When the bourses closed last evening, Amit Bakshi was worth Rs 3,225 crore and Eris Lifesciences, a pharmaceutical company he founded 10 years ago, became a legitimate unicorn. The most profitable, fastest-growing pharma company in five years with the handsomest return on capital employed—the descriptors have been glowing, even as the industry prospects have dimmed of late. The Indian pharma index has been consistently down since 2016, its first decline in five years. And the pall of the US regulatory inspections and warnings hang heavy on all exporting companies.
“No sane person could have done a pharma IPO today,” Bakshi told me soon after the issue closed on 20 June. “Imagine if this [IPO] was done seven-eight months ago, the amount of explanation I’ve had to offer would have been only 10%. Now, everyone wanted 2X-3X understanding because the times are not crazy.”
Bakshi has diluted only 0.5% of his stake so, in his own words, it doesn’t make “much difference” to his life. (Except it has made him richer by Rs 41.45 crore.) Conversely, though, it makes a difference to the pharmaceutical sector, which has not seen a company grow from scratch to this scale in a span of 10 years. Except perhaps for Mankind Pharma, which is now 21 years old.
Eris makes specialty drugs, which is a subset of the crowded branded generics market. Close to 200,000 brands sell in the Indian market of which brands yielding more than Rs 10 lakh in annual sales are just about 70,000-80,000. That’s still crowded considering how they jostle for a few minutes of attention in a doctor’s clinic. Into that space, Bakshi made an entry in 2007 with an eye for spotting product gaps and launching new brands in chronic diseases like cardiology, diabetes gastroenterology and others. As much as 96% of its prescriptions are written by specialists, even today. In 2012, when I spoke with him for a special edition of Hidden Gems in Forbes India, Bakshi was indeed hidden. Reticent, and somewhat shy, he admitted it was his first media interaction ever. He says he was discovering the product differentiation then, he has “mastered it” now.
Going public was a decision, guided not by the company’s need for funds but the private equity investor, ChrysCapital’s need for an exit. The existing fund was nearing its end, and Chrys had to raise a new fund. Moreover, secondary sales are not always possible, and strategic sales, another exit option, happen only when the investor has substantial equity in the company, says Sunil Thakur, director and chief operating officer at Quadria Capital, which has multiple investments in pharma.
