Prasad is looking at 25 per cent export growth

Seventy four years ago, on a visit to Burma, Mohammed Manal saw restless elephants being fed with a root to pacify them. He found out that the plant from which the root was taken was Rauwolfia serpentina. Fascinated by the effects of the plant on the elephants, Manal had it scientifically evaluated. After extensive research Serpina, the world's first anti-hypertensive drug, was launched in 1934 by the Himalaya Drug Company founded by Manal. Manal's vision was clear: he wanted to unravel the mystery behind the 5,000-year-old system of medicine and bring Ayurveda to society in a contemporary form.

What Manal started as a pure play prescription pharmaceutical company is today undergoing a makeover. 'Wellness in every home through herbal healthcare cutting across product categories' is the mantra at the Rs.350-crore Himalaya. In line with this thinking, Himalaya is investing Rs.165 crore to set up a new 200-acre, state of the art manufacturing and research and development facility in Bangalore. Its present facility is spread over eight acres. This jump to a mega facility is a reflection of Himalaya's growing confidence in the new direction that it charted for itself a couple of years ago.

The company recently launched Himalaya Shahicool Sharbat, an all - natural cooling summer drink and Himalaya Gripe Water a digestive for infants. With these new additions in its product portfolio, Himalaya is making deeper inroads in the fast moving health goods (FMHG) segment. Says President and Chief Executive Officer, Ravi Prasad, "Our vision is to establish Himalaya as the single brand for providing herbal wellness for the entire family. Given the prospects of the FMHG sector, the consumer health division is strategic to the growth of Himalaya."

In the next five years, Prasad expects Himalaya's Consumer Health and Personal Care products to account for over 50 percent of the company's turnover. That's twice of what these contribute currently. "We are going to position Himalaya as a well researched brand offering a better alternative, " says Prasad.

According to Prasad, while OTC (over the counter) products constitute 20 percent of the $165-billion healthcare industry in the US, in India, it constitutes only 5 percent of the Rs.19,000 crore healthcare industry. Says he, "World over, there is a growing awareness and concern for health and a strong shift from curative and advised healthcare to preventive healthcare. We expect to see a similar shift in India also".

To tune in to the trend early on, Himalaya launched Pure Herbs, a range of individual herb extracts like Tulasi, Neem and Brahmi in March 2002. This launch was followed by products like Chyavanaprasha in November 2002, Forest Honey in May 2003, Throat Drops in October 2003. It also set up a separate Consumer Health Division in April last year to bring a sharper focus to the FMHG segment.

A sales professional from the industry points out that expanding in to the FMHG segment is a smart move for Himalaya. Says he: "Consumers invariably look for quick relief for their medical problems and ayurveda is perceived to be a long drawn out cure; so, there is some resistance to using ayurvedic medicines. But in the FMHG and Personal Care segment like skin and hair care, there is a much greater acceptance of the ayurvedic products".

Raman: expanding the distribution network

Challenges ahead
Raman has many challenges ahead of him; of expanding distribution, strengthening brands and coming out with new product categories like Pure Herbs. It is not going to be a cakewalk.

At present, the consumer health division has 57 exclusive stores, 125 shop-in-shops, and around three lakh retail outlets comprising chemists and super stores. Raman's plan is to increase the shop-in-shops to 250 and exclusive showrooms to 75 within the year, and double the three-lakh outlets in the next two years.

But expanding the distribution network alone is not sufficient. A strong focus on positioning the products and building the brands is equally critical. Pure Herbs, for instance, is a completely new category. It is being promoted as a food and health supplement and not as a medicine. However, it is sold mainly with chemists and Himalaya's exclusive outlets. Industry professionals point out that this could send conflicting messages to the consumer.

In order to ensure an effective communication of Pure Herbs's non-medicine positioning it is essential, they say, to make it available on a wider scale. Something that Raman is indeed looking at. According to Raman, as part of the expansion of the distribution network Pure Herbs will be available at general merchants also.

With Chyvanaprasha, the Rs.17-crore product from Himalaya, the effort has been to take the appeal outside of the product by roping in cricketers Zaheer Khan and Yuvraj and creating a young image for the product. Says Raman: "Chyavanaprasha is the known face of Ayurveda and so it was imperative for Himalaya to enter this segment. But we wanted to project ourselves as being different from the existing players." Chyavanaprasha is a Rs.350-crore market with market leader Dabur having the lion's share at Rs.200 crore. The Chyavanaprasha market is estimated to be growing a 3-5 per cent and Raman is looking at a Rs.25 crore turnover for Himalaya 's Chyavanaprasha in the current year.

In the case of Forest Honey, the primary positioning is that of purity with the message that unlike other honeys in the market, Forest Honey contains no sugar or preservatives and is a better alternative. However, even while the medicinal values and health benefits of honey like blood purifier, laxative, aiding digestion, preventing cough and cold etc, is being highlighted, the youth is once again a special target group. For instance, in order to create excitement around the product, Himalaya had a tie up with Café Coffee Day for joint branding and introducing new items on its menu centred around Forest Honey. Says Prasad: "We want to project Himalaya as a young, zestful and energetic brand. A brand that one turns to not when you are sick but to prevent sickness and retain the zest for life."

To reach out this Himalayan message to the common person is the main reason for Throat Drops being part of the product basket. According to Raman, the company perceived a need for an anytime, anywhere, impulse purchase health product which has the potential to reach the masses. This also means that it had to be at a very low price point. Throat Drops fitted the bill perfectly. Says Raman: "The biggest challenge with throat drops is distribution,. It has been a completely new learning for us."

Interestingly, Himalaya's foray into consumer homes in a form other than medicine came at the request of its consumers in the Caymen Islands in the US, for herbal products in skin and hair care. Soumitro Banerjee, business head of the personal care division, says that the personal care products though successfully test marketed abroad, were introduced in India with a lot of apprehension. "Our fear was that there would be a dilution of Himalya's equity among doctors as a serious pharmaceutical company." This apprehension, in fact, dictated the look and feel of the personal care products that was launched under the name of Ayurvedic Concepts in 1999. Says Banerjee, 'We intentionally segregated the personal care business from our core pharma business lest it have a negative effect."

Banerjee: cosmetics are thoroughly tested

But the fears were unfounded. Ayurvedic Concepts raked in revenues of Rs. 10 crore in the first year and Rs.20 crore in the following year. The company felt that Ayurvedic Concepts was well accepted by the consumers and doctors, and so it was decided to integrate the Ayurvedic Concept products under the Himalaya umbrella brand in 2001. Banerjee is targeting Rs.100 crore turnover for the division this year.

The growth Banerjee says will come from a wider and more effective distribution, increased advertising and consumer friendly sizes and pricing. Sampling will be an area that Banerjee is looking at seriously. Says Banerjee: "Our experience has been that once consumers try our product, they invariably come back for repeat purchase. So our attempt will be to reach out the products to them through smaller sizes and sachets."

Herbal healthcare
Even as consumer health and personal care businesses are carving out a bigger space for themselves within the company portfolio, the original pharmaceutical business too is going full steam ahead. Prasad points out that, globally, while the allopathic industry is growing at a rate of 7-10 per cent, the herbal healthcare market is growing at 20 per cent. Says Prasad: "Herbal healthcare is soon going to integrate with mainstream medicine," he welcomes the possibility of biggies like Ranbaxy and Cadilla entering the herbal healthcare market. "It will increase the market size and weed out smaller players with non global standards." Of the Rs.19,000 crore pharmaceutical inndustry in India, the Ayurvedic medical and personal care market is estimated to be around Rs.3,500 crore.

Haydon: "Himalaya is the modern face of Ayurveda"

The Indian pharmaceutical industry is a highly fragmented one with over 22,000 companies. There are approximately 250 companies in the organized sector with the top 10 estimated to account for one third of the industry's turnover, Philipe Haydon, business head for Himalaya's pharmaceutical business, says that Himalaya is not just competing with Ayurvedic companies like Dabur, Baidyanath and Charak, but is playing in the same space as the mainstream pharmaceutical companies.'

The most important challenge then before Himalaya's pharma division is to become a serious contender in the doctor's mind. For instance, asked for her opinion on Himalaya, Dr.Shoba Venkat, gynaecologist at Manipal Hospital in Bangalore says that while she perceives Himalaya to be a very good company and knows of doctors who prescribe Himalaya products; she herself doesn't. Says Venkat: "As an allopathic doctor I know everything about allopathic drugs, and so am more comfortable prescribing them."

To tackle this problem last month (in June) Himalaya set up a new "hospital division" with 50 business development officers to focus exclusively on young allopathic doctors in medical colleges and different hospitals across the country to inform them about Ayurveda with well researched and documented data.

Over the last two years, Himalaya has been giving scholarship to deserving students across different Ayurvedic medical colleges and has been publishing a newsletters on Ayurveda, the Himalaya Infoline. This will now be extended to allopathic medical colleges also. To create awareness among the public, the company has been placing leaflets about the goodness of Ayurveda in 12 regional languages in clinics across the country, Says Haydon: "Himalaya is the modern face of Ayurveda. We are revalidating the ancient science through modern methods. Our message is that we offer efficacy, safety and customer friendly pricing. The real challenge is to communicate this to the doctors and the customers.'

Adds Dr.S.K.Mitra - Executive Director (Research and Development): - 'We are as modern as the best allopathic pharmaceutical companies. The only difference is that instead of chemicals we use herbs. Our quality standards and tests are as stringent or even more so than the allopathic." Industry professionals like Murali Balakrishnan of Bangalore Surgicals, who was earlier with Ranbaxy and Cadilla, agree that Himalaya's quality standards are seen as being at par with the best in the industry.

Himalaya's pharmaceutical division has 35 products with Rs.65 crore Liv.52 being the flagship. Other big brands include Bonnisan, Gasex and Geriforte. Haydon, expects Reosto, Menosan and Himplasia which were launched in 2002 to be among the biggest grossers. Pure Hands, a herbal hand sanitizer launched in August last year, is also expected to be a big revenue generator. According to Haydon in the six months of its launch, Pure Hands has already crossed Rs.3 crore. This year Haydon is targeting a growth of 20 per cent for the pharmaceutical division.

Exports is another area that Himalaya is focusing strongly. Last year the company generated Rs.50 crore revenues from exports. Prasad is targeting a 40-45 per cent growth in exports. For the company as a whole, Prasad is looking at 25 per cent growth. Will Prasad and his team succeed in this Himalayan Odyssey? Time will tell.