Act Two: Indian Pharmaceutical Company Grows in Fairfax County, Virginia

June 26, 2017

The Project Ep. 20: Granules Pharmaceuticals

This week, we bring you the story of Granules Pharmaceuticals, an Indian manufacturer of generic pharmaceuticals, which announced plans in May 2017 to invest $35 million and more than double its workforce in Fairfax County, Virginia. The company initially established a physical presence in the U.S. in 2014 with an R&D facility in Fairfax County and will soon begin manufacturing there as part of the expansion. We talked to Priyanka Chigurupati, Executive Vice President of Corporate Strategy & Business Development at Granules India Limited, and Dr. Gerald Gordon, President and CEO of the Fairfax County Economic Development Authority, for the story.

Andy Levine (DCI): If you’ve ever wondered what or who is behind the generic store brands of things like Tylenol or Robitussin, you’ll enjoy hearing about the Indian company we interview today, Granules Pharmaceuticals.

Patience Fairbrother (DCI): Granules is behind many of the over the counter products you would find at a CVS or Walmart. They first set up operations in the U.S. in 2014 in Fairfax County, Virginia. And last month, they added a manufacturing and R&D facility in, you guessed it, Fairfax County, Virginia.

Andy: So welcome to episode 20 of the project, Inside Corporate Location Decisions. I’m Andy Levine of Development Counsellors International.

Patience: And I’m Patience Fairbrother also with DCI and Andy’s co-host of the project.

Andy: So today, patience and I bring you the story of Granules Pharmaceuticals, which announced plans just last month to invest $35 million and more than double its workforce in Fairfax County, Virginia.

Patience: So to get the company’s perspective, we talk to Priyanka Chigurupati who is Executive Vice President of corporate strategy and business development at Granules India Ltd. Priyanka is a young executive who grew up in Hyderabad, India and graduated from Case Western Reserve University in Ohio in 2010. After school, she moved back to India to start her career, and just about three years ago, came back to U.S. to head up the U.S. operations of Granules India. Here’s Priyanka.

Priyanka Chigurupati (Granules India): Granules India was founded 30 years ago by the now CMD Mr. Krishna Prasda Chigurupati. And what started off as one facility and a 10 people operation, is today a seven facilities around the world and over 2,500 people operation.

Patience: So you may have noticed that the name of the founder is a little bit familiar. That’s because he also happens to be Priyanka’s father. But we’ll get back to that a little bit later in the episode.

Andy: Granules is among the world leaders in their core products. Products that most of us are quite familiar with. The company manufactures private label pharmaceuticals including Acetaminophen, the active ingredient in Tylenol, Ibuprofen which can be found in Advil or Motrin and Guaifenesin which is the active ingredient in Mucinex. They have operations all over the world, but they focus on the U.S. and on Europe.

Priyanka: As a company, about 60% of our business today comes from regulated markets. So 35% in Europe and 35% in the U.S. We’re also present in Latin America, Asia, pretty much all over the world, but a majority within the U.S. and Europe.

Patience: Granules has actually had a marketing presence in the U.S. since 2003. But its first physical U.S. facility was established in 2014 when the company invested 15 million to locate R&D operations in Fairfax County. We asked Priyanka about that initial decision.

Priyanka: Well, you know, to be honest, it was destiny in a way. We were looking to expand our presence through a Greenfield operation, but we stumbled upon this facility that was out for sale at that point. So we did our due diligence and literally, just like that, we were in. And the past three years has been a whirlwind for us. We did initially face some challenges, but we’re really settling in now and we owe most of it to the existing team whom have embraced the company as their own, and they’re working towards making this part of Granules’ growth story very successful.

Andy: On to the most recent project, Granules announced plans in May of 2017 to invest an additional $35 million to expand its R&D facilities in Fairfax County, now with the goal to move towards commercialization and start manufacturing their products in the U.S. They acquired the two facilities that they were leasing and they plan to add about 100 jobs.

Patience: So let’s talk about this latest $35 million expansion project which involves continuing to expand your presence in the U.S. and moving towards commercialization. So can you just tell us a little bit about this recent decision to expand and why you decided to do it in Fairfax County?

Priyanka: So like I said, destiny played a big part in getting us to this area, but now, we realize the benefits of being in this area. One, the proximity to the Norfolk Port, the proximity to the airport which is a big deal for us because we’ll be doing a lot of air shipments. And, the most important benefit that we’re actually noticing now is the availability of untapped potential. That’s one thing that we don’t really see in other states because especially Pharma-driven states or Pharma-loaded states like I’d say, there’s a lot of poaching, but here, there’s a lot of fresh talent that you can retain in your company.

Patience: So proximity to the Dulles International Airport and the Port of Virginia were important to the company for distribution. But another very important element was the ability to recruit and especially retain talent. We asked Priyanka to expand on this.

Priyanka: In every start-up scenario like ours, there is a lot of employee turnover only because it’s a start up and people are getting used to your culture, the working culture and all that kind of stuff. But in terms of a comparison between other states that are loaded with Pharma industries versus a state like this, you can definitely retain talent because there’s not another Pharma company around you that’s gonna offer 10%, or 15%, or 50% over what you are paying them and just poaches them just like that. It’s a little bit harder for sure, but hopefully in the near future, there are other Pharma companies in here so the talent is acquired by everybody and retained by everybody.

Patience: Finally, number three for Granules was about the support they received from the state and county throughout the expansion process.

Priyanka: And three, there’s a lot of support being given by the Fairfax County and we spoke to them earlier in terms of finance, in terms of hiring the right people, in terms of a lot of things. There’s a lot of support that comes in from the Fairfax County which I think is a little bit unique for sure.

Andy: So to hear from the economic development side, we talked to Dr. Gerald Gordon, or Jerry, as those who know him. He is the president and CEO of the Fairfax County Economic Development Authority. A role he has held for the past 34 years. So he has a bit of a unique perspective on the dramatic changes the county has seen over the last three decades.

Dr. Gerald Gordon Fairfax County: Thirty-four years ago, we were just emerging from the time when Fairfax County was a bedroom community to Washington DC. So we had all the amenities and all the businesses that supported a bedroom community. Malls and automobile dealers, and doctors, and lawyers. And we evolved over time to become a home for federal contractors and ultimately for very diverse business community based around 120 million square feet of office space, largely IT related. Many were IT and STEM areas of an intersection.

Andy: Population change over that period of time?

Dr. Gordon: Well, we’ve gone from about half a million to 1.2 million. We’re now 585,000 jobs, which is just shy of what’s in Washington DC. About 90% of our jobs are not direct federal employees, although a great number of them work for federal contractors.

Patience: Fairfax County is no longer the bedroom community to DC that it once was, but the county’s proximity to the federal government remains an important part of its value proposition for companies. According to Jerry, this was the case for Granules initial interest in the region.

Dr. Gordon: Their first interest in Northern Virginia was due to our proximity to the federal government. They manufacture pharmaceuticals, largely generics and they need to be close to the FDA. So like a lot of our businesses, they first came because of the government and then expanded their footprint into other areas.

Andy: In addition to proximity to DC, Fairfax County offered a strong IT cluster from which to pull talent for certain positions as well as a strong university pipeline for chemists.

Dr. Gordon: Gordon: One of the reasons that Fairfax County was of such great interest to them was the IT base and the IT employees that we have there. But also because what they really need in terms of hiring is chemists, and there’s a good chemistry program at George Mason University. And there are a lot of other Indian businesses located in Fairfax County. It’s about 40,000 Indian American people in Fairfax County so it’s got all the assets that the company was interested in.

Patience: While Fairfax County’s talent base was a draw for the company, Jerry also sees fulfilling Granules workforce needs as a potential challenge for the future. The Economic Development Partnership plans to serve as a kind of matchmaker to connect Priyanka and her team with local education institutes.

Dr. Gordon: They need chemists, they need IT people. IT people are an extraordinary demand right now. Chemists are, as I said, George Mason University has an excellent chemistry department, but there’s some competition for relatively few people, so we’ll be working with them. With the university, the community college in Northern Virginia has 76,000 on eight campuses and they have chemists coming out. And as you know, in most industries when you hire a four-year degree person like IT, you hire three of four two-year degree people, and for them it will be the same thing. So I think the community college becomes enormously important to them.

Patience: Finally, we asked Jerry what role incentives played in the decision.

Dr. Gordon: Like a lot of instances, I think the incentives in this case really just tipped them. It was an indication that Virginia was really interested and really wanted them here. I don’t think it was that considerable a decision factor. I think they really wanted to be here for other reasons and what a sweetener.

Patience: So as promised, we wanted to go back to the topic of Granules as a family run business. So as many of our listeners may know, Andy too runs a business that his father started, DCI. So he was eager to hear from Priyanka about her experience heading up the U.S. operations of the company that her father has built.

Andy: So I also come from a family-owned business. My father started the company I run now, DCI. You know, that’s quite an extraordinary thing to come into a market and start up a company that now, will have it sounds like about 175 people. There must be a great sense of pride as you walk through the doors each day.

Priyanka: Definitely, the foundation set by…I usually never call him my father at work, I call him the CMD, so I’ll stick to that. The foundation set by him is…it was a one-man show throughout. So to maintain and keep his legacy going forward is literally the only force that drives me. And its very fair to say that that is what drives every single employee in this company. So yeah, there is a deep sense of pride. There is that extra responsibility that you have because it’s your own sweat, tears or your father’s sweat and tears. So I’m sure you understand where I’m coming from in terms of maintaining and carrying forward that legacy.

Patience: So this is where we need to thank Priyanka for her willingness to answer some more personal questions.

Andy: This is a personal question. If it goes too far, just tell me.

Priyanka: Sure.

Andy: Do you find yourself the majority of time in agreement with, you know, do you make decisions together? Do you find at points disagreements between yourself and, I’m gonna call him your father in this case. I guess I’m trying to understand the day-to-day running and how you divide the labors between what you do and what your father does.

Priyanka: So just like in any employer-employee scenario, my dad made it very clear that I’m just another employee of the company. We obviously have certain decisions that he has to make and certain decisions I’m allowed to make. But I’m still relatively new to the business so I run a lot by him. We do have a lot of disagreements, but we talk to each other and we come up with a solution that’s in the best interest of the company, but yes, that’s my answer.

Andy: Granules is currently in the process of filing Abbreviated New Drug Applications where ANDAS are known, which will allow them to begin commercializing pharmaceutical generics run the facility. In the next two to three years they plan to add more than 100 jobs and invest $35 million in Fairfax County. So here we are again, we’re up to the takeaways portion of this episode, episode number 20. Patience, what stood out to you in our conversations with both Jerry and Priyanka?

Patience: Something Priyanka said really stuck with me, and that’s the ability to retain talent and not just recruit it in Fairfax County was a big factor in Granules expansion in the area. You know, there are a lot of other places in the country that they could have located that might have a stronger cluster of pharmaceutical companies, but in the case of Fairfax County, it’s actually an advantage that there’s not as much competition because they don’t need to worry about other companies coming in and poaching their talent.

Andy: One of the other states that we know Granules looked at closely for this expansion was New Jersey. That would have been an example of a state that has a much more mature pharmaceutical sector. They chose to stay in Fairfax because I think partly because they were concerned a little about competition for their talent.

Patience: Exactly.

Andy: So, I’m gonna take us on a little different direction and Patience as you know, I love talking to anyone who is involved in running a family-owned business which of course is part of our history at DCI and I’ve been a part of. So I just wanted for our listeners, should profile some things that maybe did not come out about Priyanka. So this is someone who graduated from Case Western Reserve in 2010. So my guess is she’s probably in her late 20s. We didn’t ask her. wouldn’t be proper in the episode. But she’s probably in her late 20s.

Graduates from Case Western Reserve, moves back, works in the family business for three years, and then comes back to the U.S. to open a completely new operation. This is kind of amazing to me Now, how old would you be Patience?

Patience: I’m 24. I was just going to say this means I have probably four to five years to start running a company if I’m gonna keep up with Priyanka. Very impressive.

Andy: Very, very impressive. And, you know, here it is something that she started really in 2014 in a much smaller way, now growing it, adding another 100 jobs, $35 million dollars investment. I mean, I’m just enormously impressed with… and in speaking with Jerry as well. He just couldn’t say enough about Priyanka in terms of a…as a young and effective leader.

Patience: So that is a wrap on episode 20 of the project Inside Corporate Location Decisions.

Andy: Our special thanks go out to Priyanka Chigurupati as well as Jerry Gordon for taking the time to speak with us. Jerry and I sat down face to face at the IEVC conference in Littlerock for this interview. Patience and I spoke with Priyanka over the phone and she was a great sport when I started throwing in some personal questions about working with her father. So, for both of them, we appreciate their participation.

Patience: The project is sponsored by DCI. We are the leader in marketing places and have served over 450 cities, states, regions and countries. You can learn more about us at aboutdci.com.

Andy: Now, in the month ahead, we’re going to add a new segment to the podcast that we’re gonna call game changers. Essentially, we’re gong to be looking at some major location announcements that literally change the economic fortunes of a city, or region, or a state. It’s an interesting twist for the project and we really hope you enjoy it. So please keep on listening. There are many more projects to come.

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