Sipra Labs—Going ahead

Incorporated in 2004, Hyderabad based Sipra Labs started off with a capital investment of Rs 20 lakhs from first generation entrepreneurs. Within a couple of years, the company expanded with financial help from the Andhra Pradesh State Financial Corporation (APSFC) to 3000 sq ft of lab space. Thereafter till 2003 every year the company added additional space, machinery and manpower to cater to the pharmaceutical industry and continued to focus on analytical testing business. Initially it operated in a 1500 sq ft area as an analytical lab, however today it is spread over an area of 165000 sq ft. It has about 700 clients in India and has more than 15 clients from abroad.

Focus area

The company has seven segments as an integrated research lab instead of concentrating on one segment and one therapeutic area. The specific therapeutic area is applicable only for clinical trials. Stating the growth of the company, Dr V Satyanarayana, Managing Director, Sipra Labs, says, "Today because of the tie up with many hospitals, Sipra is capable of handling more than one therapeutic area basing on the client requirement. Sipra's working style is different from others. Others offer what they have, whereas Sipra believes in delivering what the client wants. In the process Sipra makes new investments, arrangements to meet the client requirements." However he adds that Sipra's strategy is only to concentrate on the pharmaceuticals and Food and Beverage segments. At present Sipra is working on a couple of projects and also is in the process of obtaining some big new projects in the coming months.

Highlights

Over the years Sipra has rapidly come up to become a force to reckon with. In 2000, Sipra introduced its second product, ie, pre-clinical toxicology with animals like mice, rats and guinea pigs. The next year, a major addition of new product, ie bioavailability (BA) and bioequivalence (BE) studies, was introduced with the approval of Drug Controller General of India (DCGI). Sipra was one of the first few labs permitted to conduct BA/BE studies in south India. Formulation Research and Development (FR&D) was started in 2004 for a client in South Africa and thereafter for a good number of other foreign clients. In 2006, Sipra ventured into the Food and Beverages (F&B) segment with Bureau of Indian Standards (BIS) accreditation and ramped up the business in South India and Maharashtra in a big way. In early 2007, Sipra started the clinical trails segment with a modest entry and intends to make it a major business in the future.

Challenges

There is no gain without pain; Sipra also had its share of troubles. Speaking on the challenges, Satyanarayana says, "It was really tough in the initial years to establish and stabilise activities. Acquiring clients was not easy as the lab was new and has no accreditations to begin with. The promoters themselves used to approach potential clients for business as they wanted to give a personal touch to marketing." However, with pride he adds that, today Sipra is a household name in the pharma industry because of the commitment and personal touch of the promoters in the initial years. One thing that makes it unique is that even today, Sipra does not have dedicated marketing personnel as it believes that the satisfied client is its brand ambassador.

Further he adds that apart from getting clients, the other challenge was to get finance for expansion plans, as banks and financial institutions were facing huge liquidity problems and credit was rationed. However this problem was dealt with when they approached APSFC, who after almost over a year sanctioned and give the first disbursement. With this help, Sipra completed its first major enhancement of size and capability.

Other challenges were with respect to product addition, however like other CROs in the game, Sipra was able to handle this with the introduction of new products at regular intervals. Satyanarayana avers, "Sipra was able to overcome all its challenges with strong commitment, sound technical knowledge and dedicated set of people (from promoters to assisting staff) and the continuous plough back of profits into the business."

Future plans

Recently Sipra completed its biggest investment project at Sanathnagar Industrial area, Hyderabad with an investment of over Rs 45 crores. This project has 165000 sq ft of lab space, six meeting halls, client desks, guest rooms and video conferencing facilities. It is estimated that this new project is capable of generating revenue of Rs 90 crores at its full capacity. In addition to this, Sipra is also planning to invest another Rs 50 crores in the next three years towards enhancing its animal facilities, and exclusive lab facilities to MNC companies and few new products which have never been offered in India. Elaborating, Satyanarayana avers, "Of this, about Rs 20 crores comes from internal generation and the remaining will be raised as equity/debit as and when required." He further adds that as Sipra has excellent relationships with its lenders they will be more than willing to fund Sipra's requirements at short notice. Without stating any particular timeframe, he concludes, "As the equity market is not conducive to raise equity at present, it will be looked into as and when the opportunity matures."