Eris Lifesciences on growth plans post Oaknet acquisition

By Shardul Nautiyal

Branded formulations manufacturer Eris Lifesciences now aims to post a 20 per cent to 25 per cent growth per annum in dermatology. This follows its recent acquisition of 100 per cent stake in Mumbai-based domestic formulations company Oaknet Healthcare for Rs 650 crore.

The acquisition which now gives the company presence in 87 per cent of the Rs 55,000 crore chronic market will also be a major boost to Eris Lifesciences Specialty Franchise.

“With Eris now having a presence in the top seven therapeutic areas of cardiovascular, oral anti diabetes, insulin, dermatology, neuropsychiatry and women’s health, the company profile is complete. Now, it is all about how we grow in each of these areas,” said V Krishnakumar, ED and COO, Eris Lifesciences.

In an exclusive interview with The Financial Express Online, Krishnakumar explained that the company is growing at 15 per cent to 16 per cent per annum in therapy segments like cardiology and diabetes and at 30 per cent in neuropsychiatry. We are growing at more than 25 per cent in women’s health. Our objective will be to make the dermatology business grow at 20 per cent to 25 per cent per annum.

Excerpts-How will Oaknet Healthcare acquisition impact Eris business and how will it add to the current business portfolio?

Eris Lifesciences is 15 years old now. Since inception, our DNA has been that we are a specialty company. The meaning of a specialty company is two-fold. One is that we will be in chronic therapy. Secondly, we will largely be targeting specialists in the doctor population.

In India, the chronic care market is worth between Rs 55,000 and Rs 60,000 crores. Within chronic the largest segment is cardiovascular followed by oral anti diabetes, insulin, neuropsychiatry and dermatology.

In Oaknet, we found a platform with very interesting business on multiple counts. One is that it has revenues of about Rs 200 crores, which is the right size. The company has about 65 per cent of their business in dermatology. The dermatology business is around Rs 130 crores and overall topline is Rs 200 crores. If I look at the prescription profile, Oaknet derives nearly 50 per cent of its prescriptions from practicing dermatologists in India. There are about 11,000 practicing dermatologists across India. Oaknet covers nearly all of them. We can use this base to build on it and take it further.

In dermatology, there are broadly two categories. One is called medical dermatology. Medical dermatology is basically for itches, rashes, psoriasis and skin infections. In a tropical country like India, this category can get 8 per cent to 10 per cent growth per annum. There is also an exciting and new emerging category which is called cosmetology. This includes very high-value skin preparations like collagen and minoxidil used for hair growth. They are semi OTC kinds of preparations. But the prescription still has to come from a doctor and these dermatologists are the ones who write prescriptions for cosmetology also.

So, on one hand, you have a business that is like a steady growth business, growing at 8 per cent to 10 per cent per annum and generating good cash flows. And then you have cosmetology where we can launch a lot of new products and quickly scale up the business. This is the kind of dual opportunity that we will be focusing on with Oaknet.

What is the size of Oaknet in the overall market?

Oaknet ranks among the top 10 companies in the dermatology market. The overall dermatology market is around Rs 8000 to Rs 10,000 crores. If you look at the dermatology market in India, then 90 per cent to 95 per cent of it is still medical dermatology.

What are the other untapped areas of growth for Eris and what are the revenue projections?

On Oaknet, the company has given a projection that from Rs 200 crores, we will take it to Rs 250 crores in the next two years. The company will do a lot of new product launches. There are a lot of initiatives that we will also undertake to improve the field force productivity and look at alternate sourcing arrangements to reduce the cost of goods sold. We will apply the value creation levers that are available at our disposal and push for operational efficiencies.

Tell us about competition in the Dermatology segment?

The key names in the Dermatology market are Sun Pharma, Glenmark and Hegde & Hegde.