Rx for success Featured

7:00pm EDT March 27, 2006
Next time you fill a prescription with the generic form of a drug, you may be buying a product developed, manufactured and marketed by Detroit-based Caraco Pharmaceutical Laboratories Ltd.

Caraco’s President, CEO and Director Daniel Movens says the company has grown nearly 25 percent over the last year, bringing its 2005 revenue close to $80 million. And with the patents of several brand-name prescription drugs about to expire, Movens expects sales to increase 15.2 percent this year.

Smart Business spoke with Movens about how he grows his company through relationships with customers and its parent company, India-based Sun Pharmaceuticals.

How do you plan to grow 2006 sales?
We have products in the pipeline. We have estimations of what market share we’ll gain versus who we think we are going to compete against and try to balance market share and pricing as best we can. We expect to have generic Ambien in October 2006. We have a tentative approval, and the patent is supposed to expire October 2006.

The generic industry has an ever-eroding price once you come out to market because various people come out with the same product. You’re just replicating what the innovator had done, having a different delivery mechanism so you don’t infringe, or you come to market based on the patent expiring.

When you actually get to market, you could be competing with anywhere from two to 10 different manufacturers on the same product to get market share.

You really have to do your homework to understand who you’re going to compete against. Most of this information is available publicly. ... It’s really a matter of who hits the market first, and it’s based on relationships with chain drugstore wholesalers, distributors and managed care.

How do you create those relationships?
I’ve been in the industry for going on 11 years on the buy side, and many of the relationships are from peer groups that I was with early on. (We) have marketing people go out and visit the decision-makers in Walgreens, CVS, Rite Aid, McKesson corporate and tell them about being vertically integrated all the way back to raw material with Sun Pharmaceuticals and give them an idea of (our) product portfolio and what products may be coming up in the pipeline.

From that dialogue comes follow-up, and soon you have relationships. Relationships are extremely important, (as well as) being knowledgeable about the business and understanding the economics in the generic pharmaceutical space.

How do you stay on top of that?
We have people doing a lot of research in the company on the product basis and trade associations. There’s so much information available on what’s happening in the marketplace. It’s just a matter of how many people you have to focus on the various issues at hand.

You gain information from the market when you follow all the companies that are publicly traded. There are a lot of trade journals on the Web that allow various people on the team to investigate. You have the development team working on products, and they’re in tune to many of those same trade journals, so you get a lot of information that probably wasn’t available 10 years ago. It’s a lot of data-mining.

How do you nurture your relationship with Sun Pharmaceuticals?
Our chairman is the chairman of Sun. We talk on a regular basis and work on product development where we can. It’s a natural fit.

They are in the active product ingredient business or bulk supply business, and we obtain product from them. That helps us be vertically integrated and allows us to enjoy a longer economic lifecycle of each product, following that process all the way through to the marketing end.

They help transfer technology to us, in the sense of helping us get products to market, so it’s a win-win for us.

How will that relationship help you expand your company’s product line?
Today’s buyer wants to know what products you’re vertically integrated with because there is so much competition in the generic pharmaceutical space. If I compete against five people and they all want 25 percent market share, it’s impossible.

It’s important for the buyer to understand just how well we are integrated so (we) tell them about the relationship and how a lot of the science that’s behind some of our product is initially started out of India, which makes it less costly to Caraco. We replicate the science that was done in India and submit to the FDA to get our approvals.

Being vertically integrated, having the science from India and the economics that parallel that allows us to be a better supplier.

HOW TO REACH: Caraco Pharmaceutical Laboratories Ltd., (800) 818-4555 or www.caraco.com