Dishman Pharma setting up new R&D facility

Dishman Pharmaceuticals and Chemicals Ltd (DPCL) is setting up a new R&D facility at Bavla in Ahmedabad with eight new research laboratories. The company is also planning to increase its existing pool of scientists from 70 to 150 and has also roped in two foreign scientists.

These compounds are extensively used as phase transfer catalyst (PTC) for various chemical reactions. The company has Quats manufacturing facility at Naroda, near Ahmedabad, and commenced manufacture in 1989. The company is setting up a 100% EOU at Naroda for the manufacture of Quats at the capital outlay of Rs150 million.

This unit is expected to commence production in March 2005. The company also has a facility at Bavla, also near Ahmedabad, for the manufacture of Quats, API and intermediates and CRAMS. The Bavla facility is likely to undergo US FDA inspection in during this year. With the approval from US FDA, the company will be able to supply to the US.

The company is working on contract research product for US based MNC. DPCL has already worked for five months on project and the foreign company is extending the contract for another five months. DPCL supplies two intermediates to UK based MNC and company is on the verge of finalising another order for the supply of a third intermediate.

The company has received an order from a US-based MNC for the supply of 23 tons of an intermediate for a prazole compound. The order is likely to be executed by the year end. Galxo currently outsources two intermediates from the company and is also likely finalise an outsourcing arrangement with DPCL for a third Intermediate soon.

DPCL's strategy has been to associate itself with MNCs right from the laboratory stage to the commercial stage for their R & D molecules. This improves DPCL's chances of MNCs entering into outsourcing agreements with DPCL. DPCL has established marketing subsidiaries in Europe, US, Cyprus, the Netherlands and South Africa. The marketing team in Europe and US consists of more than 10 foreign expatriates.

Meanwhile, the company is also restructuring its debt in order to reduce the interest cost. It had received Rs200 million loan from Rabo Bank, It has also received a sanction for a Euro15 million loan (Rs 825 million) from FMO, the Netherlands and DEG, Germany. It has a working capital loan of around Rs450 million from various banks.

DPCL has also received unsecured loans of Rs50 million from IDBI. The company has swapped all its previous high-cost debt, amounting to about Rs600 million, with low cost debt. With this restructuring of debt, the interest cost is estimated to reduce by Rs50-60 million in FY05.DPCL provides technical know-how and has supplied initial quantities of products to pharmaceutical companies in developing countries like Iran, Turkey, and the Middle East.