From q4 onwards, this qtr
This qtr natco will have solid growth both top line and bottom line due to severe flue sales and copaxone sales.
Invested, so doing proper follow up every day
As per the below article, Shionogi Inc., a pharmaceutical company in Japan, is currently testing a new treatment that could kill the flu virus with just one dose of medication – destroying the flu in just a single day.
Can this drug substitute Tamiflu and how quickly can this happen, expert comments?
USFDA Approved? If not will take 6 months to one year, if the company has good track record on approvals, no plant issues
Another block buster Natco has in pipeline is gRevlimid , though we have to wait until 2022, if Dr Reddys wins patent against Celgene, it will be a huge game changer for Natco (Natco can launch early??). This drug has more than $5.80B sales in 2015 if you see expected 2022 sales , it is mind blowing growth, hoping dots get connected sooner than 2022. Here is the link, pls check. https://www.fiercepharma.com/special-report/revlimid-1
Let’s see how it unfolds.
Invested in Natco…
Just wanted to understand the 1yr forward P/E of the company which is currently at 18x.
The average one year forward P/E of the Indian pharma cos. including the ones which are currently facing a lot of troubles from US businesses. have been around 26x. Natco, with clear focus on complex generics, steady pipeline of blockbusters, sound management team, and most importantly with the ability to recognize industry changes ahead of competition and accordingly reshuffle business plans is trading at a low valuation compare to peers. Definite buying opportunity according to me. If someone is cautious whether it can sustain growth post 2020 / long term, then that is true for the entire pharma sector. No company can assure you a very very strong growth for 10 years or even 5 years with so much competition. I think what is important is to back management ability to identify opportunities and act faster than competition and also execution. From what I know of Natco, it has proven itself in these fronts. Still it is a company in a sector, which requires monitoring of the industry landscape, new drugs, competition, etc. and not something on which you relax for years.
Expert opinions on current valuation is most welcome.
Disc: Not invested; Actively tracking;
Very well put. I would also add to it that management is very transparent in disclosing any USFDA observations in detail unlike most of its peers.
disc - invested
A research note from geojit on Natco
Excellent read. RA has done some good home work here. Thanks for sharing @james_kerala.
One disconnect though on the table on page 6 titled ‘Key brands and filings to look for FY 19&20’: This table is listing Revlimed as 4.41B USD opportunity. LENALIDOMIDE (Revlimed) is one of the top 10 drugs globally. My understanding is that this has a clocking of 8.0B+ USD currently, slated to increase to 12B by 2022 “IF” Celgen is able to ward off competition. Some legal tangle on interpretation of one specific clause of patent is currently going on between Dr. Reddy and Celgen. (there was a hearing date of March as well, no update though).
Here is another news piece which is listing market size at 8.3B USD:
Natco has a limited quantity conditional launch settlement with Celgen starting 2022, timeline can move earlier if competition join the fray. Key point to notice is that this is non-exclusive i.e. Celgen can find a similar amicable way with Dr. Reddy’s as well (read somewhere that as a possibility).
Disc: Invested, no transaction in past 90 days.
Natco setting up a plant in Belarus :
Any idea., why would a company prefer to go to Belarus ? & why not do it locally ?
Natco Pharma is developing a plant at Beshankovichy. Beshankovichy is a part of Vitebsk Oblast. Vitebsk Oblast is the site of a Belarusian Free Economic Zone.
The benefits offered by the Free Economic Zone are certainly alluring.
They are as follows:
Tax free profits on all goods and services for five years. Post 5 years there’ll be a 50% concession.
50% discount on VAT on import substitution goods manufactured within a FEZ
No real estate taxes for owned or leased property in the Free Economic Zone.
Exemption from payments to National Agriculture Support Fund
No tax on vehicle acquisition.
No customs duty on raw materials and equipment imported from outside Belarus
Assurance of consistency in legislation governing the Free Economic Zone for 7 years.
I’m not certain that the Natco Pharma plant is at the aforementioned Free Economic Zone.
But, there’s a healthy chance it’s located at the zone thanks to the extensive benefits offered.
And, even if it’s not a part of the Free Economic Zone the company will receive a volley of incentives.
The reason being that Beshankovichy has a population much less than 50000 people.
In order to boost enterprise and generate entrepreneurship in smaller towns the Belarusian government has exempted businesses operating in such towns from paying taxes for 5 years.
Also, no transport tax and real estate tax will have to be paid.
Great data on the government benefits. Another possibility would be to get access to the CIS markets.
A bit dated reference-
Hep C market is probably declining due to high cure rates. Gilead’s revenue from Hep C has peaked and now declining. Same will probably hold true for Natco.
Disc - Natco just under 20% of my portfolio
Sorry, wrong copy and past above…
Dilip Sanghvi still holds 3.12% of Natco shares