Alembic Pharma (Oral Solids ==> Injectables, Onco, Derma, Opthalmic)

Stock Opportunities Not-so-Hidden Gems
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For those getting impatient with the pace of progress on this, here’s what I explained:)

Interrnational Generics and Domestic formulations segment are next - only two segments left. How I prioritise the questioning is usually done by me after I have all the questions in place…I do’nt pre-suppose priorities…unless there is lack of time…and this time there isn’t. Domestic APIs and International APIs put together are 24% of Sales -that’s a pretty important growth area for the company if you study the latest AR. I don’t think I want to ignore that.

If anyone CAN and have the time, please help me ask critical questions ondomestic formulations and International Generics…on similar lines as I have done for others…that will help…not the main questioning theme(s) - which anyways we have already done;)

1 Like
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AR excerpts from 2012 AR

“Alembicâs strategy in International Genericsis to partner with International Genericcompanies and leverage on their marketingand sales capabilities. Alembic typicallyshares the investment and return with themarketing partners and this helps de-risk itsANDA programme and reduces the upfrontinvestment in the development stage.”

From 2013 AR

“Entered into an out-licensing agreementwith Ranbaxy Labs Inc. to exclusively marketDesvenlafaxine base ER tablets in the US”

One thing is clear mgmt do understand the advantages of going the partenership route and thats what they have been touting all the way so far. Now considering the drop in export formulations business despite the fact that thye have introduced 8 new products in regulated mkts, It seems the above strategy of going partner ship route is not working well. And It is logical on mgmt’s part to try alternatives. it is a deliberate and well thought deicision.

We should confirm this with mgmt though.

The product basket for US market has improved significantly with the introduction of desvenlafaxine and 8 new commersialed ANDAs. However the numbers tell a different story. The export formulation business has degrown from 298 cr last year to 279 cr this year. Kindly share what has gone wrong. Is it the mismatch in the offering and the need of the market OR is it marketing and distribution specific or something else.

(Depending upon the answer to above question )

You strategy for regulated export markets had been to go via partnership with generics player for marketing to penetrate deeper/wider quickly. What has made you change the gears and go solo route.

Considering going solo will take time and strong financial muscle, kindly share how you plan to ramp it up. Will there be a temporary slow down on new product launch.

The export contribution is 75% from regulated markets. Do you like to keep it this way or there is conscious move to change this. What is the marketing PUSH strategy for emerging roW markets ?

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Pretty good results by the company. 20% growth in the top line in Q2FY14 on a y-o-y basis driven by healthy growth in the international generic business which grew by 123%. Domestic formulation business posted growth of 10% in this quarter.

EBITDA margins improved to 19.06% in Q2FY14 vs. 15.91% in Q2FY13. PAT up 45% in Q2FY14 on a y-o-y basis.

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Excellent numbers.So far,the co. has continued on the path it charted out in its AR.The debt is also decreasing…a 30%+ growth is seeming more & more of a reality & can excite market participants even more :slight_smile:
Good going so far in FY14.!50-160 may act as the new base now,but we may see 200 before it corrects.Glad to have loaded it up,almost an year ago :slight_smile:

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Super results…the thing to note is that the R&D cost has more than doubled.

Ayush

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That’s a very good pointer Ayush. Do you think it is primarily on account of 2 ANDA filing the company has done in Q2?

Regards,

Ankit

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APL has a subsidiary in Europe…they file from there as well.The cost would certainly be higher,maybe that,along with the recent hike in filing cost by USFDA led to the increase on the whole.
The highlight for me is the US generic biz doing so well inspite of Desvenla taking greater time to pick up.

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APL Q2 concall is available on their website…in the ‘Investor Corner’ section.Makes for a good read :slight_smile: Goldman Sachs too has started tracking this one now.
http://www.alembic-india.com/investor-corner.php

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A very interesting development,Alembic has invested in a South Africa based company Rhizen Pharma.Don’t know the quantum though.The company specialises in NCEs in Oncology & some other quiet niche segments.

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Alembic Pharma amongst top 12 stocks to keep a eye on by ede

Alembic Pharmaceuticals Alembic Pharma, is a leader in several sub-segments of the Anti-Infective Therapeutic segment. Over the last two to three years, it has invested heavily in increasing its revenue contribution from chronic therapies & regulated markets, which are high margins businesses The company has increased its revenues from the chronic segment from 45 percent to over 50 percent currently over the last year growing at over 20 percent in the chronic segment, and intends to increase its share further. As a result, we expect the company’s domestic formulation business to grow at 12 percent CAGR over FY13-15E The company continues to improve its margins year-on-year, the company has ended FY13 at 16 percent EBITDA margins, and plans to improve it further by 100-125 bps every year, and expects margins to stabilize at 20 percent over the next 2-3 years Facility expansion for US, would start contributing from Q2FY14, which would help the company grow its US business at 25-30 percent CAGR from USD 20-30 mn currently to over USD 80-100 mn. The company has strong enough pipeline of filings in the US to support the growth. We expect the company’s international generic sales to grow at a CAGR of 28 percent over FY13-15E Negligible debt on books, company plans to become ZERO debt by FY15E

Read more at: http://www.moneycontrol.com/news/news/12-stocks-you-should-keepeye-on-edelweiss_987593.html?utm_source=ref_article

Alembic Pharmaceuticals Alembic Pharma, is a leader in several sub-segments of the Anti-Infective Therapeutic segment. Over the last two to three years, it has invested heavily in increasing its revenue contribution from chronic therapies & regulated markets, which are high margins businesses The company has increased its revenues from the chronic segment from 45 percent to over 50 percent currently over the last year growing at over 20 percent in the chronic segment, and intends to increase its share further. As a result, we expect the company’s domestic formulation business to grow at 12 percent CAGR over FY13-15E The company continues to improve its margins year-on-year, the company has ended FY13 at 16 percent EBITDA margins, and plans to improve it further by 100-125 bps every year, and expects margins to stabilize at 20 percent over the next 2-3 years Facility expansion for US, would start contributing from Q2FY14, which would help the company grow its US business at 25-30 percent CAGR from USD 20-30 mn currently to over USD 80-100 mn. The company has strong enough pipeline of filings in the US to support the growth. We expect the company’s international generic sales to grow at a CAGR of 28 percent over FY13-15E Negligible debt on books, company plans to become ZERO debt by FY15E

Read more at: http://www.moneycontrol.com/news/news/12-stocks-you-should-keepeye-on-edelweiss_987593.html?utm_source=ref_article

Alembic Pharmaceuticals Alembic Pharma, is a leader in several sub-segments of the Anti-Infective Therapeutic segment. Over the last two to three years, it has invested heavily in increasing its revenue contribution from chronic therapies & regulated markets, which are high margins businesses The company has increased its revenues from the chronic segment from 45 percent to over 50 percent currently over the last year growing at over 20 percent in the chronic segment, and intends to increase its share further. As a result, we expect the company’s domestic formulation business to grow at 12 percent CAGR over FY13-15E The company continues to improve its margins year-on-year, the company has ended FY13 at 16 percent EBITDA margins, and plans to improve it further by 100-125 bps every year, and expects margins to stabilize at 20 percent over the next 2-3 years Facility expansion for US, would start contributing from Q2FY14, which would help the company grow its US business at 25-30 percent CAGR from USD 20-30 mn currently to over USD 80-100 mn. The company has strong enough pipeline of filings in the US to support the growth. We expect the company’s international generic sales to grow at a CAGR of 28 percent over FY13-15E Negligible debt on books, company plans to become ZERO debt by FY15E

Read more at: http://www.moneycontrol.com/news/news/12-stocks-you-should-keepeye-on-edelweiss_987593.html?utm_source=ref_article

Alembic Pharmaceuticals Alembic Pharma, is a leader in several sub-segments of the Anti-Infective Therapeutic segment. Over the last two to three years, it has invested heavily in increasing its revenue contribution from chronic therapies & regulated markets, which are high margins businesses The company has increased its revenues from the chronic segment from 45 percent to over 50 percent currently over the last year growing at over 20 percent in the chronic segment, and intends to increase its share further. As a result, we expect the company’s domestic formulation business to grow at 12 percent CAGR over FY13-15E The company continues to improve its margins year-on-year, the company has ended FY13 at 16 percent EBITDA margins, and plans to improve it further by 100-125 bps every year, and expects margins to stabilize at 20 percent over the next 2-3 years Facility expansion for US, would start contributing from Q2FY14, which would help the company grow its US business at 25-30 percent CAGR from USD 20-30 mn currently to over USD 80-100 mn. The company has strong enough pipeline of filings in the US to support the growth. We expect the company’s international generic sales to grow at a CAGR of 28 percent over FY13-15E Negligible debt on books, company plans to become ZERO debt by FY15E

Read more at: http://www.moneycontrol.com/news/news/12-stocks-you-should-keepeye-on-edelweiss_987593.html?utm_source=ref_article

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Hi,

On screener.in it is mentioned that Company might be capitalizing the interest cost.

It would be helpful if someone can explain what is meaning of a company capitalizing the interest cost?

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Hi Sunil,

In the case of Alembic there has been a sharp reduction in loans in FY13 hence the alert by screener might not be relevant.

The reduction in loans has been shown as a positive by screener.in :slight_smile:

Regards,

Ayush

1 Like
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Hi Ayush,

Actually I want to understand what is meaning of “company capitalizing on interest cost”? Does it mean interest in P&L sheet have increased?

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Capitalizing of interest cost means company is not routing the interest cost from P&L and directly adding it to the Balance Sheet by increasing the fixed assets. This results in inflating the profits. However, during construction phase (capital work in progress as shown in balance sheet), interest can be capitalised and there is nothing wrong in it.

Just for your knowldge, apart from interest cost, companies also capitalise R&D costs (mostly pharma companies) which may or may not provide benefit over the years. One can capitalise an expense only if it can provide profits over the years.

2 Likes
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Hi Guys,

Alembic Management Meet is confirmed in 2nd week Jan.

Those invested/tracking please post your queries and help us extract the most out of this interaction.

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Donald,
As you had pointed out a few months ago,APL is keen on marketing its drugs abroad by itself.So this should certainly find a place in the Q&A.
Q1: How do we plan to prepare/create the task force in the markets(outside India) you are targetting?
Q2: What would be the cash requirements? Will we dilute equity? Or go for debt? Or internal accruals?
Q3: By when should we expect to see the effect of this?
Q4: Would the R&D spends come down?
Q5: Has Desvenlafaxine picked up in the US? How much market share can we expect to garner by the end of this fiscal? Are there anymore Para IV filings lined up? What is the no. of Para IV filings we are looking at,on an yearly basis? Do we have any target on that front?
Q6: Is the competition in Developed markets intensifying? How long can we sustain the fast growth rate in International Generic & the Intl. Branded segments?
Q7: Is the domestic market showing any signs of improvement? Is your API portfolio doing better? How do you see the domestic market panning out in FY15?

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Hi Donald,
Are we meeting the APL management soon? Is it finalised? Would really appreciate if you could give the latest updates on the same :slight_smile:

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This time we had only an hour but our questioning was much more structured. Suffice to say that our reservations have all been addressed satisfactorily.

This is certainly a story to stay put (if you are invested in from earlier levels). Fresh allocations may be made on declines.

Next is Delhi based companies. So Management Q&As to be put up will take some time.

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Thanks Donald :slight_smile: Waiting eagerly.

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Q3FY14

â Net sales up 31% at Rs 487 crores for the quarter against Rs 372 crores in corresponding quarter last year

â Profit before tax up 48% at Rs 88.83 crores against Rs 60.09 crores in corresponding quarter last year

â Net profit after tax up 37% for the quarter at Rs 65.93 crores vis–vis Rs 48.27 crores in corresponding quarter last year

â EBITDA at 21% at Rs 102.23 crores vs 18.64% at Rs 69.36 crores in corresponding quarter last year

Segments

â International Generic Formulations sales up 112% for the quarter at Rs 130 crores against Rs 61 crores in corresponding quarter last year

â India Branded formulations sales up 15% for the quarter at Rs 230 crores against Rs 200 crores in corresponding quarter last year.

Year to Date FY14 (Apr - Dec 2013)

â Net sales up 22% for YTD DEC 13 at Rs 1403 crores against Rs 1148 crores for corresponding period last year

â PBT up 52% for YTD Dec 13 at Rs 229.8 crores against Rs 151.2 crores for corresponding period last year