The Chennai-based Shasun Chemicals is engaged in manufacture of bulk drugs such as Ibuprofen and Ranitidine. With the successful inspection of its Cuddalore plant by the FDA team, the company is set to enter the US market for Ranitidine and Nizatidine. The company's bottomline is expected to get a major boost once it gets the FDA approval. For the three month period ended June 30, 1999, the company had reported a net profit of Rs 2.89 crore on a turnover of Rs 38.23 crore, as against a net profit of Rs 41 lakh on a turnover of Rs 34.25 crore during the corresponding period last year. For the year ended March 31, 1999, the company had reported a net profit of Rs 7.50 crore on a turnover of about Rs 165 crore. Analysts expect the company to end the current fiscal with a net profit of Rs 12 crore.

The company has agreements with Boots for the supply of Ibuprofen, an anti-inflammatory, and Glaxo for Ranitidine, anti-ulcerative. The tie-ups are part of the company's strategy to counter patent law, by way of development of molecules in-house which will be out of patent by then, tie-up with original patent holders for supply of bulk drugs and by developing intermediates for original patent holders.

According to marketmen, the company is also negotiating with Eli Lily, the US-based pharmaceutical major for the supply of Nizatidine, an anti-ulcerative, whose original inventor is Eli Lily. The company has formulated plans to consolidate its operations with speciality products in the high-value and low volume range, which are expected to provide higher margins. Shasun plans to export 70 per cent of Ranitidine. Once FDA approval is obtained for the Cuddalore facility, exports of ranitidine should pick up. 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. The US market is perceived to be more important than other markets, with margins of more than 35 per cent.

The company has recently placed five lakh redeemable preference shares of Rs 100 each to financial institutions. The proceeds are to be utilised for part-financing the purchase of balancing equipment for its plants, for which an investment of about Rs 3-4 crore is required. This should help the company in improving the profit margins in future. Shasun Chemicals has an agreement with Austin Chemical Company of the US under which Austin would liasie with drug MNCs and get Shasun contracts for development of molecules. A confidentiality disclosure agreement (CDA) was signed in January 1998. According to marketmen Shasun Chemicals is currently working on 18-20 molecules. Even if two or three of these click, the company would come in the big league.