Dishman Pharmaceuticals and Chemicals, the Ahmedabad-based manufacturer of active pharmaceutical ingredients (API), is readying for its first foray into the global oncology (cancer) market. 

VVS Murthy, Chief Financial Officer of Dishman, said that the firm has invested up to Rs 60 crore for setting up a cancer facility in Bavla near Ahmedabad.

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"Construction of the facility will be completed by mid-2009, after which production will start. The facility will comply with the current good manufacturing practices."

This facility will manufacture APIs, which are pharmaceutically active raw materials used in drug-making, mainly for exports. With the oncology segment holding promise, the cancer facility is expected to fetch revenues of above Rs 120 crore within the first two years of operations, Murthy said.

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"Just before the completion of the facility, we will take a decision on the type of products to be manufactured there. At any given time, we will manufacture five products," said Murthy.

As per estimates by Pharma licening, a division of business development company UTEK Corporation, the cancer market will expand to $85.3 billion by 2010, growing at a compounded annual rate of 11.1 per cent. Currently, Dishman has a presence in the cancer market only through Carbogen Amcis, the Swiss research firm that the company acquired in August 2006.

Carbogen currently has a fairly good presence in the cancer segment, generating revenues of about 50 million Swiss Francs annually, said Murthy. Pharma analysts felt that Dishman would do well by leveraging Carbogen's expertise in the field. "The Bavla facility is being built with the help of Carbogen technicians," Murthy told DNA Money.

Dishman, which is also one of the largest players in the contract research and manufacturing services (CRAMS) space in India, expects to grow rapidly in the coming months. Murthy said that the turmoil in the global financial markets would benefit CRAMS, as it would lead to outsourcing of more contracts to cheaper places such as India. "We see our CRAMS business growing by 30-40 per cent in the coming months. With costs escalating internationally, global pharma companies will look at outsourcing to India," he added.

Dishman has pharma biggies such as AstraZeneca, GlaxoSmithKline and Merck as its clients in the CRAMS business. The company is investing about Rs 150 crore this fiscal in the space, mainly in a greenfield facility in Shanghai, China. Spread over 4,32,000 sq ft, the facility will be operational by the end of FY09. Murthy said Dishman expects the plant to bring in revenues of at least $10 million in FY10. "By 2010, we expect CRAMS to fetch over 85 per cent of our revenues. The CRAMS business from the Shanghai unit will get us about $20-25 million in FY11," said Murthy.