Second slide

Mr Ashish Maheshwari, Chaiman & MD,
interacts with Indiainfoline

Mr Ashish Maheshwari, Chairman & Managing Director, Balaxi Pharmaceuticals Limited is the first-generation entrepreneur of this IPR based Pharmaceutical company based out of Hyderabad, India. A qualified Chartered Accountant, Ashish has more than 15 years of experience in the pharmaceutical industry. Under his stewardship, the company has established a rich portfolio of products across multiple therapeutic segments, and on-ground presence in multiple frontier markets within Africa, Caribbean Islands & Central America.

In an interaction with XXX XXX, Editor, indiainfoline.com Mr. Ashish Maheshwari, Chairman & MD, Balaxi Pharmaceuticals Ltd., said: “to achieve the next leg of growth, we aim to capture incremental market share in our existing geographies where we are already present, and establish and expand our presence to as many as 15-20 new frontier markets over the next five years. We intend to make Balaxi amongst the top-two generic pharmaceutical players in our chosen markets.”


Can you throw some light on Balaxi Pharmaceutical’s business and its business model?

We are a branded IPR-based pharmaceutical player, focusing primarily on frontier markets. Concurrently, we are building a growing portfolio of prescription and OTC drugs across multiple therapeutic segments. We follow a differentiated business model which is broken into four major value streams: The first stream is Intellectual Property Research: here we undertake proprietary market research and assess the demand for various products best suited to each local market. The Company then files technical dossiers for product registrations in each specific target market. We have a strong regulatory team, which carefully monitors the registration process at every stage. Once we assess market demand to be favourable for a specific product, we apply to get it registered in every relevant market. The second value stream is our established portfolio of Product Registrations: The Company currently has 548 pharmaceutical product registrations as on date, while an additional 580+ product registrations are in pipeline across five target markets.

The third value stream I would like to highlight is our asset-light strategy towards manufacturing, what we call Asset-Light Production. Here, we prefer to produce through well-credentialed contract manufacturing facilities in India, China and Europe. This allows us to use our capital prudently and efficiently to optimise the speed-to market for introducing products into new markets, while maintaining a healthy ROA. Our last value stream, but not least, is our infrastructure and distribution strength. Here, we setup up-front a robust on-ground infrastructure of warehouses, vehicle fleets and local management teams in each of the geographies we choose to enter. Our company-owned wide distribution network enables us to penetrate the market efficiently and successfully through a “stock & sell” model.


Can you elaborate on your company’s strategy in selecting a new market to enter?

Let me tell you about both our existing and planned geographies. Our current established markets are currently in Angola, Guatemala and the Dominican Republic. Our brands are also sold in Venezuela. Looking forward into the near and medium term, we are in the process of establishing ourselves in new geographies in Africa and Central America, specifically Honduras, EL Salvador, Nicaragua, and Central African Republic. Beyond this, in the medium to long term, the Company has plans to expand into additional Central & Latin American countries and the CIS markets (excluding Russia).

Our key criteria for market selection are: Firstly, our target must be a frontier market with high GDP per capita and potential for growth. Secondly, the target country should be seen as a “difficult to enter” market with language or cultural barriers. Thirdly, we focus on markets which are sizeably import dependent and have limited or no local manufacturing of pharmaceuticals. Lastly, we focus on countries where big pharma presence is limited and has homogenous or fragmented market structures, giving us an opportunity to consolidate our market share and grow.


In Angola, your company has witnessed noteworthy success. How do you intend on effectively replicating this business model in other geographies?

Yes, that is right, we have been quite prolific in Angola, and we plan to replicate this success in other geographies as well. We believe in ‘Land and Expand’ strategy. Firstly, we land in a particular country with a robust portfolio of product registrations; an established on-ground infrastructure of warehouses and fleet of vehicles. We then strategize to expand our business operations to become amongst top two generic players in that market. This is the typical approach we follow, and it has brought us proven success.


Currently, what are the total number of existing product registrations and how does your pipeline look like region-wise? What is the estimated duration required to secure such product registrations?

Till date, we have 548 existing pharmaceutical product registrations under our belt. We are now working on an additional 580+ product registrations as our new pipeline across five countries. The time taken to secure product registrations is usually between 12 to 18 months. In Angola, we have the highest number of product registrations at 289, followed by the Dominican Republic at 136 and Guatemala at 79. As of now, we have an early-stage presence in Honduras and El Salvador with 24 and 20 registrations respectively. We are already in process to secure 175 product registrations in the Central African Republic and 120 registrations each in Honduras and El Salvador. In Guatemala, there are 115 registrations in pipeline and 52 in the Dominican Republic.


What is Balaxi’s Branded and Generics product mix? How many finished dosages does the organisation have and how many therapeutic areas do you treat?

The product split between Branded & Generics is at 24:76 as on H1FY21. Balaxi is focused on increasing the share of branded generics in its overall pharma sales. Typically, branded medicines are priced at a premium relative to Generics, thus giving us much better margins. Guatemala and the Dominican Republic are particularly brand conscious markets, and hence, there is significant headroom for growth of branded pharmaceuticals in these markets.

Given our asset-light production strategy, we can produce eight different types of finished dosage forms Including Tablets, Capsules, Injectable, Liquid, Cream & Ointment, Surgical, and Condoms. The Company is in the business of supplying everyday medicines addressing multiple therapeutic areas, with Antibiotics being the leading category, followed by Injectables.


Balaxi also has other business verticals. Can you shed some light on the same? What are your growth plans for those businesses?

In Angola, BALAXI operates across all 16 districts and covers 95% of the length and breadth of the country. It was logical that we capitalized on our local market knowledge built over several years and entered other ancillary businesses which met our preferred criteria of being fast moving with a large number of SKUs. We saw a huge unmet demand for housing and infrastructure development and to tap this opportunity, we entered the builders’ hardware segment. Likewise, we also entered the branded consumer products business, given that a lot of our end consumers in the pharma business also stocked these and BALAXI was a popular brand with them. However, our builders’ hardware businessis currently restricted to Angola and we have no plans to enter this segment in other geographies, where our focus will remain predominantly pharmaceuticals.


What about your consumer products business – what’s the direction there?

Our Branded Consumer Products business is still quite nascent and consists of biscuits and pasta across 13 districts in Angola, supplying these products to distributors, supermarkets, and general stores. We sell our biscuits under our own brand known as ‘YAP’. We have also launched our own branded toothpaste and plan to add other products such as hand sanitisers, disinfectants among other items. Our branded consumer products business complements our pharmaceutical business very well, and provides us operating leverage on the back of well-built on-ground infrastructure and channel relationships. As we build volumes and scale of economies, we may strategically add some of these products to other markets at an appropriate juncture.


How do you see BALAXI five years from now in terms of growth?

Our growth will depend on three things: new geographies, new registrations and an improving product mix. FY21 will be the year of consolidation, wherein we will unite all major operations across various geographies under the main listed entity. FY22 and FY23 will see us capture incremental market share in the existing geographies and expand in new markets including Honduras, El Salvador, Nicaragua, and the Central African Republic. Balaxi will keep on pursuing various opportunities within its core focus of pharmaceuticals in the existing regions by leveraging its physical presence.

Beyond FY23, our aim is to foray in other Central and Latin American countries & the CIS markets (excluding Russia) and successfully replicate our business model. We will strongly focus on having an ideal mix of Branded and Generic medicines that maximises returns. For example, we are now foraying into the high-value therapeutic segment of Oncology. Here, we have identified 17 molecules and 25 different products which we will get registered in Central America. We expect this segment to add significant value to our existing portfolio.