Torrent Pharmaceuticals -a phoenix like resurrection

Torrent Pharmaceuticals is back in news with the last week acquisition of Unichem's domestic pharma business for Rs 3,600 crore. Torrent, which became the fifth largest Indian pharma company with the Unichem acquisition, from its current 13th position in terms of domestic sales, had a roller coaster ride in its near five decade history. There was a time when the company was staring at bankruptcy and also there was a time it was contemplating huge acquisitions for growth with private equity support.

In 2007, when global drug major Merck KgaA decided to sell its generics business, there were reports of a surprise suitor from India - Torrent Pharmaceuticals of Ahmadabad, then a relatively unknown company in global pharmaceutical industry. Eventually, the deal was sealed by US based Mylan for a whopping $6.6 billion.

"It is a story of the past and that was the time when we were thinking of going for an aggressive growth", 55 year old Samir Mehta, executive chairman of Torrent, said last year in an interview, when he was selected as Best CEO in pharma industry by Business Today. (Then his elder brother Sudhir Mehta, who heads Torent Power, was also selected as Best CEO, Power by Business Today).

Torrent was founded by late Uttambhai Nathalal (UN) Mehta, a medical representative who worked with Sandoz for about 15 years. He founded Trinity Laboratories in 1969 but the venture ran into trouble after a Chennai based company sued it  for using a similar name.

Thus the name was changed from Trinity Laboratories to Torrent Pharmaceuticals. By that time, all the savings of UN Mehta were pumped into the company and the business was on the verge of collapse. That was the time when Torrent pioneered the concept of niche marketing - it started with TrinicamPlus, a combination of three drugs for mental disorders.  That became a success and Torrent soon forayed into selling cardiovascular drugs.

A big break came when Torrent expanded business to the erstwhile Soviet Union (USSR) in the early 1980's.  The company had first mover advantage (apart from M.J.Pharma, not many Indian companies were present there) and in the first year of business, clocked Rs 8 crore revenues out of a total revenue of Rs 14 crore. The business rapidly grew to over Rs 170 crore within 2-3 years. But disintegration of USSR in 1992 dealt a big blow for Torrent.

About Rs 200 crore got stuck there and it took over 2-3 years to recover that money. Besides, all its expansion plans to other geographies and diversification into power were affected by the USSR disintegration.

From 2000's, the company again started to explore new geographies and Brazil was one of them. Today it is the largest generic company in Brazil. In 2005, Torrent did its first acquisition of Heumann Pharma generics of Germany, a Pfizer's unit. In 2013, Torrent acquired Elder Pharma's branded domestic formulations business in India and Nepal for Rs 2000 crore.

Unlike other leading Indian companies, Torrent was a late entrant into the US, the largest generics market, in 2010. In 2015-16, revenues from its US operations alone were Rs 2,671 crore as against Rs 832 crore in the previous year, a growth of 221 percent. In 2016-17, overall revenues were Rs. 5,857 crore,  down by 12 percent from Rs. 6,687 crore in FY 2015-16, which was powered by one-time gains from exclusively selling two drugs for six months in the US market. Four years ago, Samir Mehta became the chairman of Torrent Pharma and his elder brother moved to a Chairman Emeritus role.

Apart from acquisitions, the company is also investing heavily into research and development  and is planning to launch about 150-160 products in the domestic market within the next 4-5 years. From the way the Mehta brothers are steering Torrent, it is for sure more aggressive growth actions are sure to happen in future.