February 16, 2004

“We are seriously considering entering into the pharmaceutical market”

Over the years, the Bangalore-based Sami Labs Limited has evolved as a developer and producer of standardised herbal extracts, nutraceuticals, cosmeceuticals, fine chemicals, probiotics and various enzymes. It is also engaged in tissue culture and phytoenrichment studies and biotech research on probiotics. Last year, Sami Labs added a clinical research arm through the strategic acquisition of Clinworld. After many years of concentrating entirely on exports, the company forayed into the Indian formulations business in April 2002 with the launch of eight products under licence from American Formulary Inc, USA. The change in focus of marketing strategies is intended at strengthening the company’s presence in the domestic market by introducing brand name formulations, in addition to the export of raw materials and intermediates to the international market. In this exclusive interview with Rakesh Rao, Dr Muhammed Majeed, Chairman and Managing Director of Sami Labs, speaks about the company’s new initiative to augment its nutraceuticals and other businesses in India as well as in overseas.


Q: Please take us through the major milestones in the growth of Sami Labs Ltd.
A: The company was established as Sami Chemicals and Extracts Pvt Ltd in 1991 to produce and export standardised herbal extracts, fine chemicals and nutraceuticals to the US. In 1994, Sami Chemicals became the second company in the world and first in India to develop L-selenomethionine, a more bioavailable source of Selenium. The company established its manufacturing unit at Kunigal, Karnataka, in 1996. In the same year, Sami Labs obtained three US patents on piperine as a bioavailability enhancer, while it was issued a US patent for hydroxy citric acid potassium salts as an appetite suppressant in 1998. Sami Labs built its new research centre as natural product chemistry, tissue culture and biochemistry at Peenya, Bangalore, in 1998.

In 2000, Sami Chemicals and Extracts Pvt Ltd was renamed as Sami Labs Ltd to reflect more accurately the company’s changed activities from a herbal firm to a company dealing not only with standardised herbal extracts but also chiral compounds, biochemistry and biotechnology. Two yaers later, Sami Labs inaugurated India’s first indigenously developed super critical fluid extraction (SCFE) facility at Nelamangala, Bangalore. The technology was developed by IIT-Bombay under the ‘Technology Development Mission’ of the Planning Commission, Government of India. This technology represents a strategic shift from herbal extraction through solvents to extraction through carbon dioxide process to ensure more hygienic products to meet international standards.

Q: Since its inception, Sami Labs has been a 100 per cent export-oriented company. But, of late, it is increasingly targeting the Indian market. What prompted you to take this decision? What is the strategy of the company for the Indian market?
A: The nutraceutical market in the US is well established. The ‘alternate’ systems of medicine have gone through a phase of being ‘complementary’ medicine to being ‘integrated’ medicine in the US. We are hopeful that the same trend would be followed in India. Our market research has revealed a high potential for the use of nutraceutical/ dietary supplements in the country in the coming years.

With respect to India, our strategy is to market only claim-substantiated products based on solid clinical research and trials.

Q: You have completed one year in the Indian market. What has been your experience in the last one year? How is the Indian nutraceuticals market different from other developed markets like the US, Japan etc?
A: During the last one-year in the marketing of nutraceutical formulations, we have learnt that the trends noticed in countries like the US and Japan are being followed in India. The potential for these products is tremendous. The disposable income in the top 10% of Indian population is as high as for the general population in the US and Japan. The Indian consumer at the same time is more discriminating and wants only ‘evidence based’ products rather than products based on tall claims without scientific substantiation.

Q: How is the response for your new product ‘SelenoCare’, the first organic selenium supplement to be introduced in India? Please brief us on the status of the research, currently being carried out in the US using ‘SelenoCare’?
A: SelenoCare contains organic form of the essential trace element selenium, L-selenomethionine. The product is showing promise of acceptance and growth in India. The US National Cancer Institute is currently carrying out clinical trial study on 32,400 men for the use of L-selenomethionine in prostate cancer. The 12-year trial study is into its fourth year now. At the same time, 10,000 subjects are also on this product for the treatment of Alzheimer disease. It is showing promising results.

Q: What are your plans for the company’s aroma chemicals division – Organica Aromatics?
A: Organica Aromatics has been so far present mostly in the Indian market. Globally, the flavour and fragrance (F&F) market is dominated by a few major players. The potential for these products is quite high. In order to enhance its business, Organica Aromatics is in the process of setting up a new fully-automated good manufacturing practice (GMP) compliant facility in Bangalore at an investment of Rs 5 crore to cater exclusively to the global F&F industry. The company hopes to quadruple its turnover in next year from the present Rs 3.5 crores.

Q: What is the rationale behind acquiring ClinWorld, a clinical research organization (CRO)? Any plans to foray into clinical research segment on commercial basis?
A: As mentioned earlier, the real success of a nutraceutical company will be based on claim-substantiation backed by clinical trials. Currently, ClinWorld is conducting about 19 clinical trials for Sami Labs in India. Its hands are full at the moment, but at a later stage, it will take up clinical research for other companies as well.

Q: What are you plans for entering the pharmaceutical segment? Any particular therapeutic segment you are bullish about?
A: We are seriously considering entering into the pharmaceutical market. We have plans to set up a GMP-complaint bulk drug facility at Kunigal to enter the US generic market and to produce Coenzyme Q10 (Co Q10), a support supplement recommended for patients having cardiac problems.

Q: What are the R&D activities currently being undertaken by Sami Labs?
A: In addition to developing new herbal products, the company has undertaken major R&D efforts to produce CoQ10. Right now, our main research focus is on chiral chemistry and bio-transformations. Besides this, Sami Labs is fortifying its biotechnology research for production of high-end enzymes. We are also intensifying our search for new varieties of medicinal plants. The research into claim-substantiated is also being strengthened, both for health segment as well as cosmeceuticals industry. The company has 12 US patents granted already and another 22 are pending. In the next 2 years, about 8 new patents will be filed. This will help the company in the new WTO patent regime, post 2005.

Q: The company recently appointed Ernst & Young to prepare a roadmap for a comprehensive revamp of its corporate structure. Please brief us on this?
A: Sami Labs Ltd has expanded its operation in countries like the US, Japan and the Middle-East. The company also owns Organica Aromatics Pvt Ltd and Anju Phytochemicals Pvt Ltd in India. For better corporate planning and more effective management, restructuring is underway with the help of Ernst & Young to bring all the companies under a single umbrella.

Q: Are there any plans for setting up new plants or expansion of existing facilities in the near future?
A: In 2002, Sami Labs had spent 9% of its turnover on R&D activities. The company will continue with this trend. A new bulk manufacturing facility to manufacture CoQ10 will be undertaken, while Organica Aromatics will move into a new facility. Also, the company has plans to set up a cGMP-complaint formulation facility for its other products.

Q: What major developments do you foresee happening in the Indian nutraceuticals inustry in the next few years?
A: We do see more competition in the Indian nutraceuticals industry as it is anticipated that most of the major pharmaceutical companies would enter this market.

Q: What is your outlook for the company this fiscal?
A: Inspite of September 11 incidents and recession in the US market, the company hopes to do well in the US. Sami Labs’ products are being well accepted in Japan as well. We are in the process of establishing/ entering new markets in South America as well as expanding our presence in the Indian market.