Ajanta Pharma receives approval for gZegerib and has launched the product in 2 strengths 20mg/1100mg and 40mg/1100mg capsules.
The Zegerid brand and generic had U.S. sales of approximately $ 306.7mn MAT for the most recent 12 months ending in May 2016 according to IMS Health (per DRL press release).
Shipment activities snapshot (source: zauba.com) -
@lustkills
Great work., Sandeep.
Ajanta Q1FY17 results are out. Revenue up 20%, PAT up 39%. Disproportionate growth continues.
Q1F17 Investor Presentation
Profit before tax has grown by 33%, but Tax has not increased anywhere proportionately. Tax has increased by 14%.
Lower Taxation (in Q4 FY16) was mainly due to higher tax benefits on incremental R&D capex - per ICICIDirect Q4FY16 Research Notes. Seems Q1 FY17 tax outgo is low due to the same reason. Tax experts please chim in…
Source: http://content.icicidirect.com/mailimages/IDirect_AjantaPharma_Q4FY16.pdf
Seniors who are tracking Ajanta, I have a question.
The quarterly result was already factored in at a price around 1500.
Without any new triggers why is there sudden spurt in price to 1900 ?
I am unable to connect the dots.
Please advice, is this just because of Dahej.
The PE was already too high even at 1500, and the price has now further increased to 1900.
Source: MarketResearch.com - Error page
Market for Aripripazole is getting crowded. Ajanta also getting approval http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/99A38AFD_FD31_4A35_BCF2_AC4B0D119DF0_112230.pdf.
Can you please share your views on this :
In short,i am trying to gauge what would be the impact size of this approval on Ajanta’s bottomline.
I found the rates to be as low as USD 0.15 for a 5 mg tablet.
@mukesh_gt I am not privy to any reports/data about Abilify. Your guess is as good as mine! Torrent concall gives some hint about their share of more than 4%. He also says that the litigation procedure is going on and anything they estimate may be used in court against them. So he refused to comment on the price erosion and other related data. You may check it out http://www.torrentpharma.com/download/financials/gen_info/Transcript-Q4-FY16.pdf
Hope you will get some answers ( indirect though) from Torrent concall (dated 05/23). During the call many questions answers entirely around Abilify and below two answers has key indications for you.
Answer 1:…So, I would not comment on prices beyond what we have said in the past, and so I prefer not to comment on the prices prevailing in the market currently, beyond saying that they are much lower than where they were at the time of launch.
Answer 2: In the last 12 months fiscal year we have benefited from the relatively higher prices prevailing on the Aripiprazole market place. The prices during the last quarter were much lower than the previous quarters and we should all expect as additional entrants come into the market for the prices to go down, so reasonably we cannot guide you to the same level of sales in the next 12 months for Aripiprazole compared to the previous period.
Recommend you to track Torrent VP thread/AR/concall transcript etc. to decode all thing related to Abilify since they were the first to get the ANDA and exclusivity on Abilify post patent expiry.
In general, I am not entirely ruling out Abilify for Ajanta but am not expecting much form it at the same go. Likewise, not much extraordinary for Torrent at this stage from Abilify.
Disc:
Just realized that I am referring to the same concall trancript which @sajijohn has provided immediately before. Hope you can go through the entire Q&A from the .pdf and get a first hand sense of Torrents perspective on this. Thanks
Understand the competition and other players…In my mind, Ajanta is principally a marketing company and should be able to draw better mileage from this approval…will keep my fingers crossed.
Disclosure : Invested in Ajanta since long and it forms significant % of my portfolio.
Dear All,
Being a newcomer Went thru all the past posts in Ajanta Pharma… Fear,hope , expectations and some fantastic analysis. AP has always surprised on the upside. Now that they have entered the US market -wary about FDA inspection issues. The track record is impeccable and yes often valuations will gallop but the Co is delivering QoQ and YoY. So no complaints.Thanks to VP for providing a clean forum on knowledge sharing
Disc- AP forms 22% of my portfolio
I started re-looking at Ajanta Pharma picture - to re-visit our earlier assumptions.
There is a un-stated objective from Management - to emulate Sun and Lupin benchmarks - in its strive to go to the next level
While it is clearly faltering in Topline growth (which may be temporal, and we need to understand from Management what they are doing to set things right - they have always been growth-hungry, creating avenues when they don’t seem to exist), I am more worried about Sustainability of Op Margins from the lofty 33-34%
PS: will be hopefully posting a few more such EverNote Notes (falling in love here) - to help bring everyone on same page - and help us become willing to expose the thinking behind our “Assumptions” about a business
Data Source - Screener.in; while there may be some discrepancies, broad trends should be in-line; please ALERT if you spot major discrepancies
Here’s a look again at Ajanta’s superior Asset Turns and Operating Margins
Why are we sure this will sustain?
Can we examine the assumptions we are making behind such conviction/opinion??
Disc: Invested, but cautiously re-examining
No transactions in last 30 days
And another look at the Cost-Efficiency Drivers
What assumptions are we making in the sustainability/betterment of the same??
Don’t have the time to complete the R&D Expenses snapshot - upcoming travel.
Hoping some of you will be inspired to take this further - and throw in more data/expose the assumptions we inherently make behind a continuity picture 
Attaching the Excel data - for you to tinker around
Ajanta_Assumptions_Picture.xlsx (50.4 KB)
Disc: I have a completely OPEN mind at the moment; but as is my wont, wanting to QUESTION HARD!!
All interested/invested/tracking can help 
Hi,
With great caution I am trying to take a stab at this for two eminent reasons.
a. The nudging came from someone whom I hold in high esteem for two qualities (hard and detailed work, eloquence). No flattery by the way.
b. Equally importantly, AP has proved to be best workhorse in my PF. As a result over a period this has become significant % of my total PF. Gotta behave circumspect.
@Donald – Always helps to challenge the trap called complacency. Glad that you still want to short of play devils advocate here.
In the true spirit of ensuring a productive outcome from this exercise (looking at some of the ration/metric to see how much steam is left), I am trying to firstly establish that all of us are looking at the numbers from same and correct vantage point.
So, here I go………at some places I am observing some ‘significant difference’ between your quoted numbers and what I have observed from Morningstar. I am concluding that you have taken the standalone numbers from screener, whereas Morningstar has consolidated numbers. Having said that, difference between the two should not be this wide (since consolidated is ~only 10% higher to standalone topline for FY’16).
Apologies the format is not perfect, posting from mobile and facing technical issues. but dont want to miss the important points for semantics hence just “jugaad-ed it”.
Somehow, it appears to me that Morningstar data is closer to reality. Cross verified the RONW and Inventory turnover numbers from the Q1FY17 investor presentation and both set of numbers are stacking up pretty smugly.
Now, to answer the direct question, will the investment be equally rewarding going forward?
To answer this, for a moment I am taking the liberty to consider Morningstar as my reference data:
Bottom line: Looking closely at the numbers, AP has improved the margins at all levels consistently till this year. Gross margin from 63% to 73% between FY12-16. What does that means? To me, company ‘still has pricing power by virtue of first-to-market strategy’ Equally important, AP has gained significant operational efficiency across each of the possible steps (operating margin 14% to 32% and Net profit 12% to 24% between 2012 to 2016). By extension ROA/ROE/ROIC each followed a northward journey.
Now, at this juncture, and in context of Morningstar data, I tend to believe that any further squeezing/efficiency may be little difficult since they are mostly far superior to peers and industry best in some cases.
Top Line: On the other hand, FY’16 top line growth of 16.68% is on the lower side by AP benchmark. Even FY’15 was nowhere close to peak ~35%ish growth. Historical top line growth trend:
FY16: 16.68%
FY15: 22.53%
FY14: 29.81%
FY13: 37.41%
FY12: 34.17%
As expected, that’s why we have sign of stress on DSO, assets turn over, inventory turn over etc.
Coming to your well intentional questions (food for thought), after connecting the dots, IMHO for AP the question to be worked upon further is related to avenues for top line growth more than improving/sustaining the efficiency/margins.
Specifically on top line growth, Ajanta’s USP has always been:
a) Introducing first-to-market (approx. 70% of 190 branded formulation so far, if I recall correctly).
b) Targeted marketing effort (country/geography specific go to market approach).
What I have observed is that AP is ‘slightly’ moving away from its forte…i.e. the first-to-launch margin rich new formulations in the underdeveloped/developed markets (read Africa, Asia). Somewhere seems that company is now aspiring highly regulated, competition intensive USA market via ANDA route. Upcoming Dahej facility (coming to steam in FY17), already filed 18 odd ANDAs and stated aspiration to file ~8 ANDA per year for next 3 years etc. all are indication of STRETCHED FOUCS towards US market.
Though by management commentary and even by notes from AR, seems that management is still intends to play by strength (first to market products, below radar marketing, underdeveloped markets etc). However, will be interesting to see how much successful they will be in the fine balancing act.
Attached is a template that I use to evaluate any prospect (standalone and within sectors) thanks to Pat Dorsey.
My investment hypothesis for Ajanta is entirely based on the success/failure in getting top line traction. Do let me know if I am missing something in concluding that issue worth evaluating is top line growth NOT bottom line incremental improvement.(I.e raw material cost℅,employee cost℅ etc.)
MS Consolidation Sheet_Pharma.xlsx (25.6 KB)
Disc:
