Over the next five years, what would you see as challenges to get to your target of $1 billion in annual revenue
Basically we are much more confident of delivering on a $1-billion topline than what we would have been a few years ago because there were a lot of regulatory uncertainties. We dont have a very clear perspective of what the regulators will finally approve in many of the very regulated markets.
But having said that, we are now seeing that rest-of-the-world markets or emerging markets are very lucrative, these are the fastest growing markets. Everyone is focussing on the US and Europe, but they are the slowest growing markets.
Insulin is becoming a very important product for us. One thing we have seen is that after parting ways with Pfizer, our insulin business has surged. Thats because we were actually not able to grow those businesses because Pfizer was not really pursuing those markets. Once Pfizer went, it gave us the option to pursue those markets and we are suddenly seeing a huge growth in insulins.
Basically, now we are finding that we are short of capacity. We are constrained right now by capacity, not by the market. If we had the capacity, the insulin business would be even larger. Once our Malaysia plant comes on stream, it will allow us to address very interesting opportunities.
So the bulk of that demand would come from emerging economies
Yes. Even if we get into the US and Europe it would take us at least another five years beyond 2018 to really get a big impact from the developed market. Even if you look at 2018, the bulk of the business will come from emerging markets such as Brazil, Mexico, parts of Latin America, South East Asia, Eastern Europe, Russia and China. Those are the big markets. Africa is a big market, we have just launched our product in Kenya.
Whats the plan to expand capacity
We have a phase 2 plan, which, of course, we will execute once trigger point arrives.
Your research and development expenditure has increased 54% year-on-year in the first half of FY13. Will it grow at this rate over the next five years
This is about advancement of your programme. So if your spend is going to go very high, you know you are in phase 3.
When you want to take a product to the market, each clinical trial costs you anywhere between $10 million and $50 million. What you have to appreciate about Biocon is that we have a business model that can self-finance R&D, we have R625 crore cash in our balance sheet. We are actually realising R&D money from our internal accruals. We are self-funding our R&D and our expansions, we are not leveraged at all.
Would the partnership for oral insulin be kicking in soon
It is in the final stages, so hopefully we should be able to announce it soon.