KKR-owned JBCPL to aggressively scale up, acquire local drug brands

The US private equity firm KKR controlled JB Chemicals & Pharmaceuticals (JBCPL), one of the oldest pharmaceutical companies in India, is planning to aggressively scale up the business by acquiring midsized local drug companies and potential brands.

"We are evaluating a few mid-sized companies for acquisition as part of our business re-imaging strategy and aggressive growth plan. We are also looking to acquire potential brands," said Nikhil Chopra, CEO and whole-time director, JBCPL.

Mumbai-based JBCPL, a listed company promoted by the Modi family since mid-1970s, was taken over by KKR last year, paying Rs 3,100 crore for 54% stake.

JBCPL had 13.7% revenue growth in the first three quarters of the current fiscal, with Rs 1,514.1 crore revenues. Profit After Tax for the period was also higher by 56.4% to Rs 347.7 crore, with an EBITDA margin growth of 28.8%. In FY20, JBCPL had revenues of Rs 1,775 crore with a net profit of Rs 257 crore.

Going forward, the immediate focus will be to drive productivity enhancement opportunities within the India business along with a strong focus on cost optimisation. JBCPL, which has five brands like Rantac and Metrogyl among top 300 domestic pharmaceutical brands, contribute over 80% of domestic formulations revenues, about 47% of the whole revenues. "Over the medium to long term, we plan to scale up investments in R&D and other organizational enhancement initiatives," said Nikhil Chopra, formerly Cipla's India Business CEO.  He said JB Chem is among the fastest-growing companies in the domestic market with over 18% growth in three quarters, while the pandemic hit Indian pharmaceutical market is growing at 4.4%.

He said the company is also planning an aggressive focus in cardio-metabolic, oral respiratory and pediatrics segments. Now 39% of revenues come from formulation exports, directly to Russia and South Africa and through distributor relationships in the US, Asia, Africa and some Latin American countries. Plans are to tap the existing overseas markets with more high-value complex therapies. There are continuing logistics challenges, impacting the supply chain in the International business. However, production and dispatch processes are being re-aligned to mitigate the situation, he said.

The company is also a leading contract manufacturer of lozenges and this is an area where it will try to tap the global market opportunity, worth US $4.6 billion, he said.

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