Groupe Athena, Inc. (GATA-OTCPK)

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March 23, 2012 Issue

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With Many Drugs Going Off Patent in the United States, Groupe Athena, Inc. is Well Positioned for Future Growth as They Help Pharmaceutical Companies in India Achieve FDA Approval for Product Sale in the US

Company Profile:
www.groupeathena.com
Groupe Athena Inc. was incorporated in June 2008 and began operations on July 1 of that year. The company is a research and testing organization and helps various pharmaceutical and medical products and devices companies in India and Southeast Asia to get regulatory approvals and facilitate exports of their products to the United States. The Company accomplishes this by assisting clients from concept through development, providing consultation on regulatory requirements, filings and processes

Interview with: Prakash Iyer, Director

Healthcare
CRO
(GATA-OTCPK)

Groupe Athena, Inc.
10/234 Dadidheth Agiary Lane

Kalbadevi, Mumbai -400002

Maharashtra, India

Phone: 877-647-6876
www.groupeathena.com

Interview conducted by: Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – March 23, 2012

CEOCFO: Mr. Iyer, what is the focus at Groupe Athena today?

Mr. Iyer: Groupe Athena is mainly focused on small pharmaceutical companies in India who want to start exporting the products to the US. We help them get the approvals required by them to sell their products in the US.

CEOCFO: How long have you been working on that?

Mr. Iyer: We started the company in 2008 and officially, we got the first contract in July 2008.

CEOCFO: What steps do you need to go through for these small companies to make it work?

Mr. Iyer: Whenever a client approaches us, the first thing we do is a factory visit. It is mainly an audit. When our consultants go in, they check whether the factory is qualified to become approved by the US FDA, because US FDA has one of the most stringent requirements in the entire world. They are very strict about the clean room and other things that they require as per their criteria. The moment a client approaches us, we will tell them that the FDA will want to know if the factory is CGMP approved or not. If not, we have to get the factory approved by the FDA before we go forward. If they are already approved as per CGMP standards, then what we do depends on the scope of work. We have to take them through the clinical trials, we have to make the documentation and then we present the case to the FDA.

CEOCFO: Are most of these companies already manufacturing and distributing in India or are they just targeting the US to start with?

Mr. Iyer: All of them are already manufacturing and they are selling their products in India. Therefore, India has already approved the products, and it is only the Europeans and Americans who have to approve it for export.

CEOCFO: Are you able to use the same data?

Mr. Iyer: Sometimes yes and sometimes no; but mainly no. This because the US FDA requires a whole different set of criteria and we have to satisfy the US FDA.

CEOCFO: Why should the pharmaceutical companies choose Groupe Athena to do the process for them?

Mr. Iyer: The advantage that we enjoy currently is that a lot of similar companies are based out of the US and we are only one of the few based in India, so the response time is much better in our case. The other thing is the language. We speak their language and out of 17 consultants, 15 consultants are based in India, so the response time is faster. The companies feel comfortable with us because we speak the same language and we know the practical problems involved with bringing these companies to the FDA. Therefore, if they tell us something we immediately understand what they want. Having said that, a lot of companies still prefer Americans and a lot of American companies are doing business. What is happening here is that the market has grown.
 

What happened was in 2005 was that India became part of the GATT and the WTO and because of that, India moved from a stage of “process patent” to “product patent”. Before that, India did not have product patents, so anyone could manufacture it with a slightly different process, even though the product was patented. What happened in India when the product patent came in, is it came on par with the US and European companies. Now, when a product goes out of the US patent, is where the Indians come in. This because they can manufacture it cheaper, so once it is out of patent, they can safely manufacture it and try to sell it in the US at a cheaper cost. Therefore, many companies in India keep track of the products going off patent and then they start manufacturing and selling it. In the last three years, many products have gone off patent in the US and that has increased the market. That is the main advantage for companies like Groupe Athena.

CEOCFO: Does Groupe Athena work with companies outside of India, such as in Southeast Asia?
Mr. Iyer: Not yet. We want to, but we are now concerned only with India. It is only three years old, and we do not have the manpower or the resources to go to, let’s say, China or Viet Nam or Singapore. However, we want to do it eventually.

CEOCFO: What is the biggest challenge in getting it through the US process?

Mr. Iyer: The biggest challenge is the stringent requirements of the FDA. They are extremely, extremely strict, as they should be. We have found that the US FDA is one of the strictest in the whole world.
 

CEOCFO: Do you work with the companies once it is approved to facilitate working with American companies that might be using them as manufacturers?

Mr. Iyer: Yes. We continue to work with the company in the sense that once a year, when they call us we go to them and do an audit of the factory to see that everything is up to date. The other thing is, let’s say a company got their approval in this year; they will come back to us for doing the next product. Therefore, the relationship continues.

CEOCFO: What are the biggest challenges for Groupe Athena as a company?

Mr. Iyer: The biggest challenge is marketing. If you see our revenues, it has increased quite a bit from 2008 when we started. This year, in June 2012, we should be doing about $45 million in revenues and next year should also not be a problem. The challenge that we face will be in 2015, when our revenues reach about $75 to $80 million, then to grow from there. This is because now all of the growth is coming off a very low base and when the base increases, the challenges increase. That is when we will have to increase our marketing efforts, we will have to employ more people, more consultants, and be more aggressive in marketing.

CEOCFO: How do you reach potential customers?

Mr. Iyer: Our people in India go and visit the companies. Luckily, for us we have good people in India. All of them were working in pharmaceutical companies in India themselves before they joined us. They already had a good network of contacts to get the doors to open for us. Client referrals are the next biggest source for us and currently we have almost 40% of business because of referrals.

 
CEOCFO: Final thoughts, why should investors be interested in Groupe Athena?

Mr. Iyer: There are three or four very advantageous things. First, looking at the current revenues and the profits, it is a grossly undervalued stock. Our stock is currently trading at about .43 cents, which is dirt cheap. It is a multiple of less than five. The growth is going to come in over the next two years, so definitely the stock price is going to go up from this level. The other thing we are putting in writing as our firm commitment in the next 18 months, is that, there is going to be no dilution of stock. We are not going to issue any new stock. We have made a pledge to our shareholders saying that any growth in assets will come from internal accruals and not from dilution. So investors can rest assured that we are going to stick by this no matter what happens. Even the balance sheet for the last three years proves that; there has absolutely been no dilution. Whatever stock was issued initially, that is it. That is our firm commitment to our shareholders and we stand by that. So, over the next eighteen months, there is going to be no dilution through stock offerings. In addition, there is going to be no debt, so any investor would love this. As a CFO, I know numbers and if I was introduced to a company like Groupe Athena I would be excited.

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When a product goes out of the US patent, is where the Indians come in. This because they can manufacture it cheaper, so once it is out of patent, they can safely manufacture it and try to sell it in the US at a cheaper cost. Therefore, many companies in India keep track of the products going off patent and then they start manufacturing and selling it. In the last three years, many products have gone off patent in the US and that has increased the market. That is the main advantage for companies like Groupe Athena. - Prakash Iyer