Finally I got a response from the company and guess what, I got an opportunity to talk to COO of the company Mr Vivek himself. A very gentle, politie, realist and straightforward person.
Key points from the interaction:
– It is tough to answer all the investors individually but they are trying to change that with starting interaction with few of the long term investors as and when the bandwidth permits.
– Once the company gets approval for a product or a new registration, it takes up to 2 years to hit topline and bottom line. So, products which got approval in 2015 are adding to the revenues in 2017 kind of thing. It takes even higher for regulated markets like they are facing in Brazil.
– It’s tough to grow at historical growth rate of 30-35% as base gets higher every time. So, they will continue with sales and profit growth projection of 20-25% and will try to exceed that.
– On my question for making top line as bottom line between 2016-2022 warrant numbers higher than the regular projection, he agreed that they have set a very steep target for themselves but they are on track to achieve that.
– Pharma based products are about 95% of the company revenue rest is other products. Company is expanding it’s OTC products sourced from China and supplied through HK based subsidy this has added considerably to 100%++ profit growth seen in last 2 quarters and company plans to expand that portfolio.
– Latam remains the main focus for the company as they have resource limitation, they don’t want to expand too fast too soon. Additionally, they are expanding in Africa in unregulated markets like Angola where product registrations are not required plus some other nations through associates.
– Company’s subsidiary in Colombia needs to have local partners are compulsory to set up a company in the country, similar to many countries like Dubai, Malaysia etc. Thus, the percentage of shareholding is less than 100%.
– Brazil is very interesting market but the approvals are taking longer than expected.
– They don’t plan to drive into European markets and EU EMP approval is used for mutual recognition of facilities by lots of LATAM companies thus saving time for the company in launching products in those companies.
– First ANDA is a very simple product and should not add lot of dollars to topline and bottom line, but this will work as a milestone for supply to US market.
– Company will file total 4 Anda in partnership with 2 companies one Cycle Pharma and another three with Fresenius Kabi, two of these are already filed and third will be filled next year.
– Company plans to have 60% of US products as quick moving products and remaining 40% as semi-complex and complex products.
– Company is not looking to be a pure play supplier to US market but is looking for adequate return on investment and partnership kind of a model.
My take: Company is showing guts to act different than other Indian pharma players.
– Management with Vivek takes care of all production and supply and his elder brother is taking care of marketing. They have a rich understanding of LAtAm markets and any new player will take lot of time to create a footprint like them.
– They get lot of offers from big pharma names (he did not disclose any names) about using the big pharma registrations and supply the products. The company evaluates those options on profitability and time required for registering their own products as they earn more profits.
– The interaction lasted for about 45 mins, I did not ask for disposal of plant in Himachal or capex planned for coming years (it slipped off my mind)
– All and all, i am happy with the interaction, I don’t plan to add more shares but don’t plan to sell anything either.
Disc: Vested interest and biased views.