Encore Healthcare: Pharming the Future | Entrepreneur

By Shrabona Ghosh Nov 11, 2024

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There is never a perfect time to do an interview, so carpe diem! It was a Monday morning; having managed to block the calendars of the Merchant family in Mumbai, I went up the thoroughfare to the office, conceptualizing the meeting to be copacetic. I finally met Viren Merchant, who agreed to give his first media interaction, since the inception of his company, Encore Healthcare. As we began the conversation, the tranquil founder gave an overview of how the next generation is taking over the reign of the pharmaceutical company. "Good luck to the children," said Viren Merchant, founder and chairman, Encore Healthcare, who is sanguine of his daughters, Anjali Majithia and Radhika Ambani, to take on the business.

History dates back to 1996: the Merchant Group stepped into the field of pharma in the year by setting up a Derma Plant in Pithampur, Madhya Pradesh. The name of the company was ZYG Pharma Private Limited, which was later sold to Torrent Pharma in 2015. Meanwhile, in 2002, Merchant set up Encore Healthcare, a global contract manufacturer of tablets and capsules for the Indian pharma industry. The company today has a manufacturing capacity of a billion tablets a month.

The epiphany "The idea to enter the pharma industry goes prior to starting Encore. There was a vacuum for good pharmaceutical facilities. So, me and my wife Shaila Merchant decided to enter into this segment. Initially, we had put up a skincare manufacturing unit and that's how we began," said Merchant. Today, the firm has a vision to continuously enhance processes and provide high quality products at affordable prices.

Viren Merchant

After setting up the first skincare manufacturing unit, the company decided to establish a green field project. So, what is better, acquisitions or greenfield projects? "We did the evaluation of greenfield versus acquisitions; although, greenfield turns out cheap on paper, acquisition saves you time," he quipped.

"When we started Encore, we were running at almost 30 million capacity of tablets a month. Soon, we realized that it's very difficult to sustain while manufacturing a small volume, as the requirements keep increasing day by day. Currently, we have the capacity of manufacturing a billion tablets every month. In the next two to three years, we are looking at expanding our capacities through efficient processes," he explained.

The geopolitical tensions amid COVID-19 was a risk that threatened the global supply chains of the pharma industry. Back then, it was unclear how new dynamics may affect company plans and persistence. "Based on our customer requirements, we import certain raw materials which are not easily available in India. We do a lot of manufacturing for multinationals here, and they have vendors overseas. When the geopolitical issue began, it was tough. To contain challenges, we built up stock for certain products and then started validating different vendors from various places to avoid issues in the future," he added.

With continuous development in making medicines more effective, the research and development (R&D) wing has pivoted the manufacturer to make affordable healthcare. The founder stated that for Encore, the emphasis is more on the development side rather than basic research, which needs exorbitant investment. "As of now, we have a pipeline of 70-80 products which are at different stages of development."

Its international presence is a newly established vertical, the company aims at being present in about 20 countries in the next two-three years. Currently, the Merchant family is not looking at establishing a new manufacturing unit; however, it plans to add value engineering, newer technologies and digital integration to ramp up current capacities. Exports currently form a small chunk of the business, the reason being, lengthy and tedious processes: It takes around minimum 24 to 36 months for the first commercial shipment to move, which is a long timeframe.

Besides establishing a firm base in India, Encore has extended its reach across various regions including Asia, Africa, the Middle East, CIS, and LATAM region. With innovative products in the pipeline it aims to continue to grow in the RoW (rest of the world) market, also known as the emerging market or semi regulated market, with deeper penetration and calibrated strategies.

The international market is looked after by Anjali Majithia. On roping in the children to the business, he said, "As a person gets older, the attachment towards creation becomes stronger. This is where the problem begins! Me and my wife made this conscious decision that before we hit 60, we want to let go of everything and let our children take over and they are at it, doing a great job."

Cosmopolitan touch "Growing up, we've always had dinner table discussions about business, pharmaceuticals and medicine. I was exposed to this environment much earlier and when I entered the industry, it made me much more comfortable," said Anjali Majithia, executive director, international markets, Encore Healthcare.

Anjali MajithiaThe international market is a new organization within the current framework. According to Invest India, the national investment promotion and facilitation agency, the pharma industry in India is currently valued at $50 billion. India is a major exporter of pharmaceuticals, with over 200-plus countries served by Indian pharma exports. India supplies over 50 per cent of Africa's requirement for generics, approximately 40 per cent of generic demand in the US and almost 25 per cent of all medicine in the UK.

"There is ample opportunity in quality manufacturing in the international markets. We didn't get in earlier and now it seems like a good growth metric in addition to manufacturing and India marketing," she explained, adding that this vertical has potential to be at par with the manufacturing business, which is the strongest arm.

On making strategic partnerships in the international market, she weighed in the importance of good manufacturing practices no matter the country or the client, "Whoever we are supplying to, we always meet the highest standards abiding by the regulatory guidelines."

The government has taken several policy initiatives for strengthening R&D in pharmaceuticals sector such as fiscal incentives to R&D units sector and streamlining of procedures concerning development of new drug molecules, clinical research and new drug delivery systems leading to new R&D set-ups with excellent infrastructure in the field of original drug discovery. "I do see a sort of pride for Indian pharmaceuticals on a global level. We at Encore, created our own R&D about two years ago, and now we are considered a CDMO," she explained.A CDMO, or contract development and manufacturing organization, can handle the entire process, from drug development to commercial production, or they can provide specific components of the process.

"Due to the regulatory framework in place, India is now at a level playing field globally. I'm able to pitch Indian drugs as a quality manufacturer and not just as a price competitor. Besides, we are in a position to supply the required quantities at the given deadline, currently, my focus is on making the processes faster," she added.

National permeation

Being future ready is what Radhika Ambani is focusing on, she is the executive director, domestic marketing, Encore Healthcare. She envisions providing high quality world class products to every remote corner of India. The pharmaceutical industry is now a complex and dynamic field, constantly evolving to meet the demands of patients worldwide.

Radhika Ambani In recent years, technology has played an increasingly important role in this industry, transforming the way drugs are discovered, developed and delivered to patients.Talking on the tech aspect, she said, "I think there is a huge shortage of doctors in our country and we are at a pivotal point in time where this problem can be addressed by technology in the near future. We could soon have an artificial intelligence (AI) doctor supplementing the contributions of our doctors. We already have amazing companies working on mobile ICUs and digital healthcare. We have the opportunity to provide high quality world class products to every remote corner of India now. Our markets may no longer be focused in cities; we need to be ready with our distribution channels for when this happens."

This confidence and vision goes back to when she started her career. She joined Encore as a medical representative (MR) and aimed to understand the true working conditions and challenges of the business. "My first boss told me if you can manage the sales of a company you can play any role there because sales requires you to learn the ins and outs of product, finance and distribution. It also allows you to operate at the level which is closest to your customer. Our journey has been one of constant collaboration, always striving for excellence in the pursuit of quality healthcare for all," said Ambani.

While starting the India distribution business, Viren Merchant's only requirement was to maintain quality. "My father spent his entire career building the Encore brand in the business to business (B2B) space. We are extremely stringent on the quality of all our products and never push sales at the cost of quality ever, or compromise for short term gains," she added.

Every organization is as good as the people working in it, and in Encore, it's no different. It capitalizes on building a motivated, capable team, with maintaining a low rate of attrition, "I personally monitor this extremely closely every month in each region. We had an intensive intervention approach where I was evaluating every exit interview, traveling to each region to work with the managers on their coaching skills. We are still not where we want to be but we are in a safe place when it comes to attrition."

Ambani highlights that the company, since its inception, had been data driven. "We run constant town halls; our entire sales staff has direct contact with all the product managers, sales head, marketing head and me. We encourage everyone to share their learnings from the field weekly if not daily. I feel this bottom up has been the biggest contributor to our planning," she explained, sharing insights on staying ahead of the industry trends.

Talking about her upcoming projects, she said, "My target for next year is to stabilize three new regions we are expanding into. I want to increase our presence in South India, I think this market will be a huge contributor to our future growth. This year we have ventured into the Trichology market with a couple of products. Our market response has been strong and our team has been motivated. I am excited to see how we grow in this segment; we have a few new brand initiatives planned within the Trichology market."

Currently the company has a strong presence in Rajasthan, Gujarat and Maharashtra. The company's overarching mission stands at providing high-quality, affordable healthcare products accessible in every corner of India. "This mission guides every decision we make and every brand we build," Ambani concluded.