Torrent Pharma Q4 net may jump 145%, margins likely at 30%
I think that there is no momentum at all and the Abilify induced surge may be considered as one off
PS - invested. no transactions in last 30 days. Bracing for another spectacular result becoming a wash. All I can do is to remember this immortal quote and keep holding
"Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas." - Paul Samuelson
Samir Mehta on the rise of Torrent Pharma on Passion To Win
Consolidated Results in Rs. cr.:
Q4 FY16 v/s Q3 FY16 (revised)* v/s Q3 FY16 (original) v/s Q4 FY15:
Sales: 1499 v/s 1539 v/s 1539 v/s 1154
PAT: 357 v/s 348 v/s 483 v/s 130
FY 16 v/s FY 15:
Sales: 6676 v/s 4653
PAT: 1722 v/s 751
Awaiting detailed concall update. I heard it in pieces but from what I heard, I will take the pipeline of ANDA filings as big positive.
Here are my notes
Domestic business-
Launched a new anti diabetic product. Biosimilars business off to a rocking start with 2 launches.
India formulations- low exposure to regulations. Almost no effect 1-2%. FDC ban on alternatives to Chymoral may benefit Torrent. Sales force productivity focusâŚincreased 30% MR strength 2720.
Low growth in Q4 due to reduction in inventories. Inventory days have come down from 79 to 62?
Price increase on Elder portfolio have been taken in end of Q3.
US Business
Launched 5 products in US in FY16âŚTransferred one product from Sun Ranbaxy
Indrad inspection was a product specific inspectionâŚ.2 products. It went well and we hope to get EIR in a few months. 2-3 minor 483 observations were product specific.
Active projects- 121, 9 externals projects compared to 40-50 last year. 15-20 ANDAs will be approved next year.
FY17 will have 10 launches of USD 9bn= 6bn Crestor+ others 3bn.
Crestor will be competitive and Torrent will not be in wave 1. It will be a tough marketing challenge. Balance 9 launches- most of them will be before end of calendar year. All would be oral solids.
Price erosion happened for Abilify and will continue. It is still a good product. Market share as per IMS (March) 4% and actual number is higher. Abilify Sales decline can be partially offset by scale up of other products from Dahej for US business. 3 prdt approvals (site transfers) happened from Dahej. By next year we will have 10 approvals from Dahej. As pdts get ramped up we will supply 180-200cr tablets from Dahej. Currently Indrad does 300cr tablets. Dahej will free capacity for Germany, Brazil, UK, Romania in next 2 years.
Detrol LA- Torrent had 15% share in March. 4 player marketâŚshare can go up in coming months.
Nexium- Slow ramp up as brand is still occupying 44% share. 5-7% market share guidance due to complexity of manufacturing. Manufacturing cycle is 45 days. Unfortunately cant make it in Dahej yet. Pricing is not that great with 6-7 player market. Other products maybe better so wont increase Nexium capacity at expense other products.
Base business of US- 0.5bn sales can be sustainable in next 2-3 years. ex-abilify base business gone up in a good way. 4 large customers
Europe grew 10% ccâŚlarge part is Germany. Capacity constraints getting solved slowly due to freeing up of capacity at Indrad.
Brazil volume growth 8%. Its not what it was but it is still a good market. Between 2010-2013 it was growing 13%. Between 2015-2020 things have changedâŚmacro issues. Hopefully 2018 onwards Brazil may show growth. We are thr for long term.
R&D expenses outlook- FY16 was 4% of sales, 250cr. Next year we are looking at 8%. We will like to maintain it at that level going fwd as well. Absolute value terms also it will be higher. Quadrupled R&D spend for Brazil. Indian R&D will also go up- First in India pdts and first in the world, innovative delivery forms (similar to 505B2 in US) for all divisions CMS, CVS, GI etc.
R&D is priority number 1. 400 scientists hiring was started in Q1 FY16.
ANDA filings- 4 filings each Q.
Few derma projects from Zyg pharma.
Capex- 1500cr for 2-3 years including maintenance capex.
Acquisition- 300-600mn USD range but we can even do larger acquisition. We need to diversify from oral solid retail to hospital presence. Current is not a part of Gland acquisition.
Tax rate 23% MAT rate. We will be under that.
Excellent notes. Most of the points you have captured. Couple of points to add from my notes
They are entering into 9 collaborations for R&D projects with outside companies to fill the gap for capabilities of the company and fast track the filings. 3 of the products collaborated are soft gel products. This model of collaborations with R&D companies will continue as it will allow company to leverage its strong commercial and marketing skills
In US market the channel consolidation is not good for the Indian companies as there are only 4 large Customers and hence they do ask for competitive prices. However, large companies like Torrent are at advantage because of the long standing and deep relationships and good product portfolio. Torrent will have to adapt to the new environment to maintain its position.
Abilify the prices have stabilized considering current players in the market. However, if there are new entrants, prices may fall further. Company expects at least 2 new entrants in the time to come.
Unless there is strong price erosion in the abilify, company expects to maintain current EBIDTA margins
Measure taken in domestic business have started showing results and margins are likely to improve which may offset the impact of NLEM affected business (1-2% of Torrentâs business)
Torrent Pharma in talks to buy Glochem Industries for Rs 300 crore
Read more at:
http://economictimes.indiatimes.com/articleshow/52458610.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst
Torrent increasing 50% on R&D and planning to launch 10 products in US market http://www.business-standard.com/article/companies/torrent-pharma-plans-50-hike-in-r-116053000475_1.html
Next triggers for torrent-
Abilify will still generate something
Detrol will also support the US numbers.
Europe should also slowly improve.
I think the markets havenât fully priced in the execution of abilify, mainly because of lack of ANDA filings in fy16. I had bought torrent as an opportunistic bet but it hasnât moved in last one year or so.
I am in the same boat as you Rohit. What baffled me is that another good result took this nowhere. Somehow, I sensed that this will happen since there was no momentum, leading upto the result. The subsequent good concall and as much 4 ANDA filings promised for Q1 wasnât enough to cheer this stock. I am consoling myself with what Hiteshbhai used to say, that it has to run, when one wants to sell and not before.
Torrent Pharma: Strong base, robust outlook
Torrent Pharma has seen a series of brokerage upgrades, as new approvals and higher research & development (R&D) spends are expected to improve its US prospects, while higher exposure to India vis-Ă -vis peers should translate into better growth. While most pharmaceutical companies are raising their R&D spends, the increase is the highest for Torrent. It plans to raise its investments over FY16-18 by 55 per cent, with R&D as a percentage of sales expected to rise to eight per cent in FY18, from under four per cent in FY16
for more details
Disc : invested
Torrent Pharma acquires Glochem Industries Vizag API plant which is approved by USFDA
http://www.bseindia.com/xml-data/corpfiling/AttachLive/B0182FA5_C6DA_4AA8_ACB3_FC747453BD05_134343.pdf
this acquisition news came in ET last month. the article mentions deal value to be around Rs 300 crore.
Torrent Pharmaâs 2016 Annual Report is out http://www.torrentpharma.com/download/financials/annual_report/AR-2015-16.pdf
The things that stand out for me is companyâs focus on NDDS, NCE, Biosimilars and contract manufacturing
If FDA approve generic version of Crestor / Astra loose its case, Torrent Pharma will get huge market entry
@hnk_so , this news item from ShareKhan on Crestor is dated April 2015. Crestor patent is expiring in July. Now it is to be seen what happens next, whether will they get extension for seven years or not. If not, can be a boon for Torrent.
To me, seems that the news about Torrent acquiring Glochem warrants some digging before even calling this out as a positive or negative for the script.
The transaction: Going by the limited info available on the public domain (mainly print media) seems that Torrent has paid ~300 Cr. In return what it is getting is UD FDA + European regulatory approved Vizag API Unit along with the DMF of Glochem. The site is a multi-product facility for advance intermediates and active pharmaceutical ingredients (APIs).
Rational: Understandably, this is driven by the urge of backward integration for Torrent wherein existing business(formulation) will be supported by Glochemâs existing business (API). Also, in the transaction, they getting USFDA approved sites. Thatâs why media refer to it as âbuilding blockâ.
Apprehension/doubt/unanswered question: Understandable that Torrent will have in-house API capability + FDA approved site thereby enable it to be aggressive on ANDA. However, going by the DMF file posted by @pikrohit for Glochem, dont think that those are much sought after names (intend to do some investigation on the current market potential).
Will that not be a rather long route?
not sure if bang for the buck will be there in that case
At this juncture, the questions may look very naive becuase of lack of detailed info/implication available on public domain about the deal. Only meaningful info that I have is BSE announcement (link ) and on ET (Link).
Personally, I was positive while the news was around Torrent looking out for Gland. Because that by itself would have paved way for some niche business for Torrent.
Perhaps, this may be a real good news for Torrent (as perceived by market). Just that I am getting ticked-off by the fact that a company worth 300 Crores dont even have a workable web site. Throughout the day the Glochem website is giving me some forbidden error.
Will appreciate if others can share their perspective on this. (both pros and cons).
Disclaimer 1: Torrent Pharma consist of ~14% of my PF. No transaction in last 30/60 days.
Disclaimer 2: Still learningâŚ
Regards,
T@run