How Emcure Pharma owner built a Rs 6,000 Cr business empire on the back of Rs 3 lakh bank loan

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Pune-based Emcure Pharma has built a presence in 70 countries since 1981. The promoters continue to own 86 percent equity in the Bain Capital-backed firm. Founder Satish Mehta traces the four-decade journey of the homegrown pharma major.
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Second-generation entrepreneur Satish Mehta started Emcure Pharmaceuticals decades before ‘Made in India’ or ‘Build in India’ became catchphrases. 

Founded in 1981 as a contract manufacturer for multinational pharma giants, the Pune-based firm went on to develop and sell its own branded generic formulations across 70 countries, and become one of the leading companies in the sector. 

Over the last 40 years, Emcure has built a network of 19 subsidiaries, an R&D team of 500 scientists, and a global workforce of 11,000 people. Its lifetime revenues are touching Rs 6,000 crore, with only 44 percent of it coming from the domestic market. 

The company registered a YoY topline growth of 15 percent in the first half of 2021, according to CRISIL, and is now gearing up for a Rs 4,000 crore IPO.

Its galaxy of accolades aside, Emcure Founder and MD Satish recalls where it all began. “With a loan of Rs 3 lakh, I decided to go on this journey,” he tells YourStory Founder and CEO Shradha Sharma in an exclusive interview. 

After returning to Pune with a PG diploma from IIM-A, Satish started working in his father’s business to learn the tricks of the pharma trade. Driven by the urge to do something on his own, he took a bank loan and launched Emcure in the early ‘80s.

Turning a Rs 3 lakh investment into a billion-dollar enterprise sure required a lot of chutzpah. Add to that, Satish’s own swelling fortune. In 2016, he was ranked as the 82nd richest Indian with a net worth of $1.6 billion, on the Forbes Rich List.

Summing up the decadal journey, he says,

“We started with 7-8 people [and now have] 11,000+ people. Never in my wildest dream did I imagine that I'll do what I've done. When I joined my father, he was doing around Rs 2 crore of trading. And I used to tell myself that if I succeeded in doing Rs 20 crore by the time I retired, that would be great. I've done at least 10 times of what my father did.”

Globally diversified pharma empire

Today, Emcure has a diversified revenue profile, with over 56 percent of sales coming from overseas markets. This includes 13 percent from emerging markets, 31 percent from regulated markets (the US and Canada), and 12 percent from Europe. 

In the domestic market, the Bain Capital-backed company enjoys leadership positions in key therapeutic segments, including cardiology, oncology, anti-HIV, and neurology. It also has an active presence in anti-infective, pain management, dermatology, gynaecology, and paediatrics. Emcure brands like Maxtra, Metpure, Asomex, Orofer, Bevon, and Ferium are well established in the Indian pharma market.

The founder says, “When I started my career, medicines were being sold only in major cities like Mumbai. Now, our company has 4,600 medical representatives. So, modern medicine is reaching urban areas, semi-urban areas, and even rural areas.” 

Interestingly, in an era of increasing equity dilutions, Emcure promoters continue to hold 86 percent stake. Bain, which bought out Blackstone’s stake in the company in 2014, owns 13 percent, and the rest is held by key employees and associates. “We depended on debt. Even today, my family holds 86 percent of equity,” Satish says.

Emcure Pharma Founder & MD Satish Mehta in conversation with YourStory Founder and CEO Shradha Sharma

He further shares, “Around 2006, we needed growth capital. And, that was the time Blackstone invested in our company. With the funding, we were in a position to build facilities for the regulated markets. It was a calculated risk, but we knew exactly what we were doing. We wanted to build a company that is comparable to the best.”

“Calculated risks” have come to be a recurring element in Satish’s leadership at Emcure. He attributes it to his mixed background of IIM-A and family business ideals.  

He explains,

“Coming from a business family meant taking risks ran in my blood. But at the same time, coming from IIM-A meant I was also calculating the risks. I always knew where I was going, what could happen, what could go wrong, and what was the course correction required. Corporate governance has played a very important role in whatever we’ve done in the last 35 years. There was total commitment to doing things the right way and learning from mistakes. No shortcuts.”

Decision-making and consensus-building

Pharma is an intensely competitive and fragmented sector. Add to that, a Pune-headquartered business in the 80s had its own set of challenges. Hence, the first key decision Emcure took was to build up its backend, i.e. manufacturing. 

Satish shares, “Everyone starts with the objective of selling products, but at that time, we quickly realised that with limited resources in Pune, we couldn't compete with others. So, we turned our attention to manufacturing. By working with multinationals, we understood manufacturing and the importance of quality.”

In the mid-90s, as homegrown companies like Cipla, Sun Pharma, Cadila, etc. started dominating India’s pharma landscape, Emcure too got into the distribution and marketing of its own products.

“We realised that in manufacturing, you essentially worked with hospitals, and it was a very limited market. To be a big company, you had to build your own brand. So in 1995, when we had a reasonably good base [of customers], that's when we decided to go for marketing,” shares the founder.

It wasn’t easy though, with Satish’s own friends warning him of potential challenges.

“All my friends who worked in MNCs told me ‘Satish ab jaoge to pit jaoge’. So, it was a very important decision for us. And once we started succeeding, the next decision we took was to go to less developed markets that are similar to India,” he recalls.

Emcure has a 2.8% share in India's $20 billion pharma market

Through the late 90s and early 2000s, Emcure expanded to emerging markets in Africa, Asia, and Latin America. Once that was done, it began targeting the regulated markets of North America and Europe. Calibration was the key to its approach. 

Satish describes it thus, “After we had created a base in India, and knew that we would be able to produce quality products and support the team financially, we started building in other countries. Because there's always a gestation period in business. Things are not going to happen immediately. After stabilising ourselves in emerging markets, we entered the regulated markets in 2005-06.”

He highlights that no major decision in Emcure’s 40-year-journey has been his alone. 

He elaborates,

“I’ve never felt that I'm the owner of the company. I come here as the chief executive, as the first among equals. I'm here to be responsible to all the shareholders. There will not be any irrationality. Even when we were a small company, I learnt consensus building. And whenever major decisions were taken, they were discussed with the senior people and the board.”

And the result of consensus has been a successful and sustainable business empire. 

Along the way, Satish has hired people “smarter” than him, and also roped in his children in the business. It has led to a blend of leadership styles at Emcure, and created a fine balance between the MD’s legacy systems and the new-age professionalism of his kith and kin. 

“They were very system-driven because they are foreign-educated and trained in a particular way. I was always open and willing to learn. So, it has been a great journey as a family promoter with professional managers,” he shares.

Emcure Pharma is gearing up for a Rs 4,000 crore IPO shortly

Advice for young entrepreneurs - Stay hungry

Satish believes that discontent can be a great driver for business growth. 

“Data says we are amongst the top 10 [pharma companies in India]. But, I'm not happy. I would like to take the company to the top five. That’s the driving force,” he says.

The Emcure MD goes on to say,

“This year, we will do Rs 7,000 crore [of business], but at the same time, you think ‘somebody is doing Rs 30,000 crore’. There is always a desire to do better than what you've done yesterday. I always tell the next generation that the day this hunger is gone, I will retire. The desire to excel, to give new direction to the company, and give a better deal to the people associated with you, whether you're an employee or a customer...that's the focal point.” 

Emcure Pharma campus in Pune

The root of this hunger, he believes, dates back to his IIM-A days in the 70s. 

Satish, who was “always a topper in Pune”, was in for a rude shock at India’s premier B-school when he discovered that 90 percent of his batchmates came from IITs and other leading colleges in the country.

“That's the first shock you get. You might go there thinking that you’re a sher, but by the time you reach IIM-A, your ego is finished and you have come down to the ground,” he says. 

“But, you also learn to compete, to communicate, and you gain confidence by being around the most competitive guys you’ll ever come across,” he notes.

The Emcure chief has immense admiration for the new crop of entrepreneurs and startup founders. “These guys are doing fabulously well. Look at the number of unicorns in the last 12 months. It has taken me 35 years to build this company, and these young guys are becoming billionaires in 4-5 years,” he says.

Emcure is on course to deliver 60 million doses of its mRNA vaccine by the end of 2021

Future of Emcure - mRNA vaccines

Despite being a legacy business, Emcure is bullish about scientific innovation.

Its next big bet is mRNA vaccines for COVID-19. “We are working on it, and it will be absolutely comparable to the Pfizer and Moderna vaccines,” Satish claims. 

Emcure says it is on track to deliver 60 million doses of its mRNA vaccine (which is being developed by its subsidiary Gennova) by the end of this year. Its vaccine, which is currently undergoing Phase 1 trials, can be stored in temperatures from 2 to 8 degrees. 

Media reports also suggest that the pharma major is in the process of submitting data to the Central Drugs Standard Control Organisation (CDSCO), and applying for permits for next phase trials. “We are a biopharma company, which grew on the back of chemistry. Our next growth will come from biosimilars and vaccines,” Satish says. 

Despite the increased attention on healthcare, India’s per capita pharma consumption is still very low. However, expenditure on the sector is poised to grow from 1.6 percent to 2.5 percent of GDP, according to the last Union Budget.

Satish sums up the opportunity by saying, “The domestic market is about $20 billion [Emcure has a 2.8 percent share] and is pegged to reach $35 billion in seven to eight years. Even if we have a 3.2 percent share in India alone, one can aspire to become a billion-dollar company. So, you can imagine [the growth potential].”

(With inputs from Naina Sood)

Edited by Saheli Sen Gupta

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