How Satyanarayana Chava Grew Laurus Labs

Turning challenges into opportunities, Satyanarayana Chava, Founder and Chief Executive of Laurus Labs, has taken his pharma company to new heights in the past two years. Chava, who played a major role in the success of Matrix Laboratories as CEO, has also worked with Ranbaxy Laboratories, Vera Laboratories and Vorin Laboratories in different roles. And now, he is writing the growth story of his own company. For Chava, the past 15 years have been extremely rewarding despite the challenges. “Each challenge was converted into an opportunity. If there is no challenge, there is no opportunity. Our success depends on how much we innovate and build facilities to make a product commercial,” he says. In March 2020, the company received the US Food and Drug Administration’s approval to market hydroxylchloroquine tablets, which were in heavy demand at the onset of the pandemic. 

The Hyderabad-headquartered company had also announced that it would supply hydroxychloroquine for clinical trials of preventive treatment of Covid-19. Like all other organisations, Laurus Labs faced its own share of struggles that the pandemic presented. “The first thing for us as a healthcare company was the responsibility to supply drugs. The second was how to run our factories while taking care of the health of our colleagues and their families. We were fortunate that all of our colleagues were very forthright to take this mission forward, thus ensuring that we did not need to shut our factories,” says Chava. 

Founded in 2005, Laurus Labs is scaling up fast. Its consolidated revenue for FY21 increased 70 per cent. Chava says his company has been able to sustain both EBITDA margins and profitability. The generic API division saw a growth of over 100 per cent for the October-December quarter. But even as Laurus Labs reports healthy numbers, Chava says the revenues are secondary. “We started with APIs and bulk actives and later moved into formulations. After that, we got into biology and cell therapy by investment. So, we aim to be a research-driven manufacturing company in the next 10-15 years.” Chava finds himself at the top of the Pharma & Healthcare category in the BT-PwC India’s Best CEOs ranking. With investment plans of up to Rs 1,700 crore before the end of FY23, Laurus Labs plans to boost capacity in biotechnology and contract development. “We invest in products and capacities much before the requirement. In any industry, growth comes from two things—either you invest in capacities or buy companies. Instead of putting money on the ground, we can buy the companies to grow. However, our philosophy is organic growth. We want to build facilities and for that, we need to invest ahead of time.” 

According to Tushar Manudhane, Research Analyst at Motilal Oswal Financial Services, Laurus Labs continues to strengthen its quarterly performance with better-than-expected Q3FY21 results. While the ARV (antiretroviral therapy) segment is the key growth driver currently, it is building additional levers such as contract manufacturing services on the biotechnology front, adding new dosage capabilities, and building an abbreviated new drug application pipeline for the US market. “We have one of the largest research divisions in the pharmaceutical industry in APIs. But if somebody wants to measure our efficiency based on the number of products we develop, we might be the lowest in the quartile. We want to become a leader in the products we make, that’s our philosophy,” says Chava. Laurus Labs puts a lot of products for development, but also kills many if it realises it cannot become the leader in the segment. “We don’t want to be a fifth player or 10th player, we want to be first, second or third in the market share for that product,” says Chava.

V.V. Ravi Kumar, Executive Director and CFO, Laurus Labs, has known Chava for 27 years. “The past five years have been extremely promising under him. The company has grown from a turnover of Rs 1,900 crore in FY17 to Rs 4,800 crore in FY21. Profits, too, have increased 3.6 times. And it is important to note that amid all these, he keeps in mind the impact of his decisions on the 10,000 families associated with Laurus Labs,” says Kumar. 

FY21 has been the best year in the history of Laurus Labs even though it did not make any Covid-19 vaccine. “Hydroxychloroquine is the only drug we made, and it did not have significant revenue in FY21. All our revenues were registered through our regular products,” he says. Kumar, who fondly refers to Chava as Dr Satya, shares that the CEO reserved 5 per cent of the company’s equity in 2006 for ESOPs. 

“Dr Satya loves to call himself the founder and first employee of the organisation rather than a promoter. As a founder and the first employee, he never held 50 per cent stock. He believes that after a certain [point], there is no value [of] money. His passion is the subject of Chemistry. Applying knowledge on a commercial scale is what makes him a successful leader,” sums up Kumar