No they do not conduct con calls
Last quarter they did have a investor presentation for the first time
Q4 FY20 Investor presentation of Shilpa Medicare. Q4 results of the company were below average compared to q2 and q3 results. Drop in operating margins from 31% to 21% qoq were mainly due to drop in licence fees from Rs. 32 cr to 15 cr. Capex of Rs. 288 cr done in FY20 and Debt increased from 194 cr to 350 cr yoy.
Key Points from the investor presentation.
- Biologics
- 4 of the top 15 Biologic products in the pipeline
- 2 Lines independent - single use lines (1000L Bioreactor each) for production of MABS from mammalian cells
- 1 single use line (200L bioreactor) for production of MABS from mammalian cells
- 1 multi use SS line (1000Lx2nos) for production of recombinant proteins from microbial cells
- Initiated a Biologics manufacturing plant equipped with best-in-class technologies at Karnataka. Phase I of the facility on schedule to commission in June 2020 - This facility shall cater to the global market
- Oral dissolving films and Transdermal products
- Transdermal Therapeutic systems facilitate better treatment for the patient
- Combo âLine will be commission in July 2020. Combo-Line (ODF & TD), first of its kind from Harrow, Germany at Bengaluru, India
- 2 dedicated lines for ODF at Hyderabad
- Dermatology formulations
- Company is engaged in R&D in various Dermatological products.
- 2 Products are ready to be filed under which 1 Product is Niche Generic and 1 Product is Niche OTC.
- R&D is carried out at Shilpa Medicareâs in-house R&D Facility.
- Exhibit batches are taken at a Contract Manufacturing Organization
- Upcoming state of the art centralized R&D center at Bengaluru for the development of Formulation, will be fully commissioned by September 2020.
- USFDA held an audit from 13 February to 25 February at its finished Dosage Formulation Facility in Jadcherla, Form 483 issued with 15 observations, SML working with USFDA to address the observations in a comprehensive manner
- API
- Plan to commercialize 3- 4 new molecules each year
- To enhance capacity by 40 -70 % via debottlenecking in all Oncology production blocks
- To install dedicated intermediate blocks to make intermediates available in a shorter delivery period.
- Increased capacity of Tranexamic Acid by nearly 100% from previous capacity and upgradation of existing API.
- Formulations: 1 new injectable line has been commissioned
- Manufacturing facilities
2 API plants at Raichur, India
2 Formulation plants at Jadcherla and Hyderabad, India
1 Manufacturing site for Biologicals at Hubli, India
1 API plant at Austria
4 R&D units. ( Bangalore, Dharwad Hubli and Raichur, India)
Regards
Harshit Goel
17 Likes
VallumDiscovery-Stakeholders-March2020 (1).pdf (146.8 KB)
Our long-term investment in Raichur-based oncology company is progressing well
with the company receiving 5 approvals from the US FDA during FY2020 and filing
ANDAs for 8 high-value products. Overall, the company has 58 filings across US &
Europe out of which 22 filings are pending for approval and 3 have been
tentatively approved. The company has completed the construction of its
Biologics plant at Hubli, Karnataka, and is in the developmental stage of about six
biosimilars/fusion proteins (Adalilumab, Albumin, Etanercept, Aflibercept,
Darbepoetin Alfa and one more). These products would enter clinical trials in
India in the next twelve months, addressing the commercial launch in India and
the Rest of the world markets and thereafter to the developed markets over the
next few years. The pre-genericized global sales of these five drugs are
approximately $40 billion. The company was granted patents in the US& Europe
for its manufacturing/purification process for Recombinant Albumin. Our internal
estimate suggests that the company has made R&D investments of Rs 350 cr, and
30% of cumulative PBT has been invested in R&D over the last five years; thatâs
quite a huge punch for a company of this size. The company has done mid-course
correction of asset sweating strategyby monetizing products worth Rs 70 crs,
taking more CRAMS projects this year, and we expect this to continue in the likely
future. They have also launched cancer drugs in the domestic market at a fraction
of the innovator cost. This should yield benefits to shareholders. In case you are
en-route to Raichur, do visit the shining stars, the second generation of the
company.
14 Likes
Decent set of Numbers by Company on EBIDTA. Topline growth is muted and we will have to see why the company is not able to grow.
Disc invested
4 Likes
There is hardly any gain in revenues qoq⊠And the bottom line has boosted due to Shilpa disposing of 26 % of raichem chemicals for a consideration of around 60 crores⊠Without this gain the results look lacklustreâŠany idea about the concall timings
Or to whom and why this 26 % was disposed⊠Is this some sort of financial dressing wherein the company doesnât want to look bad in a scenario where everyone else is delivering âŠjust a passing thought
Regards
Divyansh
Dj look at EBIDTA, it has grown 30% even Q-o-Q. So company has done operationally well however they have not grown at all on the topline. I think one of the reason might be that they might have some onco products where people have to visit the doctorâs clinic and due to COVID that took a back seat. I read similar thing in NATCOâs results.
2 Likes
No gimmick here. It is an ongoing sell process. You can see in footnotes of previous quarter results. It was supposed to be paid in this quarter. I think this 26% JV revenues are reduced from consolidated results that is why no growth at consolidated level, it needs to be confirmed from management.
Yes , the results are decent. Q-o-Q, good growth in EBITDA. This is in line with most of other pharma companies i am tracking. Indian pharma companies are showing good growth in EBITDA margin since q4â20. Few developments to watch:
- Commissioning of Combo-line for Oral Dissolving Films and Transdermal products, which was expected by Julyâ20.
- Phase 1 of the Biologics manufacturing plant which was due to be commissioned in Juneâ20.
- Bringing on board a strategic investor for its Biologics unit. Recently Biocon did bring investment of Rs 225 crore in its Biologics unit from Tata Capital Growth Fund, valuing the Biologics unit at USD 3.5 billion. The capabilities developed by Shilpa medicare in its Biologics unit and the valuation it gets is something to watch for. The money will strengthen the balance sheet and also fastrack the further development of its Biologics unit.
Company has started sharing Investor presentation since last 2 quarters, hope to have this quarterâs by next week.
Disclosure: Invested since 2015.
3 Likes
The Annual Report is out.
Few Highlights-
API Manufacturing:
All the oncology blocks are designed with Containment; products are handled in highly précised isolators to take care of people and environment.
Non-oncology facility is upgraded to increase the capacity by 25%,with this, the project could increase its production volume to almost 3 times of present volume. All oncology plants capacity got enhanced about 30% by operational efficiency (like enhancing the batch size). API facilities are designed and organized to handle minimum of 300 gm to 350 kg batch size with minimum, moderate, medium and highest batch size scale up facility.
R&D API:
For further strength of our business strategy to depend less on external customers for supply of starting material and make them in-house to further reduce the cost of existing API to make more cost effective technology. For important projects starting material synthesis in-house initiated and taken some trial at plant/lab scale & some are the under lab development/process optimization. (Vertical Integration)
Formulations:
Could not find anything new in this years report.
R&D Formulations:
The Company soon going to commissioned the State of Art Centralized Formulation R&D Centre at Dobaspet near Bangalore. The R&D Centre is involved in development Onco and NonâOnco Injectable formulation, Onco, & Non â Onco oral formulations. R&D also develops Transdermal patch and topical applications.
R&D Centre is well equipped for development of Generics, Complex Generics and also new dosage forms involving Nano and micro technologies like liposomes, Nano particles and specialty products.
The new R&D Centre is one stop solution to customers for product development, can cater the product development along with analytical method development for finished product, analytical method validation, stability studies, characterization of impurities, evaluating extractable & leachable for packing components. Process Development Lab meets the cGMP requirement for manufacturing scaleâup batches to optimize the process variables and to manufacture clinical batches.
New R&D Centre can be catering for CRO for NonâOnco products along with analytical support and as CRAMS for Oncology portfolio of customers.(Can be a meaningful revenue stream in the future).
In FY 19-20, Shilpa and its group companies have filed 72 patent applications taking the cumulative total to 357 patent applications in India and other countries. Shilpa received grants for 14 patents during FY 19-20.
Biologics Unit:
The Company is in advanced stage for setting up of a world class biologics manufacturing facility for Monoclonal antibodies and biologics in Belur, Dharwad. The facility consists of two production lines for Drug Substance. The first, second lines are currently in qualification and expected to be completed by 2020. Your Company is awaiting commercial production license from the Drug Controllerâs Office (post inspection) at this point in time for its first molecule. The expected cost of setup of this facility is amongst the lowest anywhere. The incorporation of best-in-class technologies lower the foot print of the facility, thereby reducing the operational expenses and is also environmentally friendly. (It was supposed to be commissioned by Marâ20 as per 2018-19 annual report. Now, as per Q1 investor presentation by Q2 FY21).
Opportunity in regulated markets - This manufacturing facility, coupled with very strong R&D backing in the area will help the Company integrate vertically in biopharmaceuticals. Your Company expects strong international partnerships in biosimilars over the next 1-2 years, to drive the business in regulated markets with the development and manufacturing from the Unit situated at Belur.
Opportunity in RoW markets â The NBM grant that has been utilised for the setup of a GMP pilot facility, is expected to help the Company in being recognised in the international markets, especially the RoW markets, where WHO tenders are expected to play an important role in widening the impact of the biosimilars. Apart from this, this also enables the Company to target co-development partnerships with global startups - which helps in expanding your Companyâs footprint globally.
Your Company is also expected to progress one of its biologics into Human Clinical Trials designated as a New Biological Entity (NBE) during the course of this coming financial year (FY 20-21). This is expected to be major revenue driver from 2022-23 onwards â both, through direct sales and licensing opportunities for the Company.(In 2018-19 annual report it was mentioned 2022 onwards).
With a view to unlock value in the biologics business as well as attract focused biopharmaceutical, your Company has formed a 100% subsidiary company â Shilpa Biologicals Pvt Ltd (SBPL), where all the biologics asset currently reside as a result of a slump sale executed in March 2020 and approved via a EGM on 30th March 2020. (This could be a major trigger. As of now we have no idea of the valuations it would command).
SBPL now has 6 biosimilars and one New Biological Entity in its pipeline and is dominated by drugs catering to the autoimmune disorders and oncology segments, with 4 of the top 10 biologics in its pipeline. The remaining are niche, high margin opportunities catering to high unmet clinical needs. (As per Q1fy21 presentation, 6 of top 15 biologics in the pipeline).
Your Company is forging ahead with clinical trials on 1 nos MAb, 1 nos fusion protein and 1 nos NBE during the course of the coming financial year, while 1 other is expected to complete preclinical studies. The combined market size of these drugs today is about $20 billion. 2 more are expected to be added in the next financial year to the clinical trial pipeline, with market size of about $12 billion. The revenues from sales of the first commercialised biosimilar is expected to accrue from FY 2022-23 onwards.(As per 2018-19 annual report, it was supposed to be from 2021-22 onwards).
No major changes observed in its US subsidiary.
The company will be focusing on big orders from Russian government.
The company is shifting its focus to orals which are the ongoing trend and since being a chronic disease patient will be consuming its brands from 6 months to two years.
**Shilpa Therapeutics:
STPL is the first company to commercialize pres- cription products as oral thin strips/films in India.
Strong technical expertise to develop thin strips/ films for oral/sub-lingual/buccal delivery
The plant has recently upgraded to carter Regulated Markets like ROW and European countries
Vertically integrated GMP facility from Research to Commercialization. (Again talking of vertical integration).
I am not mentioning about other smaller subsidiaries.
My comments:
- The company is definitely at inflection point. Itâs oncology products are gaining traction. Itâs API and formulations segments both are showing good numbers.
- Strong focus on R&D. 16% of fyâ20 sales in R&D.
- The technology used in biologics is quite advanced. I had read about the similar equipments being used by Syngene International.
- The oncology and Biologics segment can surprise going forward.
- The management has definitely improved on communication. They have started sharing investor presentation since last few quarters. Hopefully they start arranging concalls soon.
- The company is available at approx 5x sales, slightly expensive.
- We need to track the operational cash flow figures. Not much improvement in last 2 years but hopefully should improve this year. Available at approx 30-35x CFO which is again expensive.
25 Likes
Free cash flow is almost nil/negative in last 8 yrs since 2012
Pharma companies need to keep on investing in R&D and vertical integration/new plants if they want to keep growing. If you look at small and mid-size pharma companies, there wonât be any free cash flow or the number would be erratic. Once they attain certain size, the numbers start looking good. Even biggies like Lupin and Sun Pharma seldom show erratic cash flows.
3 Likes
Shilpa Medicare ventures into OTC segment with the launch of âready-to-drinkâ green tea films. The company is marketing it as an immunity booster targeted at fitness and health enthusiasts. Unlike as in regular tea bags, these films wonât have any residual matter left behind and dissolves completely in water.
9 Likes
3790e00e-64de-44e0-a8e4-d468cd49affd.pdf (180.0 KB)
Finally management is listening. Could anyone from the forum attend the call?
2 Likes
Shilpa Medicare is One of the Best ARâs written, very detailed info about the business and what they are doing and how they are doing.
Also excellent info about world Pharma market, both domestic and overseas and also Oncology market and opportunity.
No wonder, these guys donât do quarterly investor calls and share all the business details once in a year in the AR.
A must read to know about the Pharma industry.
9 Likes
Interview of Shilpa Management - business Head - India Business, watch it , some useful business updates on Onchology, OTC etcâŠ
Disc - invested
2 Likes
Did anyone attend the AGM of the company and can anyone post the notes? I missed it due to work committments.
does anyone happen to have a url to this callâs video, transcript or notes?
1 Like
I was going over Shilpaâs investor presentations and also annual reports. A couple of things remain unclear to me:
- What do they mean by patent filings ? I understand what they mean by SMF, ANDA, NBE, and NDA. I think the patents are different from these. These patents (as far as I understand) could lie on a spectrum of almost no value (patenting something very specific to shilpa) to high value (patenting something which is generally applicable). Does anyone have any insight about the specifics of Shilpaâs patents ?
- In recent investor presentation, they mention having 6 out of top 15 biologics in their pipeline. Does anyone understand what they mean by top 15? Is this too 15 by sales across US/sales across the world or some other metric?
- Shilpa mentions biologicals. Does anyone understand what these are ? Are these biologics (biosimilars + NBE) ?
- Shilpa specifically mentions going after NBE assets but does not share any details. As far as I understand it, getting approvals and also the R&D for NBE is very difficult. But these can also be high growth exclusive growth opportunities due to the enforceability of the patent related to the NBE. Does anyone know details about what areas they are developing NBE in or any other next level of details?
Would help me a lot if someone who understands or tracks could help answer these questions 
They are having Process Patents for manufacturing of various APIs. Now I donât know the specifics as to how green, cost-efficient and effective these processes are as compared to the patents owned by its competitors or the out-of-patent processes. So, canât comment on whether those are real value accretive for the company.
When they say 6 out of top 15, this means that they are talking about Biosimilars. NBE are âNewâ (to be released) and so canât have any ratings.
3 Likes