The Pondicherry facility has got the the US Food and Drugs Administration approval, essential for selling the drugs in the USA. The company expects to get the nod for the Cuddalore facility soon. Production is yet to be fully geared in the Pondicherry facility, so Ibuprofen is not being manufactured at full capacity. "But the levels should soon touch 3,000 tonne per annum soon," Shasun Chemicals finance director Vimal Kumar said.

The year 1997-98 has not been too good for Shasun, with prices of the bulk drug Ibuprofen dropping to Rs 325 from Rs 390 per kg. The international prices are slightly better at $9 per kg. Shasun sells 50 per cent of its produce in the localmarket. In the local market, it is facing the disadvantage of selling to traders, who buy cheaply and export the same with a lower realisations of $8 per kg and with the advantage of 17 per cent credit under the DEPB (duty entitlement pass book scheme). This is true of other bulk drug manufacturers as well.

Prices of its other bulk drug product, Ranitidine intermediates, have crashed from Rs 1,700 to Rs 1,250 per kg. Shasun produces about 600 tonnes annually of Ranitidine HCL and intermediates, nearly 70 per cent of it for exports. Once the US FDA approval is obtained for the Cuddalore facility, exports on the ranitidine front should pick up even faster, Kumar said. Also players like Dr Reddy's Laboratories, who are setting up a formulations unit solely with the US market in mind, would have to source bulk drug material from US FDA recognised units.

Shasun has put on hold a backward-integration plant it was planning for benzene and is instead going to concentrate on products for the US market. Theseproducts are S-Naproxen, Famotidine, Nizatidine which have still got process patents on them till the turn of the century. Already Shasun is marketing small quantities to other markets. "FDA approvals come in fast for newer products out of the patent net, where the buyer from the US has to get the approval for his source," Kumar said. "If we are ready with our own FDA approvals here for our manufacturing facilities, we could start exporting soon after patent expiry." The US market is perceived to be more important than other markets, with margins of more than 35 per cent.

However, price reductions, the bifurcation of manufacturing facilities and high interest costs have taken a toll of the company's bottom line for 1997-98.

For the six-month period ended September 1997, Shasun had a sales of Rs 81.15 crore and a net profit of Rs 30 lakh - a steep decline compared to the net profit of Rs 2.33 crore on a turnover of Rs 50.93 crore for the previous corresponding period.

However company officials claim thatthe company would manage to show a net profit of Rs 3 crore for 1997-98 on a turnover of more than Rs 165 crore. The net profit would still be only 50 per cent of what had been achieved for 1996-97.