman, Keynote Corporate Services Ltd

During its days of institutional supplies, Bafna supplied generic formulations to the Central Government, the State Governments of Andhra Pradesh, Tamil Nadu, Kerala and Orissa, and the ESI Corporation HSCC through contracts. However Bafna was not too keen to focus on the domestic market. "India is one of the largest markets in the world. But it is difficult to tap the Indian market," says Chand. "With not much regulation, products were 'copied'. But after strict patent laws, the situation changed. But it is not possible to stay in the market unless you are technically strong and have unique molecules," adds Chand. This paved the way for many pharma giants to enter the Indian market and emerging companies had to face tight competition. And so, Chand chose to concentrate on exports.

Not that Bafna intends to ignore the domestic market. The increased buying power of the Indian population has resulted in a change in the lifestyle, paving the way for rising lifestyle diseases. "We have come up with drugs for lifestyle diseases like diabetics, cardio-vascular problems, anxiety and depression," says Chand. "The products are created with know-how from UK, so they are technically strong," he explains. Since the dossiers are similar, the same product exported to the UK will be sold in India, Sri Lanka and Ghana and this will result in lowering the cost.

The company is now running a marketing set-up in West Bengal and plans to expand it to the rest of the country. The company is also planning to launch a brand building exercise in India and abroad. "We will register the company and products and create a brand in international markets," says Chand.

Tapping the regulated market

With intentions to step into regulated markets, Bafna launched a new plant in Grantylon Village near Chennai. Spread across 2.65 acres of land, this 65,000 sq ft plant was first audited by Medicines and Health Care Products Regulatory Agency (MHRA) in February this year. The Grantylon facility will make non-betalactum products in solid oral and dosage forms.

The company is hopeful of acquiring the license and plans to step into the UK market. On placing his footmark in Europe, Chand says, "We have entered into a five-year contract with Somex Pharma, a UK based company, for supplying simvastatin tablets, a cholesterol lowering drug."

Research & Development

Bafna's new plant in Grantylon Village near Chennai

Bafna has installed a R&D unit in its Grantylon facility. Though, currently the R&D is on a contract basis, there are long term plans too.

The company plans to bring out its own formulations and receive MHRA validations for them. "With both the license and the facility in our name, we will not have to depend on others," says Chand.

R&D can prove vital in replacing generics. "We were concentrating on generics. This will go on for sometime. But once the lifestyle drugs market starts blooming, we will phase out generics," says Chand.

Challenges and competitions

As a new entrant into the regulated market, Bafna will have to face stiff competition from some pharma giants. But the company, with its multi-product profile, is planning a different strategy. "We have a vast range of products to offer, while most of the MNCs concentrate on a single product. We are ready to get into contracts, so we will be a part of them and not their competitors," says Chand who is looking at pharma giants as associates.

A major concern for the company is issues related to trademark. Bafna feels trademark plays a vital role in brand building and is fighting an ongoing battle with GSK Pharma over 'Newpar'. "Prescription drugs are remembered by their unique sweet names. We have been using the name for nearly 15 years and they are yet to use it," says Chand. With registrations not taken seriously in India, there are various companies, who, like Bafna, sell their drugs without registering the names. "Being an emerging company, we didn't know about registrations," he admits. Today Bafna has registered 57 products in Sri Lanka, five in Ukraine and three in Laos. The company has applied for registration of brands with the trademark registry for 23 products and 15 brands have already been approved. Chand wishes that the government could look into this matter taking into account the plight of emerging companies. He also feels a need for a time-frame on these trademarks.

"If the name is not used over a period of time, it should be discarded," he says.

Initial Public Offer

Bafna has entered the capital market with its IPO of 64 lakh equity shares of Rs 10 each for cash at a premium of Rs 30 per share. The proceeds of the issue will be utilised towards brand building exercises in the domestic market, partly to repay its loans and invest in R&D equipments. The company was expecting to raise Rs 25.6 core through the IPO. The IPO that closed on May 30, 2008, was subscribed about 4.96 times, as against 64, 00,000 shares offered. Overwhelmed by the response, Chand says, "I am happy with the outcome. Despite the current market turbulence, the response is so good."

Future plans

After Europe, it is US for Bafna. The company plans to apply for US FDA approval after establishing itself in Europe. "We will enter the US market, 18 months after our foray in the UK market," says Chand. Bafna plans to spread its wings across the globe by setting up its own offices. "Initially, we want to open our marketing office in Europe and the African countries, and later in all the countries where we market our drugs," says Chand.

The company also plans to move into the prescription drugs market in India and later in the global market.

Since Bafna has already set up its new factory as per European Union - Good Manufacturing Practice (EUGMP) guidelines, it intends to get manufacturing contracts from large multinational companies.

And of course, there is Chand's dream of making a turnover of Rs 500 core in the next five years.

k.deepalakshmi@expressindia.com