Rudra,
Please find below a link from FDA which clearly states that filing a DMF is not a substitute to ANDA & NDA:
Also, what is more interesting is DMF filings is not approved or disapproved. Actually, even I learnt this by googling it… 
Thanks Ankit.
Basically you need to have compliant DMFs filed and the facility should be US FDA approved if you want to supply for an approved ANDA for some other player for US market.
If you refer this Link: http://api-data.com/base/?q=Imatinib+Mesylate , for Imatinib DRL and Sun has their individual DMFs filed while Shilpa has it’s own.So for example DRL may use their own API for India (say for example where Novartis do not have patent cover) now if Shilpa has a US FDA compliant plant, DRL may source from Shilpa during their US launch of the generic (Hypothetical, since patent expiry is 2015 and beyond). In this case, for the finished dosage formulation DRL will use its own ANDA filing and site Shilpa’s DMF as done currently by Fresenius for many drugs.
Hope this clarifies things.
My concern was more from a competition perspective, like say in the above case will Shilpa compete with DRL or a Sun with its own formulation for Imatinib in US or will it remain only an API supplier when it’s customers are in the foray.
Rudra,
Can they enter into a marketing arrangement with larger players like Sun or DRL to cater the US markets something which Alembic did forDesvenlafaxine by tying up with Ranbaxy?
My concern
Hi Ankit,
Alembic did a marketing tie up with Ranbaxy while the NDA was their own. (http://www.ranbaxy.com/us/ranbaxy-to-market-desvenlafaxine-base-extended-release-tablets-in-the-us/)
Shilpa do not have similar filings in US. So at best it can sell the APIs to set customers (DRL/Sun etc) or tie up with others to provide APIs (for US).
In other markets, it theoretically can launch own versions, but depends a lot on marketing/distribution reach and associated cost to check profitability lift over only supplying APIs or intermediaries.
forDesvenlafaxine
Shilpa Medicare Ltd has informed BSE that a meeting of the Board of Directors of the Company will be held on April 11, 2014 to consider the proposal for offer and issue of Equity Shares or Warrants or convertible instruments on preferential basis in accordance with provisions of the regulations of Chapter VII of the SEBI [ICDR] Regulations, 2009, Section 42 of the Companies Act, 2013 and Rule 14 of the Companies [Prospectus and Allotment of Securities] Rules, 2014.
Shilpa medicare has decided to raisefunds upto Rs. 75 Crores (Rupees Seventy Five Crores Only) by issuing equity shares on preferential basis to FIIs/ FCBs/any Other Investor
The company has also decided to increase the current FII limit from 24% to 30%.
Mumbai-based private equity firm Tano Capital is looking to almost double its holding in Karnataka-based pharmaceutical ingredients manufacturer Shilpa Medicare Ltd by investing up to Rs 75 crore ($12.5 million) through a preferential allotment.
Excellent results by the company:
Consolidated Results (in Rs. Crore)
| Q4FY14 | Q4FY13 | Q3FY14 | Y-o-Y | Q-o-Q | |
| Sales | 167 | 99 | 154 | 69.97% | 8.49% |
| EBITDA | 35 | 17 | 35 | 108.48% | 0.83% |
| PAT | 25 | 13 | 21 | 97.44% | 19.61% |
| EPS | 6 | 3 | 6 | 77.94% | 1.00% |
| EBITDA% | 21.18% | 17.27% | 22.79% | 391 bps | -160 bps |
| PAT% | 14.75% | 12.70% | 13.38% | 205 bps | 137 bps |
Healthy traction of growth over the past one year:
| Q4FY13 | Q1FY14 | Q2FY14 | Q3FY14 | Q4FY14 | |
| Revenues | 99 | 114 | 136 | 154 | 167 |
For the full year, sales increased by 54% while PAT increased by 63% in FY14 on a y-o-y basis.
Company has declared a dividend of Rs.1 per share.
Q4’14 and full year Results out
For Consolidated Q4, YoY
Sales up 69%, at 167.44 cr. Vs 98.52 cr.
EBITDA up 111%, at 32.34 Vs 15.27
PAT up 98% at 24.70 Vs 12.50
EPS at 6.41
For Consolidated FY-2014 YoY
Sales up 54%, at 571.27 cr. Vs 371.32 cr.
EBITDA up 74%, at 101.87 Vs 58.53
PAT up 60% at 75.66 Vs 47.34
EPS at 18.88 Vs 12.25
OPM is declining YoY. Can someone please help me interpret the same ?
Annual ResultsConsolidated - Figures in Rs.Cr. /Standalone Results
| Narration | Mar 08 | Mar 09 | Mar 10 | Mar 11 | Mar 12 | Mar 13 | Trailing |
|---|---|---|---|---|---|---|---|
| Period | 12 months | 12 months | 12 months | 12 months | 12 months | 12 months | 12 Months |
| Sales | 95.81 | 166.43 | 264.91 | 290.29 | 318.18 | 371.32 | 571.38 |
| Operating Profit | 19.00 | 32.54 | 76.59 | 70.81 | 60.64 | 68.87 | 115.98 |
| OPM | 19.83% | 19.55% | 28.91% | 24.39% | 19.06% | 18.55% | 20.10 Correction - It was declining from 2010 - 2013. |
What was the price of preferential allotment to Tano Capital? Does anyone know ?Looking to invest in it?
Thanks Ramesh.
Hello Shilpa investors,
Please see this:
Novartis is betting big on oncology. How will it affect Shilpa? Is is positive or negative?
Also, Is this a good news for Novartis india?
Can anybody explain…
Regards,
Vaibhav
India Nivesh Update on Shilpa Medicare - June 2014
India Nivesh Inititaing Coverage; Shilpa Medicare - March 2014
Philip Capital had organised a Management Meet on 24 June in Mumbai where Mr. Vishnukant Bhatuda (MD) and Pramod Kasat (Director) attended.
From what we could gather, there wasn’t much new - no outlook on earnings trajectory etc, but mostly re-inforced the known positives in the story - for analysts from several brokerages which had started sghowing interest in the company.
1). The Formulations foray into regulated markets contracted already by leading players but subject to receiving USFDA approvals. Customers have filed ANDAs that mention Shilpa Medicare’s specific DMFs from the Jadcharla facility. It must be noted that these ANDAs might get approvals depending on the schedules of specific drugs going off-patent. No specifics were disclosed.
2). The JV with ICE Italy - will take off sometime in Fy15. FY16 will see first full year of operations
We are trying to gather more details.
Hi,
Please find below the text of Philip report (takeaways from the Philip Investor Conference) (copying only the Shilpa part) released on 30 June.
â Shilpa Medicare, incorporated in 1987 and listed in 1995, is an established supplier
of niche APIs, intermediates and formulations. It also undertakes CRAMS business.
â So far as revenue model of the company is concerned, CRAMS with sales at Rs 2.5bn
account for 44% of total revenue (i.e., Rs 5.7bn in FY14) followed by oncologyâled
APIs with 35% sales contribution at Rs 2.0bn and nonâoncology APIs with 21% sales
contribution. Recently, the company has developed capability and facility for
oncologyâbased formulations, which should drive value growth for the company in
the medium to longer term.
â Under CRAMS, it manufactures and supplies an intermediate to a European player
under a longâterm supply contract. This supply arrangement is for a single product,
which provides almost its entire CRAMS revenue. This segment is growing at >20%
annually.
â Though CRAMS seems to be the largest revenue contributor, manufacturing and
supplying of oncology APIs is the prime focus of the company. The key oncology
products of the company are â Gemcitabine, Carboplatin, Oxaliplatin, Busulfan.
Gemcitabine is the leading product in the oncology API basket.
â Key customers for its Oncology APIs are â Actavis, Intas Pharma, Dr. Reddyâs Lab,
Cipla, Fresenius Kabi, Sun Pharma. Though it supplies to domestic peers along with
MNCs, most of its oncology APIs supply are targeted at the export market.
â Looking at the CRAMS opportunity in oncology formulations, and to leverage its
strong association with domestic as well as global formulators for oncology APIs,
Shilpa has set up a formulation facility with an investment of Rs 1.5bn in Jadcherla,
Andhra Pradesh. The facility is currently producing exhibit batches and awaiting
regulatory inspections. Management expects incremental revenue flow from the
facility FY16 onwards.
â Having oncology formulation aspirations, the company has already filed 7 ANDAs
with USFDA (including 4 fillings by customers) and expects to file about 10 more
ANDAs in next 12 months.
â Shilpa has signed a technology transfer agreement with global innovators â Gilead
for manufacturing HIV/AIDS drugs like â tenofovir, emtricitabine, cobicistat, and
elvitegravir and supplying to over 100 countries. This could prove to be key growth
driver in 2 years.
â In FY14, Shilpa Medicare reported 54% growth in revenuesto Rs 5.71bn with 140bps
expansion in operating margins to 20%, resulting in a 59% growth in net profit to Rs
756mn (i.e., 13% net margin).
Business Segments for Shilpa Medicare:
|
Shilpa Medicare |
FY13 |
FY14 |
Growth |
|
Custom Synthesis (ICE) |
130 |
250 |
92% |
|
Oncology API |
120 |
200 |
67% |
|
Non Oncology API |
78 |
77 |
-1% |
|
Total Standalone |
328 |
527 |
61% |
|
Non-Standalone |
43 |
44 |
2% |
|
Total Consolidated |
371 |
571 |
54% |
|
Geographical Segments |
FY14 |
|
Europe |
75% |
|
USA |
0% |
|
Other Markets |
25% |
Triggers for the better Future:
1.USFDA Approval for API Facility at Raichur:The Raichur plant has been awaiting USFDA approval since May2013. The company received only 3 observations by the USFDA in May2013. Though the company seems to have replied to most queries raised, we cannot be sure on the timing of the approval. We think that the USFDA approval should come in the next 6 months maximum (Dec 2014). Once the approval is in place, the company is extremely confident of immediate sales coming from the US market due to the demand coming for the US market from existing customers. As the US market is not contributing any revenues, any contribution from the US market will give large incremental growth for Shilpa at higher margins. Shilpa has been planning for the US entry for years and has already filled 15 DMF. This indicates the number of products that Shilpa can easily start selling in the US market (subject to off-patent)
2.JV with ICE âRaichem to start in this year:Shilpa and its custom synthesis client from Italy have planned a JV named Raichem (51% Shilpa; 49% ICE) at the cost of Rs 140 crores. This unit is nearly ready and is expected to be operational by Dec2014. Once the new unit gets operational, the incremental business and existing business from ICE will get slowly shifted to the JV. We estimate that the current revenue of Rs 250 crores from this business has a potential to grow by more than 30% per year. As the revenues will slowly move to the JV, the growth from this segment might not show-up on the profit basis due to the minority interest being paid to ICE for their 49% held in this JV. With a Rs 150 cr of Capex already done for this JV, and additional minor capex, the total sales from this entity can reach to 450-500 crores in 3 years.
3.ARV business to start catering after the USFDA approval at Raichur:Shilpaplanned an entry into ARV by getting an affiliation from Gilliad lifescience. The capacities that will be freed by transferring ICE business to JV will be utilized for producing ARVs (Anti-Aids). Though the margins for ARV business could be lower, the huge volumes coming from them will more than compensate for the same. Currently Shilpa has a tie-up with Gilead to produce 4 products, however, management will introduce more products in time to come.
4.US Formulations Business Opportunity:The Company is also forward integrating itself with its first entry into the formulations business. To support the formulation business, the company is preparing ANDA* product pipeline where it has applied 7 ANDA and plans to further apply 7-8 ANDA per year in the US market starting FY15. The formulation unit at Jadcherla has been built at the cost of Rs 150 crores and will only be used to sell in theRegulated markets.It is important to understand that any revenues from this business can only start post the approval of the plant. Currently, the facilities are not even inspected by authorities from USFDA. We believe that it will take atleast 2 years (not before Fy16) for the facilities to start contributing to Shilpa's revenue.
US Business Strategy:The strategy of the company here is that it will not venture by themselves in the US market. The Large Generic players will use the facility of Shilpa Medicare and file for ANDA approvals from that facility. And thus Shilpa Medicare remains a contract manufacturer. Shilpa will not give exclusivity to anyone and nor any company is bounded to give orders to Shilpa. However, usually client stays for a long run.
5.Placement of shares to Tano Capital at Rs 425:Shilpa has raised capital via preference isuue to Tano Capital at Rs 425 per share. Through this issue of shares, the company realized Rs 75 crores and this funds will be used to fund the future expansion. The company is quite conservative and believes in planning the funds first for the expansion that will come later. The kind of Capacity expansion done by Shilpa is just phenomenal and we think this will continue for a while before it becomes a sizable player.
Key Risks
1.Existing Clients Loss
2.Delays in getting plant approvals for the US market
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Everyone/Shadofax,
Appreciate the effort to share and update the community promptly, on the developments.
Please always mention the source(s) of your data/report quoted by you (as some of you have done) - helps establish authenticity. Besides we must give credit to the original sources, always.
Also if these are not from any brokerage/institutional sources, but are your own observations/analysis based on data/information from a variety of sources - please also mention that upfront - preferably, with required disclosure(s).
Following small measures like this will help the community take better-informed investment decisions.
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