Good comments coming for client-
"We are proud to have partnered with Caplin Point, their injectable drug product development and manufacturing capabilities are impressive, and their support has been key to meet this approval timeline. This FDA approval is the first of Cycle’s promising pipeline of generic drugs, which will alleviate unmet demand from patients and keep prices fair.” said Antonio Benedetti, CEO of Cycle Pharmaceuticals
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any idea on the size of the opportunity?
Limited knowledge but my estimation is around USD 47-50 mio per annum (market size). Please take this with a pinch of salt & I have extrapolated from a 2014 estimate
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More than market opportunity my interpretation is that their CAPEX on the FDA compliant plant would be put to good use- assuming that they file 30-35 ANDA over the next few years
They clearly can dominate the injectable market
Discl: Have none in my PF
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I am surprised with no price movement on this great news of first ANDA approval. They will not start generating cash flows from today but it’s physiological win. So, I expected fireworks, but any case it is good that the price does not move up fast and thus remain attractive for investors like me.
Waiting to hear from people who plan to join AGM tomorrow. Happy Investing.
Disc: Vested interest and biased views 
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The fireworks had already begun a few months prior to this news.
If you are attending the AGM tomorrow, I had a few questions lined up :
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This is the first FDA product Approval that has come up since the FDA site inspection. What impact should we see in the top line & bottom line happening from this approval ?
What is Cycle Pharma’s role in this ? & what would be the profit sharing be like ? -
What are the Commercial gains the company achieved from tie-up with Fresenius Kabi ?
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The new facility had also received Approvals from Brazilian agency ANVISA & European Union EU-GMP around 2 years back. But there is no news of any product approval or sales happening in Brazil and Europe.
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It would be much better for the shareholders., if the company would disclose Area-wise sales & sector-wise sales in the Annual Report.
All the statements made in the AR are generalised., with no mention of volume or sales arising from a particular drug / sector.
Transparency regarding the same is very much needed.
Regards,
Mukesh.
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Hi Mukesh,
Nice red flags kindly drop a mail to investors@caplinpoint.net and see if you get some answers. Please don’t forget to mention your dp details.
Further, you are requested to share the reply from company with us on this forum
Regards,
Atul
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Hi All,
I have dropped the following mail to the company:
"Hi Vinod,
Thanks a lot for your quick action and intimation to stock exchange on the information about ANDA approvals.
I am really impressed by the speed and agility of the team to respond to question raised by an individual investor.
This encourages me to seek further information, kindly share the information on following points:
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This is the first ANDA approval post FDA site inspection. When can the company commence it’s first supply to USA? What kind of milestone payment company will receive post this approval? What kind of top line and bottom line impact seen from this approval?
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What is the status on other pending ANDA’s filled in association with other companies and what kind of mile stone payments are expected.
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As i understand the business of the company and stated in the annual report, the company has two segments one is manufacturing another is trading. Why the results are not segmented accordingly?
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Another thing on segmentation, the company is now dealing in pharmaceuticals and OTC products, I firmly believe the quarterly and annual results should not show a breakup between pharma and OTC products as well as trading and manufacturing operations.
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The annual report of the company is silent on amount of capex planned to expand the Indian facilities by the company.
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The company has closed the Himachal plant, what the company plans to do with factory in Himachal Pradesh and what kind of money can be expected on sale of the factory if plans are to dispose off the asset.
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Annual report is quite detailed wrt disclosures but still I would really appreciate to see breakup of sales and profits region wise and country wise.
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Its almost 2 years since the company has received the Brazilian Agency ANVISA and European Union EUGMP approval for the injectible unit but the company is yet to generate any revenues from these two markets. 2015 Respected CEO sir told it will take 2 years to generate revenues and we have completed those 2 years now. Kindly help us understand what are the steps taken and likely timelines for start of supply to these markets. On website I can see there are 7 registered products for Brazil but nothing for Europe. Kindly help me understand what kind of sales are generated from Brazil if any till now.
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The company has also received approval from IMVIMA Colombia and have created a subsidiary (Caplin Point Laboratories Colombia SAS) to operate in the country but the company owns 56.6% stake there, who owns the rest of it and why company divested the stake as it is setting up a new business?
Your early reply in the matter will be highly appreciated.
Many thanks,
Atul Agarwal"
Once I receive some reply will post it here.
Disc: Vested interest and biased views
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I am yet to hear back from them… will keep every one posted.
Disc: Vested interest and biased views
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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.
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How much of your portfolio invested in this company
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How does it matter dear? Ask logical things Happy investing
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It matters a lot dear.
If you feel allocation is unimportant, you are not a value investor.
Brother, I don’t claim I am a value investor. The forum is here to discuss the fundamentals, technical and any other information members want to share with each other. Unlike other members I am normally biased about my investments and I duly disclose my interests in the counter.
Caplin is about 35% of my folio and has given me 55% CAGR for last 15 years. Most of the returns came since the stock started moving. I don’t own big quantity neither my folio is big, probably that’s the reason I could have the stomach to hold for such long.
I think i have been fair in disclosing my vested interest in all the posts. I continue to see growth in the company till at least FY2021. I firmly believe that stock should continue to do well despite high valuations and should move 3-4X in so many years.
Hope I clarified my point of view.
Disc: Vested interest and biased views
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You mean you are holding it for 15 years ?
What was the rationalie behind buying caplin 15 years back ?
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I will be very honest, I don’t know the reason why I bought 15 years ago, but in 2012 I knew this is going to be big. Obviously, I did not anticipate it to grow this big, but I continue to track and hold on to my analysis.
Nice discussion, can somebody help me with the revenue breakup both segmental wise and geography wise, it will be great help for me, I could not find it from their AR
It is not provided by the company
So lets keep this thing in mind so that we can get an answer from them next time when we interact with them.