Elder Pharma backs out of Ghana venture

Elder Pharmaceuticals Ltd is betting big on its rural market initiative in India even as it plans to strengthen its Bulgarian operations and withdraw its experiment in the African continent.

Elder Pharma launched its rural marketing division, Elvista, early last year targeting the largely untapped potential of villages and small towns.

“We have set very clear objectives and have various levers to monitor and measure Elvista’s operational and financial performance. We plan to increase its sales by 8-9% mainly from rural areas by strengthening the sales force for this segment,” Alok J Saxena, director - international division, said.

In 2009-10, the company expects Elvista to clock sales of around Rs 36 crore.

Elvista sees potential in categories like anti-peptic ulcerates, anti-malaria, anti-infectives, NSAIDS, quinolones and cough medication.

The company is marketing its major brands like Eldervit injection, as well as niche brands, such as Mucodyne, Mucobron, Protocream and Venex through Elvista, Saxena said.

According to the company, rural markets constitute 21% of the
total pharma sales in the country and bear a lot of potential going
forward.

Elder Pharmaceuticals is planning to raise Rs 150 in the next few months, part of which will be spend to upgrade and strengthen its Bulgarian operations.

“We have not yet taken a call on how we will raise the money.
Most likely it will be a QIP (qualified institutional placement),”
Saxena said.

In 2008, the company had deferred plans to raise around $50 million through foreign currency convertible bonds, for which it had got shareholders’ approval.

Elder Pharmaceuticals’ hopes to get a stronger footing in NeutraHealth Plc are still in a limbo, after its attempt to increase stake in the UK-based neutraceuticals major faced opposition from minority shareholders last year.

In July 2007, Elder Pharma had acquired a 21% stake in NeutraHealth for about 5.63 million pound sterling, and had planned to increase the stake subsequently.

NeutraHealth would have given Elder Pharmaceuticals access to a Rs 3,575 crore market in the UK.

The deal was aimed at enhancing Elder Pharma’s finished drugs business in the regulated and semi-regulated markets of Europe.

The company’s plan was to gain access to the UK market through NeutraHealth and also provide manufacturing back-end to NeutraHealth as it outsources most of its products.

“NeutraHealth is still stuck and we are not giving it much thought now. We are still there,” Saxena said.

Meanwhile, Elder Pharma plans to strengthen its presence in Bulgaria, which is a key market for it.

It has a presence in Bulgaria through Biomeda, in which it first acquired a 51% stake in August 2007 for 5 million euros and later bought 100%.

“We want to upgrade our units in Bulgaria. We are going to invest more there,” he said.

The company has, however, wound up its Ghana plans where it was looking to set up a manufacturing facility through a joint venture.

It will, though, maintain its presence in African markets, including Ghana, through exports.

“We have exited from the tie-up with Vincom Pharmaceuticals in Ghana on the back of low sales volumes and a substantial drop in
demand. Also the plan was delayed a lot. It was taking too long so we decided to call it off,” Saxena said.

It plans to commission its new Langa Road facility in Uttaranchal by March, which will target EU and Commonwealth of Independent States countries. NW18