Not many entrepreneurs would persist with a business model that could cost them their lives, but with an ailing pharmaceutical giant to resuscitate and his reputation at stake, CC Paarthipan knew he’d have to go further than most.
Established in 1990 as an ointment manufacturer, Caplin Point Laboratories’ fortunes looked quite different by the end of its first decade. After a record-breaking initial public offering in 1994, which was oversubscribed by 117, the company faltered when its founders failed to balance expansion with market consolidation. With his back to the wall, then-Managing Director CC Paarthipan looked at Africa as his last shot.
“At that time there were only two approaches if you were to turn a company around: you had to know something that not many people knew, or you had to go to countries where most people feared to go. I took the road less traveled,” Paarthipan recalls.
In choosing where exactly to set up his business in Africa, Paarthipan first considered potential competition. While competitors were importing goods from Sierra Leone and Liberia to Guinea, Paarthipan instead went straight to that country to build his pharmaceutical business.
He even chose to go to Somalia while it was reeling under administrative chaos, and landed in Angola in the middle of a civil war.
“I took the road less traveled.”
“I landed at Luanda, the capital of Angola, and the next day, I was greeted by bandits, who put a gun to my head. I remember thinking, ‘If I can survive in this country, the competitors will be few and far between’,” he recalls wryly.
To begin with, Paarthipan took an unusual tack, and bought an Indian restaurant. It was, he realized, one of the best ways to increase his knowledge of the local surroundings and begin to network.
This was the first of three innovations Paarthipan used to turn Caplin Point around. He then decided that, rather than selling to importers, Caplin Point would become the importer in these smaller countries. Finally, Caplin Point took over distribution to supply medicines to wholesalers and retailers.
Now Chair of the company, Paarthipan has created an end-to-end business model that currently commands about US$1 billion in market capitalization.
“Last year, we sold INR1,500 crores [US$180 million], and 85 percent of business came from Latin America and Francophone Africa,” he explains. “All these are possible only because of the differentiations that we have created in our business model. It is not the market that gives you the profit and cashflow, it is the model.”
Now, Caplin Point is poised to take the next leap, and this time Paarthipan and his team are ready. The immediate plan is to vertically integrate facilities to reduce dependence on intermediaries.
“It is not the market that gives you the profit and cashflow, it is the model.”
As part of this diversification, the Puducherry division is undertaking a three-phase plan for Latin American markets. The company is also planning an oncology facility in the Thiruvallur district of Tamil Nadu and renovating an active pharmaceutical ingredient facility in Vizag.
In addition, Caplin Group is developing an oral solid dosage facility for regulated markets such as North America, Brazil and the European Union, aiming to launch in early 2025.
All of these will be financed internally, thanks to its debt-free model and huge cash reserves. By keeping all segments under one umbrella, Caplin Point is ready to enter any market that has a demand for its products.
To expand the business, Paarthipan has always focused on the bottom of the pyramid, be it customers or partners.
“There are a few things I learned from the books and there are a few things I learned from the struggle,” Paarthipan acknowledges.
He has introduced performance-based employee stock ownership plans and intends to open a hostel for employees who have to travel long distances and rarely get the opportunity to rest at home.
Over the years, his efforts have been validated by various industry sources. From being recognized as one of the decade’s top wealth creators by Value Research magazine to maintaining a debt-free structure – there is much that separates Caplin Point from the rest.
“An easy life does not lead to the creation of extraordinary things.”
This reputation is noted by partners and suppliers. Paarthipan has entrusted Managing Director Sridhar Ganesan to negotiate the best prices for the company. And thanks to its rigorous vendor verification process and high standards, Caplin Point has built a network of key suppliers, one of them being CN Water, which provides turnkey water purification systems.
Paarthipan also sees a future in digital platforms and AI, which he believes could revolutionize the pharmaceutical industry. After so many hurdles and daring missions, he is ready to roll the dice yet again.
“An easy life does not lead to the creation of extraordinary things,” he says. “Lethargy, casual attitudes, they have to be thrown away in order to succeed, to make something big. That really matters because our legacies outlive us.”