In The Big League

Starting out as an API player, Laurus Labs has broadened the scope of its businesses, improving its potential to emerge as a complete pharma company

- SAMAR SRIVASTAVA

Dr Satyanarayana Chava isn’t afraid of grabbing the bull by its horns. The chief executive of Laurus Labs has probably been asked this question ad nauseum and he moves fast to address why the company didn’t perform in the three years since its public offering.

The answer in his mind is simple. And it also provides a window into the recent outperformance of the entire Indian pharmaceutical industry. Some part is cyclical and an equal part is on account of the new business opportunities for the industry. But a large part of the sudden surge in profitability comes from investments made in the last five years finally paying off. “This is not an industry where you have results in a year. It takes time for the work to show,” he explains.

The result has been the ₹300 crore that the company invested every year since 2016 in plants, research, scientists, filing abbreviated new drug applications and drug master files bearing fruit in the last two quarters and cementing Laurus’s status as an up-and-coming pharma company.

In the fiscal year ended March 2020, the company saw its net profit rise by 174 percent to ₹255 crore. It followed it up in the first quarter of this financial year by clocking in ₹171 crore or two-thirds of last year’s profit. The increasing profitability has been accompanied by rising margins, which rose from 16 percent to 29 percent between the first quarter of last fiscal and the first quarter of the current fiscal. At the margins, Laurus’s numbers compare favourably with Aurobindo Pharma and Sun Pharma, but are behind Divis Laboratories.