shahid akhtereditor, ETHealthworld, spoke to Ashish MaheshwariChairman & MD, Balaxi Pharmaceutical Limited, to get an understanding of his saga of success in establishing on-ground presence with a growing portfolio of drugs across multiple therapeutic segments in Africa, Caribbean Islands & Central America.
Pharma Formulations: Challenges & Opportunities
India is sitting on a huge opportunity to export pharmaceutical formulations to the entire world. Of course, the regulated markets of North America and Europe are the most valuable markets in terms of value; however, the rest of the world holds immense potential for India, especially for medium and small enterprises. Although there are many difficult markets in the world, such as frontier markets. These markets are a little challenging in terms of penetration because of language issues and regulatory compliance.
Opportunities for Indian pharma MSMEs
Frontier markets will provide a lot of opportunities to Indian pharma MSMEs in the next four to five years for growth in exports from India. The regulatory issues that must be addressed are the major challenges that MSMEs face in India. Regulatory issues, when tackled at WHO-GMP levels and EU-GMP levels, can add a lot of value to the exports that are being done by Indian pharmaceutical foundations. So that is a major challenge in terms of regulation, and the opportunity, I believe, lies in the rest of the world’s markets for smaller MSMEs rather than the US and European markets, which are catered to only by the very large players in the industry. fromIndia.
Balaxi Pharmaceuticals: Journey
I qualified as a chartered accountant in 1993, and after dabbling in other businesses like yarn and cement for a few years, I got into the pharmaceutical business in 2003. I started off by supplying white-labelled goods to distributors in Africa under their own brand names. I used to take their orders and then source them from various factories in India to supply them under their own brand names.
The USP that I sold to those distributors at that time was that I was not limited by any finished research forms or therapeutic segments. I used to offer them everything under “all finished forms” under “any therapeutic segments.” I used to provide eight completed research forms for the likely 25–30 therapeutic segments. In that process, I developed suppliers here in India and China for more than 150 products, and that was the point in time when I entered Angola, I visited Angola in 2004 and found it to be a very lucrative market. In 2008, we opened our own wholesale department under the brand name Balaxi with 150 products, and there was a huge demand-supply gap in that market. We experienced such rapid growth that by 2012, we had 17 wholesale depots spread across Angola, each stocked with between 200 and 300 of our own products. We have one wholesale depot every 200 kilometers in Angola, from north to south, east to west.
In 2008, I visited Central America, the Dominican Republic, and Guatemala, which I revisited in 2015 and found the market to still be as open as it was in 2008. I opened our offices in the Dominican Republic and Guatemala and started filing for product registrations in those countries. Product ratios in those countries typically take 12 to 18 months from the Ministry of Health. We generally wait for 50 to 60 registrations to come in before we open a wholesale depot. And that’s how we opened our first wholesale depot in the Dominican Republic in 2017. And today we have more than 150 products in the Dominican Republic, 95 products registered in Guatemala under our brand. Totally, we have a pending pipeline of 645 products across both Central American countries as of today. Hence, we expect this hypergrowth to continue for us in Central America for the next three to four years as we get more and more products into our pipeline and increase our number of wholesalers who come into our fold as we age and as we increase the number. of products.
Balaxi Pharmaceuticals: Market Strategy
I believe the basic DNA of Balaxi is in these products. Pharmaceuticals is one thing; another is the fine human resource management that we have fine-tuned. Human resources are what drive Balaxi and its growth on the ground in all these countries. Our market selection strategy is quite simple, although not everyone could have thought of it many years ago. My first strategy is very simple: we will go to non-English speaking countries because I don’t want competition from Indian suppliers, and Indians generally don’t venture into countries that don’t speak English.
Growth & Future strategy
I didn’t venture into East Africa or Nigeria, which were already replete with Indian suppliers. As a result, my strategy was to target non-English speaking countries with high GDP per capita. So when I entered Angola in the stock and sell model, Angola’s GDP was $6,500 per capita in 2008, compared to, just to give some context, India, which was around $800 per capita at that time. And then I enter Central American markets, where the GDP per capita is still very high. Guatemala has a GDP per capita of around $6,500. The Dominican Republic has a $7,500 GDP per capita, and El Salvador, where we are entering, has a $4,500 GDP per capita. Non-English speaking countries with high GDP per capita, frontier markets, and semi-related markets are thus the basic strategy.So these are the markets that I have purposefully chosen and successfully selected for Balaxi. For the next three to four years, we will keep doing what we are doing in Central America. We have a pipeline of product registrations—more than 600 product registrations are in the pipeline. When I say “pipeline,” it means dossiers submitted to the Ministry of Health in various countries, of which we are expecting the issuers to come in. As these registrations come in, we will see hypergrowth in what we call LATAM countries.
For us in Guatemala, El Salvador, and Honduras, we have already opened offices in Ecuador, and the next countries are Colombia and Chile. So we have a strong pipeline of countries in Central America, which will give us hypergrowth for the next three to four years. And now we also want to start off in Southeast Asia, where the volumes are much bigger in countries like the Philippines, Vietnam, and Cambodia, and also start off by the end of this year in the CIS countries of Uzbekistan, Tajikistan, and Kazakhstan . So we have a very robust pipeline of what I still call “frontier markets,” where we can replicate a stock-and-sell model. We are very clear that we will only stock and sell models. We don’t want to do tender markets or private markets.
We have been completely outsourcing our production to various factories in India and China. But going forward now we are setting up our own EU GMP compliant plant here in Telangana, Hyderabad for general formulations. When we say “general,” we will not be making antibiotics, hormones, or oncology products. As of now, we’ll be doing general products: tablets, capsules, and injectables. This was a national milestone for Balaxi because we now have enough capacity to run a full-time plant, as well as one or two to enter other markets in the CIS and Southeast Asia.They just don’t need WHO-GMP; they also need EU-GMP certification, which gives us an easy approval of our GMP plant. These EU-GMP plants are not available for contract manufacturing as easily as WHO-GMP plants are in India and China, and the contract manufacturing charges they want to charge wouldn’t leave us with any margins. So this is a natural progression where we get control of at least 40% of our own production, which gives us much better bargaining power with our suppliers because now they also know that we also have a plant.
We are naturally progressing towards an EU GMP-compliant plant for tablet capsules and injectables. This plant will come into production in March 2024, and we already have the capacity that we are putting in place. We have already sold 50% of the capacity as of now, and the next 50% we can easily sell over the next one or two years. We don’t see this as more of a backward-integrated kind of plant for us, but it will also let us expand into other markets, including Southeast Asia and CIS countries. Going forward, after this plant, we want to go ahead and establish what is the largest growing sector in the world today in the therapeutic segment of oncology. In oncology, we want to set up a plant for the manufacturing of both APIs and finished formulations for at least 20 molecules, for which we are doing the retail project reports right now, and we’ll decide on it at the right point in time .