Vasu Group poised for a big leap in pharma

Hyderabad-based pharma distributor with turnover of over Rs 400 crore has entered into formulations space and launched its own medicines recently. Starting with single medical store in 1985 in Hyderabad, Vasu Group has grown into `400-crore pharma distributing entity in the past three decades.

B Bhanu Murthy, the group’s founder and Chairman, tells P Madhusudhan Reddy, in an interview. Excerpts:

How did it all begin?

I started my business in pharmaceutical space with a single medical store, Vasu Medical and General Store, in Himayatnagar way back in 1985. I had just two employees with me in the store then and my initial investment was around Rs 1.5 lakh. My aim was to make a living out of the business. But subsequently my two brothers – Srinivas and Ramesh - also showed interest in the business. So, we forayed into pharmaceutical distribution business in 1988. It is very complex business. But we worked hard and developed our distribution business from the scratch. At present, we have several companies in our group, including Vasu Medical and General Store, Vasu Agencies, Vasu Pharma Distributors and Venkata Sai Agencies. In 2006, we established Vasu Vaccines & Specialty Drugs which distributes specialty drugs and vaccines. In 2014, we set up Vasu Organics Private Limited which makes and markets our own generic drugs.

What is secret of your success?

Unity among our brothers, disciplined way of working, and committed workforce are behind our success. At present, we employ close to 400 people and we treat all of them as our family members. Nearly 100 employees have been working for us for the past 15 years. We offer decent salaries and incentives to them. Some of our employees earn more than Rs 1.5 lakh a month. I am proud to say that no one who works for us feels like an employee here. Every one treats the company as their own. We have built the work culture in that way from the beginning. Most of employees call me as ‘Anna’ (brother).

How many pharma companies does your group represent?

We distribute products from 480 pharma divisions from as many as 250 to 300 companies. There are a lot of mergers in the pharma industry now as big companies are acquiring small firms. For example, Abott Labs has acquired over 20 small companies now. We do a minimum business of Rs 1 lakh on each company a month, but for big companies such as Sun Pharma, we do an average business of Rs 2 crore a month. Our group has touched monthly turnover of Rs 1 crore sometime in 1995.

Normally, margins are very low in distribution business. So, what kind of profits your company generates?

It is true that distribution activity is a low margin business. But turnover is normally high and that’s advantage here. We get a gross profit of five to six per cent. However, it is difficult to estimate the expenditure in this business in advance. Moreover, we have to increase salaries by at least 10 to 15 per cent every year.

Brand generics space is very competitive in the country and even global players find it difficult to gain a foothold in India. So, how do plan to succeed in the formulations space?

We have three decades of experience in selling pharma products. That will definitely help us market our own products better. We will also take suggestions and advices from experts. We strongly believe that there is enough space for growth in pharma segment as the market is very big. Initially, we are outsourcing manufacturing activity, but we have plans to set up our own plant once the sales cross a critical point. Our focus will be on Andhra Pradesh initially, but we plan to have pan-India presence by the year 2020.

Which therapeutic areas you intend to focus on initially?

We have two well-defined divisions in Vasu Organics. In the TopNerve division, we have medicines targeted at gastroenterology, orthopedics, ENT and general medicine. Through Inoto division, we will focus on gynecology, pediatrics and general practice medicines. We will soon establish two more divisions that will focus on cardio-diabetic and neuropsychiatry segments.