Dishman’s Shanghai operations delayed

Dishman Chemicals and Pharmaceuticals, the Ahmedabad-based drugmaker’s plans of beginning operations in China have been delayed by a couple of months.

The company was ideally aiming at the completion of its facility in Shanghai by October 2009, and to being operations thereon.
But according to V V S Murthy, chief financial officer, the China facility, which would mark the company’s first organic foray into the international market, should start functioning from the second half
of 2010, maybe August-September 2010.

“At present, all the equipment are being validated as per government rules, and once that is over, operations would start.”
According to Murthy, revenues from the facility should be around $25-30 million from the second or third year of operations.

Dishman has invested approximately $10 million in the Shanghai unit, spread over 40,000 square metres at the Shanghai Chemical
Industry Park and will produce quaternary salts, and intermediates for international clients mainly from the European Union and
Asia.

The Rs 1,062 crore company, which is one of the leading players in the $1.1 billion contract research and manufacturing services (Crams) market in India, is also expecting a 20% growth in Crams in FY11.

“Currently about 75% of revenues come from Crams. Revenues from Japan and US would also help the company,” said Murthy.
Revenues from Japan, where the company made an entry a few months ago, is estimated to be a minimum of $10 million by March 2011, while those from the US, where it is eyeing contracts, to be between $10 million and $15 million by March 2012.

“Moreover, the contracts that Dishman has with Novartis, AstraZeneca and Sanofi Aventis would add to the revenues,” says an analyst from an Ahmedabad based broking firm.

Research analyst Bhavin Shah, from Dolat Capital Market, says Dishman has benefited by mainly catering to innovator pharma companies, rather than generic firms, and this has led to long-term orders and higher revenue visibility.