Natco Pharma: Focusing On Complex Products


(Tarun) #125

Some Notes from Q1’FY18 Con call and Investor presentation:

Hepatitis C Franchise: Worldwide, Hepatitis C market was estimated to be ~$11.81bn in 2015, which is expected to grow at a CAGR of 15% to reach ~$27.63bn by 2021. Registrations filed in 40 countries and import permits and approvals received in 10. Key focus area is Philippine region. Domestic market has expended rapidly and they are number 1 with recent launches like Velpanet, Epclusa etc. however the segment is now short of stagnating on pricing front though volume growth is there. Evident from segment revenue:

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RoW Subsidiary: Will primarily be about Hep-C and existing portfolio of Onco. Good uptick in short duration of time:
Canada - Filed 15 products with 11 approvals
Singapore - Filed 10 products with 5 approvals
Brazil - Filed 10 products with 5 approvals


Revlimed: is a BIG opportunity. A follow-up query to be answered to FDA. Expecting approval in FY’18. Possibility of early launch (under certain conditions) from FY’19 subject to other competitor product arrive in the market.


API: Recent capacity expansion to significantly improve API capacity. Even otherwise API export is growing at a faster pace from 212 MN USD on Q1’17 to ~800 MN USD by Q1’18.

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Copaxone: Natco feels that Mylan will most likely will go for at risk launch since legal position is very strong. Though one PTAB hearing is still pending but company is positive about outcome.
brand sales for the 20 mg/mL dose of approximately USD 700 million and for the 40 mg/mL dose of approximately USD 3.64 billion for the 12 months ending July 31, 2017. Natco will receive 30 percent profit share from Mylan for the 20 mg product and 50 percent share for the 40 mg product.
Edelweiss projections: We were expecting launch (of 20 mg product) in Q4 FY18 (Jan-Mar) with USD11 million of revenue (for Natco) in FY18. Given the earlier-than-expected launch, this could now contribute USD 25 million-USD 30 million in FY18 and around USD55 million in FY19,” Edelweiss said in a note. “For the 40 mg product, the launch is likely to be in the second half of fiscal year 2018-19 due to certain patent issues. This product could contribute USD 125 million to Natco’s

FDA Approval status:
Export formulation facility Kother: Approval received in Jan’17.
Export formulation facility Vizag: Under development
API facility Mekaguda: US FDA approval Jan’15
API Chennai – US FDA Feb’16


New verticals: New C&D vertical will focus on niche products. First of kind types. So far 3 launches with more in the pipeline. Overall 10 Products targeted to be launched in FY18E (this number covers both domestic and Export formulation).


Fund raising: Fund raising of ~1,500 Cr. By cometary, they are very very clear not to pursue any me-too generic opportunity with the changing time. Rather would prefer to invest for complex generic where gestation period is long however the windfall more than well offset for the effort worth. Those opportunities may be in the area of Novel Drug Delivery Systems (NDDS) or complex chemistries. Will NOT go for Bio-similar/biological etc. Subtle expectation setting for beyond 2024-25 for complex generics.

Are there some surprises in store with the fund raising? Existing balance sheet is getting better riding on Hep-C, Copaxon etc profit flow. The cash flow is expected to improve further with Copaxone effect trickling in for full year in FY’19. On the other hand, Rajeev specifically commented that CapEx projection is for ~350Cr. only for FY19. Putting these two together, I am speculating that the fund to be used for some big ticket acquisition. Nirmal Bang security speculating about possibility of acquisition in the complex Onco space.

Any Natco experts got any insights/view specifically on the proposed fund raising of ~1500 Cr and implication of the same.

Thanks,
Tarun

Disc: Invested


(Tarun) #126

Though amount is not really big however hoping that management don’t get drawn into trivial things.


(Rajesh) #127

Also mystery behind 1500 cr capital raising is not giving comfort. We have to understand capital allocation plan.
Disclosure -Invested


(saumya) #128

Revlimid news update


can any expert in pharma patents analyze its effect


(Tarun) #129

Some speed breaker on thriving domestic Hep-C franchise for Natco.

Sofosuvir+velpanet prices set at ~15500 AGAIST current 18,500. More than 15% haircut

Hep-C, Cancer and Hemophilia drugs to cost less as regulator caps prices of 51 formulations
The new price caps are likely to hit many Indian drug makers’ domestic formulation businesses

Also, I suspect some oncology products also in purview. Anyone got a Chace to see the most recent notification? We can assess the impact by comparing notified price vs. current MRP (can find current MRP from NPPA site:)

http://nppaindia.nic.in/nppaprice/pharmasahidaamweb.aspx,


(Sumeet Shah) #130

I will try to search for the notification and see the oncology drugs involved.
In the meanwhile, I had one query. The MRP printed, is, of course, for the final buyer. Companies sell to distributors for much lesser rate and distributor to Pharma store for some rate and then the Pharma chap sells the final version at MRP, which offers him quite a margin.
Since he government has capped, say Sofosbuvir in combination with the other one, at 15,500, is it only the company who will bear the loss or it could be divided into all the channels in which case, loss to company will be minimal.


(Nasar) #131

(Ayush Mittal) #132

Found couple of good articles in reference to potential from Copaxone:

Few extracts from above:
Mylan raised the lower end of its 2017 forecasts after the surprise approval of Copaxone in October. It is the leading MS therapy worldwide, generating more than $4 billion in revenue for Teva last year.
Mylan said it was pleased with how much market share it has picked up with its version of the 40-milligram dose of the drug - by far the most commonly prescribed dosage. For the week ended Oct 27, Mylan said it took a 16.2 percent share of new prescriptions and around 8 percent of total prescriptions.


(Tarun) #133

Some competition building up on gTamiflu however don’t think this will be significant at least for this year since Natco generally do stocking in Q3 itself. Also read somewhere that this year flu is severe as compared to last year.

Lupin receives FDA approval for generic Tamiflu capsules
Lupin has received final USFDA approval for Oseltamivir Phosphate Capsules USP, 30 mg (base), 45 mg (base), and 75 mg (base) to market a generic version of Hoffman-La Roche, Inc.s Tamiflu Capsules, 30 mg, 45 mg, and 75 mg.


(Sumeet Shah) #134

Yes, agree with you that at least this year, may not be much of a problem. The flu season in the US has been relatively earlier than it comes normally, and has been severe. The generics include Natco and Cadila and now Lupin.
Recently, read an article on Fierce Pharma (last week), which stated that Mylan has gained momentum in gCopaxone with a more than expected capture of market share. I don’t know exact numbers though, but in late October 2017, Mylan has already had 8 percent of the new patients of Multiple Sclerosis and 16 percent of follow ups. So by December, I am sure the numbers will be higher than above.
gDoxil, gLanthanum and others will also yield good numbers. Last quarter result did not reflect gDoxil numbers even though it was launched earlier and sales had happened.

And now that the litigation issue on Copaxone is behind us, looking forward to a good result from Natco, as compared to other Pharma peers, who have still not fully come out of various issues plaguing the sector.


(Tarun) #135

They have increased to 10% market share by December. Also, commentary from Mylan side is very bullish.