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Not all is well

Well-positioned niche products that led to robust growth have now started to lose steam

Soumik Kar

There’s a carefully preserved old magazine, circa 1995, on a shelf in Pankaj Patel’s Ahmedabad office. It features an interview of him and Patel looks remarkably different in it. He’s younger, of course, his hair darker and his smile more reserved. Patel looks at this picture with some amusement. “A lot has changed since then,” he says.

That’s not an understatement. Now a dollar billionaire, Patel owns the Cadila Group that houses companies such as Cadila Healthcare and Zydus Wellness. While his flagship clocked revenues of Rs.4,464 crore in FY11 and has compounded sales at 23% for the last five years, sales at its 72% wellness subsidiary, have grown from Rs.43 crore five years ago to Rs.336 crore in FY11.

Caught offguard

Lack of an aggressive strategy has affected sales

The company acquired its present name after its parent Cadila Healthcare de-merged two of its products, EverYuth and Sugar Free into Carnation Nutra Analog Foods, a company it had acquired in 2007. You could say Zydus Wellness is a play on the rising affluence in the country. As people get richer, they tend to do less and spend more to keep fit.

Zydus’ portfolio includes three key products that cater to these needs — Sugar Free, a low calorie sweetener, Nutralite, a substitute for butter, and EverYuth, a range of skin care products. All three products cater to the evolving needs brought about by a change in lifestyle, and it is politely called the business of wellness.

Patel’s positioning of Zydus’ products was clearly thought through. “Let’s face it,” Patel says of the deep pocket multinationals who dominate the FMCG segment. “I cannot compete against someone who reaches a million outlets.” Instead, he decided to be a niche player. “We figured there was a need in the market that was not met,” Patel says of Sugar Free and Nutralite, all brands that Zydus has nurtured to astonishing success.

“We consciously did not want to wear the pharmaceutical hat in the FMCG business. Products get sold in the pharma busines

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