Jan 1, 2008: Hyderabad-headquartered GVK Biosciences figures in the top tier of contract services providers in India. Offering a highly integrated platform of research services across pharma R&D value chain, the company counts 15 of the top 20 global pharma majors among its customers and there is no let-up in its fast paced growth. Set up in 2001, GVK Bio had a strong last quarter and has been growing rapidly in FY 2006-07. Moving ahead, the company aims to be a one-stop-shop to all large pharma and biotech outsourcing.

The company is now building on its strengths, to emerge as a global player. On the anvil are plans to acquire businesses to add competencies, and an organization-wide cultural shift that is needed to push the company to next level. Led by its President, Mr Manni Kantipudi, who took charge in mid-2007, the company is forging ahead towards the new goal. In an exclusive interview with BioSpectrum, Kantipudi shares how it is all coming together for GVK Bio and what the company is doing to make the most of opportunities that the market is throwing-up.

What are the strengths of GVK Bio?
GVK Bio is a part of the $1 billion GVK group, known for its diversified interests in infrastructure, services and manufacturing. Founded by Mr Sanjay Reddy the company has been built on a solid foundation. Today, we offer the whole gamut of integrated services for drug discovery and development value chain with about 1,300 people spread across three locations in India—Hyderabad, Chennai and Gurgaon. However, we have no intention of striking it out on our own, even when we have the infrastructure that allows us to do that. We have a clear focus. We are a services company with an integrated service offering for large pharma and biotech outsourcing.

GVK Bio as a company is financially strong. Mr Reddy is a great entrepreneur. He has been building a great foundation for the company from day one. Our Chairman Mr D S Brar brings in 30 years of industry and Ranbaxy experience to GVK. I bring the experience of setting up Intel India, which has demonstrated scale. All put together we have great experience in IT, generics and business acumen between the three of us. And that is a strength we will be building upon. I intend to integrate a lot more IT in the business at GVK.  

The company has five main divisions—informatics, chemistry, biology, clinical research and clinical pharmacology. Though chemistry is our biggest division employing 900 people we have strengths that we are leveraging across all divisions. In the next five years, GVK Bio will emerge as a globally recognized leader in life sciences.

How has the business model evolved since inception?
We are maturing with the industry. We have an exclusive relationship with Wyeth Pharmaceuticals where we have set up a dedicated facility with 200 people for Wyeth. The nature of the relationship is collaborative. The next level for us is collaborative customer-relationships. We have all the components of drug discovery chain and are ready for partnership/ collaborative discovery model.

Our relationship with Wyeth where we got the contract after competing with 100 CROs globally; our joint venture with INC Research which materialized in 2007; and the manufacturing scale up capabilities at our sister concern Innogent are all geared towards coming together to provide value to customer. We know—how to scale up. We are currently talking to five companies to get into collaborative research with them.

Our position is very clear. We want to excel in the services and that is how we want to create customer satisfaction. We are willing to help companies produce a drug. These days, companies are under tremendous pressure and are getting into collaborative drug development to shorten development cycle time. While the mechanics of the deal will vary from case-to-case but the point is we have the infrastructure and resources, and we can take their work forward. We can add a certain risk component of our own and work out a win-win deal. We intend to manage this risk through a portfolio approach by capping it at a certain percentage.

What would be high growth areas for you?
Chemistry, of course, is a high growth area. It is also our largest operation. With 900 people it generates about 70 percent of the revenue. It is a high growth area because it is fairly easy to outsource chemistry as it is labor intensive and the cost savings are clearly visible.

However, all the areas of the company are doing well and we expect our clinical pharmacology business to take-off in a big way in the near future. This service is tailored for the generics companies. There is a huge business opportunities in this area between 2008-2010. A number of domestic generics players are competing in the space, globally. All this bodes well for us.

What are the competencies you are looking at adding to the company?
I am not satisfied growing organically. So, we are certainly looking at acquisitions in the US or Europe. The strategy is to add pre-clinical toxicology and safety studies offering to our value chain.

Also, my vision is to set up a “virtual team”. It will be a small team. This will be assembled on the basis of projects that we have. And these teams will come together and get disbanded as and when needed depending on the projects.

Another paradigm shift that I am working towards in the company is—product thinking. Though collaborative research is a service but the thinking behind it has to be outcome-based, product-based.

Year 2008 will also see us consolidate our operations. The company has grown so fast that a number of inefficiencies have crept in the system. These are being addressed by consolidating operations. The recent infusion of over $25 million (Rs 100 crore) by Sequoia Capital will help us execute this consolidation, integrating our operations.

The Sequoia Capital infusion brought a lot to the table. They have tremendous experience in the pharma outsourcing corridor between US and India. They are well networked in the industry and bring with them the skill to hedge against currency fluctuations and so on. This will help the company in being competitive and give it an edge leading to a systematic scale up to market demands that we will have to face when we go public. We do plan to go for an IPO in a three-to-four year horizon.

Any industry issues that you would like to highlight?
There is a need to have a strong industry body to represent CRO-industry related issues to the government in the country. Industry players should come together on that and I am thinking about taking an initiative on that front.