Elder Pharma to invest Rs 20 cr in cosmetics venture

The company plans to manufacture cosmetics at its existing plant in Paonta Sahib in Himachal Pardesh, which has up until this point, been solely dedicated to developing pharmaceutical products.

"We are looking at investment of Rs 15-20 crore over the next two-three years for marketing and manufacturing of cosmetics​," says joint managing director, Alok Saxena.

Saxena added that India's facial skincare segment is estimated at around Rs 5,500 crore and that the target therefore will be skincare. "India is a developing consumer market with strong growth potential. Almost all the products initially in the first few years will be skin products in the form of creams, lotions and ointment. The total market in this segment is about Rs 18,000 crore​."

Expansion​

The news comes just weeks after the pharma player revealed it had teamed up with Japanese cosmetic giant, Kose to develop a range specifically for the Indian market.

The venture is known as 'Kose Elder', to which Kose, one of Japan’s biggest cosmetic and personal care providers with a wide presence in the AP region, will hold a 60 percent holding as its experience in the cosmetics industry, Elder believes will help both companies hone their skills for the Indian market.

The venture, Saxena says, will benefit from Elder's knowledge of local markets and strong sales network in India, and will be synergized with the Japanese giant's strengths of technological prowess and the development of high value added cosmetics.

"Cosmetics manufacturing is an altogether different area for us. The initial investments could run into a couple of million dollars. We have not finalised the business plan as yet, but we are looking at giving them (Kose Corporation) complete support of manufacturing and distribution in Indian market​."

Honing both companies skills to successfully target the Indian market​

Up until now, Kose's main means of advancing into overseas markets has been to export products that matched the requirements of the target country, from its base in Japan.

However; with the Indian market, where culture and tastes are very different, the Japanese company is said to have considered it essential to undertake strategic and business planning tailored to the region, and are "proceeding with investigations through agreements with local enterprises that are familiar with the markets."​