Results seem okay. It seems that markets were worried about extreme de growth as compared to earlier y-on-y comparable quarter. Since no immediate trigger is around I think stock will remain range bound. Trump antics will keep most US facing pharma companies under pressure in short term.
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Concall Update Q3FY17
India 34%, US 21%, Germany 19%, Brazil 11%
Focus on speciality, productivity, brand building, pipeline.
R&D-
- Signed 6 deals this year and will sign 3-4 more this year. 2+ will be in soft gelatine capsules.
- Will exceed 15 ANDA filings this year and 20 next year⌠derma, opthal, onco filings
- In years ahead 10-11 launches, post that launch rate would be same as filing rate.
- Zyg-2 filings this year and 3-5 per year in future
- Products in derma space facing pricing- 2 types of productsâŚ1) low hanging fruits- Taro Fugera type of products to get Zyg front end established. 2) high risk and high gestation period products. Mix of me too and lesser competition products.
- NCE/phase 3 ambition is limited to domestic market. Minority of R&D spend to this
Geographies
-
India- 12% growth for Q3. 77% revenues come from chronic, subchronic segment. Productivity has gone up to 6 lakhs during Q3. Specialist focus. Launched one combination drug in Q3.
- 2-3 more biosimilars in FY18
- India january general market hasnât been good.
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US- We continue to face pricing pressure in US for existing products in high single digits. Only 2 new launches in US in Fy17 which have not compensated for loss of pricing and the high base of Abilify. 10 ANDA filings in Fy17 which includes 2 derma and 2 FTFs. Will launch 3 products in Q4 Fy17. We have 21 ANDAs under review and 4 tentative approvals. Dahej- 8 approvals and expect 4 more in this year.
- Detrol LA market share- increasing capacity and will increase market share. 19% share in December.
- Renagel- Were waiting for USFDA approval earlier. Waiting info from USFDA. Remove from short term forecast. Maybe longer than second half of FY18.
- Quetiapene ER- 2nd half of 2017. Important opportunity but wont be day 1 launch in May 2017 as we have to respond to USFDA.
- Fingolimod-Torrent was party to IPR case. No comments except that did not pursue IPR route now against Novartis.
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Germany- 24% in rupee terms. Chugging along nicely. 75-80% business is tender base. Growing but challenge is profitability.
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Brazil- 35% growth in INR. Q3 constant currency growth was 12%. Launched 2 new pdts after gap of many years- First branded generic of olmesartan and trazodone. PCPM is at 107000 real compared to 77000.
Drop in gross margin sequentially- 60% due to discontinuation of Romania operation. 40% due to US pricing pressure.
Depreciation has increased. Will increase some more due to API
Low tax rate of YTD 14%. Wont be more than 14-16% for full year. Standalone benefit due to depreciation and R&D. Inventory at subsidiary level has gone up and that has caused lower tax.
1200-1500 cr investment in next 3 yearsâŚonco facility, sikkim expansion, dahej expansion doubling capacity. Not necessary that debt will go up- depends on cash flows.
Interest cost decreasing due to repayment and refinancing
Other incomeâŚforex, treasury gains of short term investments.
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Where do we find schedule of FDA inspection of pharma companies?
Any idea, when FDA inspection schedule for Torrent Pharma?
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ICICI Securities has come out with its fourth quarter (January-March) earnings estimates for the Healthcare sector. The brokerage house expects Torrent Pharma to report net profit at 209.9 crore down 8.3% quarter-on-quarter.
Net Sales are expected to increase by 3.4 percent Q-o-Q (down 0.4 percent Y-o-Y) to Rs 1492.7 crore, according to ICICI Securities.
Earnings before interest, tax, depreciation and amortization (EBITDA) are likely to rise by 3.5 percent Q-o-Q (down 32.4 percent Y-o-Y) to Rs 327.1 crore.
It expects flattish revenue as US business witnesses slowdown in growth owing to no meaningful launches and high base of generic Abilify. India business is expected to grow at 15%, and EBITDA margin would decline due to higher base from sale of generic Abilify and increased R&D spend.
Looks like they are more focused on India. Pending CCI approval Torrent has bought the womenâs healthcare portfolio from Novartis. Novartisâ womenâs healthcare portfolio had a turnover of about Rs 70 crore in India and the deal is likely to be completed within the next eight weeks.Both the companies have already signed a business transfer agreement (BTA), and the total valuation of the deal would be around Rs 300 crore.Novartis was in the process of exiting some low priority products in the women healthcare.
@hitesh2710 sir, there are no major launches until Q4 FY17 and considering the price erosion of Abilify and pricing pressure in general in US. Are you still upbeat about Torrents prospects in coming 2-3 years? Do you think it is still a good value bet for long term?
Disc: Invested
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Is it really wise to purchase brands for the Indian market, when the government has given indications of banning prescription of specific brands by doctors?
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Bad news for Torrent
Torrent has submitted to exchanges that they got 4 observations on Indrad plant and as per management these are related to improvement in processes and documentation practices.
Results are scheduled on 26th May.
You are right Akbar. Need to question management on the strategy.
I tell about the guy who sold fishing tackle. I asked him, âMy God,
theyâre purple and green. Do fish really take these lures?â And he said,
âMister, I donât sell to fishâŚCharlie Munger.â
I think these brands are for doctors and medical stores
In India normally Patient purchases medicine from nearby medical store.
Most of time Hospitals/Clinic have in house medical stores.
Are we making this push for generics as a push against brands? Govt. has ONLY said that alongside a branded drug, the doctors should ALSO list the generic one. And in such scenario, either only very informed or very cost conscious people will go for generics. Would you buy noodle abc instead of Maggi even if youâre told that they are made in the same factory?
Torrent has been given the approval for OLMESARTAN MEDOXOMIL and HYDROCHLOROTHIAZIDE -generic equivalent of hypertension drug Benicar. Mylan got the approval in Dec with 180 day exclusivity after a protracted legal batter. The drug market size appears to be $2.4B in 2016. Other approvals are Teva, Aurobindo, Alembic, Mcleod and Prinston.
I was going throâ environmental report of Torrent oncology facility coming up some time back.
Here is my summary.
1 Torrent is increasing filings next year (fy18 to around 20) concentrated towards derma, opthal and oncology
2.New oncology facility is also coming up near Ahmedabad. It should be ready by mid CY2018 (total capex is 1500cr including onco for next 3 years)
3 Torrent is increasing up the filings with external R&D and CMO
4 Point 1,2 and point 3 are very similar like alembic (even the timing look somewhat similar).
5. The difference between alembic and torrent is that alembic does the API for many of the molecules.
6.I have gone thro environment clearance report for the onco facility and have attached pipline analysis
Torrent is mostly targeting many big molecules (many are 1b USD+) in onco as per environmental filings. Because in generics timing does matter (when you launch), it is not certain whether they will launch in first to files or later (after juice is out). I have also added which molecules are common between alembic, shilpa and torrent (not a lot in common currently).
Alembic and Shilpa filings I have used the FDA DMF list.
6. Torrent is targeting some ophthalmic and gynac launches too. But they seem competitive currentlyâŚ
7. Not sure what is the strategy of filing for some of the very competitive molecules with already 10 or more torrent onco environmental report analysis.xlsx (12.1 KB)
competitors.
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HDFC and Edelwiess maintain buy with a TP of Rs 1,450 - 1460 pruned from earlier TP of 1525-1570 respectively.
Hi hiteshbhai, any view on torrent pharma after todayâs spike of 9%?? Is the correction over in pharma stocks?? Whether some of the good companies like Torrent, Shilpa, etc. can be accumulated at these levels??
hi
Torrent seems to be forming a base around 1200 levels. Lets see how it pans out. I think it will take a long time to form a base before a significant upmove. But overall it looks to be stabilising and might be coming out of the woods.
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Interesting interview :
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Torrent Pharma acquires Branded Formulation Business of India and Nepal of Unichem Laboratories Limited
http://www.bseindia.com/corporates/anndet_new.aspx?newsid=77e1bb99-3884-426f-b933-4a92faa30ba3
Paid 3600 crores for domestic business of unichem having sales of 850 crores approx. Isnât the price paid is high. I read somewhere that they may need to take some debt also for this acquisition. What others think about the valuation paid ? Can it have bad effects on balance sheet ? Kindly share your views.
This is from Sharekhan,âŚ
Torrent Pharma: Acquires Unichem Laboratories domestic branded business (Rs 841.5 crore sales in FY2017) along with a manufacturing facility in Sikkim and ~ 3000 employees for a consideration of Rs 3600 crore (4.3x sales). View: The deal valuations (4.3x sales) are in line with similar deal in the past. The management expects the deal to be cash accretive for year one and EPS accretive from year three of operations. But it will depend on the companyâs ability to ramp up the acquired business. However, the Q2 results are not encouraging and we expect the street to reduce target price given the weakness in core earnings and hangover of the debt (75% funding of deal thru debt).
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