Torrent Pharma Ltd


(Hitesh Patel) #358

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.


(kdjolly) #359

Interesting interview :


(Hashims) #360

(Hashims) #362

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


(Rohit) #363

Paid 3600 crores for domestic business of unichem having sales of 850 crores approx. Isn’t 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.


(sunilgct) #364

This is from Sharekhan,…

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 company’s 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).


(Bhaskar Jain) #365

I am invested in both Torrent and Unichem from some time. No doubt Torrent has paid a premium but for me the positives are -

  • Past track record of Torrent in gaining from domestic acquisitions
  • Not many overlapping products
  • Unichem management was very conservative. Maybe under Torrent’s wing the business grows faster

Negative for me is the age of the Unichem plants. Not sure how much maintenance capex is required yoy.


(shimoli.singhal) #366

(Rohit Ojha) #367

Torrent posted a detailed presentation for the 1st time

The highlight of the presentation is the acquisition lead growth strategy. They have been successful at integrating 30 brands from Elder and 2 from Novartis. Shelcal sales have gone up from 195 in 2014 to 333cr in 2017. Chymoral has gone up from 77 to 144cr in same period. Regestrone acquired from Novartis has shown god y-o-y growth in 2017. Lets see if they can do the same for 120 brands of Unichem.

Management mentioned that they are planning to consolidate and digest the recent acquisitions, but at the same time they mentioned that they are always looking for opportunities.

On USA- company has 77 products under development. During concall, management said that they launched 5 products in 9 months and 2 more will happen in Q4. They filed 3 ANDAs and got 5 tentative approvals. Next year will see 10 approvals and launches. The ANDA filing rate has been lacklusture inspite of R&D investments of 432cr in 2017 vs 246cr in 2016.

The presentation also mentions about 2 NCEs for emerging markets in Phase III.

Net debt stands at 4000cr.

Discl: Tracking position


(Rohit Ojha) #368


Torrent coming with qip to bid for Zentiva


(Akansha17) #369

Mutual Fund holdings of Torrent Pharma Ltd are increasing every month.

Source : https://www.rupeevest.com/Mutual-Fund-Holdings/100420


(smehta) #370

Torrent Pharma

Highlights Of Q1 FY19 Results

Key Highlights

  • Integration of Unichem into Company is now over and there has been significant reduction in the attrition level. Losa which is the second biggest brand in Pharma in India has shown substantial turnaround and it is currently growing at 12 % compare to 2 % growth in Q4 FY18. Union Enzyme which was having a negative growth rate is now showing a positive growth rate of 25 %.
  • In terms of PCP productivity , the company and Unichem together was 4.4 lakh. Currently on Torrent level it stands at 5.6 lakh. Company expect the integration to be fully done by the end of current fiscal year.
  • In terms of Biocon company have 12 OTC products at the time of the acquisition then it launch its 2 RX products and about 4 must be launch in the coming month.

Financials

Sales growth was 37 % YOY basis excluding Unichem and Biocon . Top line growth is 20 % on YOY basis. Company had done sales of 1834 Cr and generated EBITDA of 501 Cr that is 26.8 % this was achieved by increasing company R&D expenditure to 128 Cr compare to 101 Cr same period last year.

Update on Four Largest strategic market

  • India contributed 44 % to overall consolidated revenue in current quarter . The revenue growth for the quarter is 79 % adjusted for reduction in channel inventory during the transaction to GST last year and lower realization this year due to GST . Growth of Q1 FY19 is 52 %. This include the portfolio from Unichem with effect of 14 Dec-2017. Growth without the portfolio is 30 %. Company India business continue to driven by specialist. 70 % of prescription market is driven by Specialist, 75 % of sales come from chronic and sub-chronic segment. Shelkem sales was 385 Cr which is 24 % brand growth as compare to 12 % brand growth in the covered market . Kymore sales was 158 Cr which is 20 % brand growth as compare to 10 % growth in the covered market. Resistion which compay acquired from Novartis has register a growth of 59 % compare to molecule growth of 27 %.
  • US sales has reach to the level of 48.4 Mn USD which is 52 % growth in the O&G period compare to the same period last year. Growth without Biocon portfolio is about 12 %. During the quarter company lost one product which is cylrena pill where it redeem company targeted market share. In the quarter company has launched one product from EP and expect launch momentum to pick up during the launch of this year to about 2-4 product every quarter going forward from Torrent and Biocon.
  • In Germany sales was 31.4 Mn Euro up 17 % from Q1 last year. Company launch 2 products in the current quarter and goal remain strong to launch about 12 products in Germany in the fiscal year.
  • In Brazil company sales was 89.4 Mn Riyal while internal sales were flat from Q1 last year. Ethical market in value term grow by 7.7 % and company grew at 9.6 %. Sales were also impacted due to discontinuation of 1 product which is Saridon as well as increase competitiveness call azukon. However the growth has been supported by 3 new product launches
  • Company have ramped up production capacity significantly and currently it is close to 50 %. So far company have transferred 16 US products to Dahej and 5 more will be filed in the remaining month of the fiscal year. This year company have also plan to file 2 high volume product for Germany from Dahej. During Q1 company has invested 128 Cr in R&D compare to 101 Cr in Q1 of last year. Current ratio from R&D to sales is about 6.8 %. This year company aim to file 81 new products in which company has started with 2 product and company is confident about meeting the targets of current fiscal year.
  • Company currently have 41 AU under USFDA and out of these 30 are from torrent and 11 are from Biocon. Of 11 Biocon it include 5 which are with commercialized partners.

Q&A

  • What is the reason for moderation in Gross margin compare to full year number from last year ?
    • On Standalone basis gross margin has not gone down. It has increase by 1 % YOY. So as far as the synergies integration valuation realization is concerned on standalone basis.
    • On Consolidated basis is has come down because
      • There has been an additional inventory provision that has been taken in this quarter where the impact is close to 1.1 %.
      • There is an impact of BRL currency depreciation on P&L to the extent of 0.7 %.
      • There is an impact of European subsidiary to sales mix in 0.75 % and another 0.4 % impact which was seen in US . Also there is a rupee depreciation to the extent of 4 %. The price erosion is little higher than 4 % so that impact is 0.30 %.
    • So everything put together total impact is 2 to 2.2 %.
  • Going forward did the impact will continue or it will slow down ?
    • The inventory provision and European subsidiary sales mix impact was one off. So margin will increase going forward.
  • Any one off was there in other expenses as there is reduction compare to QOQ ?
    • Last quarter there was one charge of 50 Cr because of company evaluating inorganic growth opportunities so that was one off in Q4. Other expenses should remain in range of 490 to 500 Cr
  • Other than sales growth what kind of cost reduction company has achieved ?
    • There were three things in cost synergies
      • One is procurement synergy which is now has been done and nothing additional has being going to come out of it.
      • Once integration is done fully than savings will come from there also and company have achieve 50 % of that and rest 50 % company will achieve by the year end.
      • In terms of promotional spend on relative basis company would see a drop in the spend because of business similarity in both the portfolio. Going forward the cost saving will come from the rationalization of Field Foil.
  • Will Unichem will be cash Ecrative by the end of the year ?
    • Yes
  • What would be the Employment benefit expenses going forward ?
    • On consolidated basis last year the Employee benefit expenses were 317 Cr and this quarter it is 346 Cr. On Broad base generally the increment basis is from 12 % to 15 %.
  • What is the utilization in Dahej and how do company improve the utilization level ? What will be the benefit as the utilization and operating leverage plays out ?
    • Current utilization is close to 50 %. It is currently selling products for the US and has 16 products approve for the US markets. Another 5 are ready for filing this year. It is the most competitive plant in the Industry which make product with high batch sizes and mass volume product. Company is also filing products for Germany which will allow company to cover the Generic market. Currently company cover 63 % of the Generic Market in Germany. Company aim is to increase it and that helps company to increase capacity in Dahej Plant.
  • Is company is in line with the integration process or does it actually ramp up earlier from the time given ?
    • The only thing which will take time is the rationalization of field force. Company thought that the whole process would take 18 month time but the things happen fast and company will complete it by the end of the year. The rest of the pieces has already been done.
  • When would the impact of the new product launches will come ?
    • In next 3 quarter.
  • Will the tax rate will be in range of 29.5 % going forward ?
    • Yes
  • Company has always outperform the Industry growth rate so industry has come back to 10-12 % growth rate so excluding Unichem does company will achieve the growth rate above industry ?
    • Yes infact if company normalize the GST impact for the last year Q1 company growth is around 15-16 % for the TPL base business. And industry growth was also 9 % in last two quarter and as the GST get nullified it should go to 12-13 %.
  • Does Unichem is doing better than what company had acquired ?
    • Yes , the trend from April June Unichem number was close to 250 Cr than it go to 248 Cr than 246 Cr and than 238 Cr and in current quarter it has register 258 Cr. So it is progressing. On growth front and the molecule growth in June 17 it was about 4 % than it was about -5 % , Oct-Dec it was -4 % , March quarter it was -2 %, june quarter it registered 3 %. So it is improving and if one look at the top 5 brands of the unichem. They have almost clock 11 % growth compare to 10 % in the industry. The biggest brand of Unichem which is Lota which has current quarter growth of 12 % . Union brand which was de-growing has registered a growth of 25 %. While other brand like Vysilac which were de-growing has register a growth of about 8%. So overall the brand is reviving and that is company strategy. Specialty focus, Increasing Production and Brand building is company major strategy.
  • Did the growth which has come is because of largely geographic touch point and Doctor touch point ?
    • Yes it about both side they are also covering whole India and company is also covering whole India. It is a specialty focus what company is bringing in the business and focusing on the right specialty for the right brand .
  • What is the status of the US market ?
    • The public market and the transaction market in US has come down while the seller expectations are not necessary there. So company is monitoring its opportunities but company will not going to do any transaction in short run in US.
  • What was the growth number for Unichem in the quarter for domestic market ?
    • It is 33 % on Torrent base and overall it is 79 %.
  • Is there any pricing action in Unichem portfolio ?
    • Company is taking normal price increase.
  • What would be the constant currency growth for Brazil and Germany on YOY basis ?
    • From last few years Germany has been in the 15 % range and for this quarter Germany grew about 17 %.
    • In Brazil company see impact of stocking and De-stocking so growth for last year in terms of Invoice is 3 % and this quarter it is -1 %.
  • How does the Pricing in US compare to Q4 and Q3 last year ?
    • It is a product wise impact so it is happening on a competitive basis. It will not be the trend going forward. Customer in US has come up with lot more focus on supply and not less on increasing suppliers because of the large number of product discontinuation that happen from larger company. The companies are discontinuing 100 of products which make the buyers very nervous which has an impact of people who are in the market and more concerned about supplier reliability. So pricing pressure in US is back to normal pricing pressure in a range of 2-5 % range every year.
  • Why was the growth in company and unichem was low as per expectation ?
    • The overall 900 Cr was on the perspective of market numbers and internal numbers were much lower than one is indicating. Company is on the track to achieve 9 Bn at the end of the year.
  • How is the combined seasonality for entire India has changed for the full business across Q1 , Q2 and Q3 ?
    • Company does not get much affected from the overall seasonality. Company focus is that 75 % business come from the specialty and regular component asset are very low in company portfolio. Company is more stronger in the Chronic and sub-chronic segment and fluctuation is not much.
    • On overall chronic and sub-chronic segment contribute 52 % and 75 5 so company business is more long term and sustainable because it is more Chronic and Sub-Chronic. Dependency on the acute business is quite low.
  • In Unichem growth that has picked is there any element of low hanging which has picked or the growth is sustainable?
    • Six month has been over and company is putting the number in place and some of the low hanging fruits like Union Zac which is quite aggressive in the OTC segment. Also the Unichem improvement will take time because the specialist prescription come far than the General Practitioner. In substantial quarter the growth rate will definitely improve.
  • Is there a budget company have to spend on OTC products ?
    • Yes company have it and last month company had done it on Sony SAB and &TV .
  • Kindly split the Depreciation and Amortization number ?
    • Amortization will be 103 Cr and Depreciation will be 47 Cr.
  • As prices are getting sustainable in US so how will be company business seen there in next 2-3 years in US like which product company is targeting to file and going forward should company see sales run rate going upward ?
    • Company is currently doing 49 Mn in the US market. So company did 48.4 Mn this quarter and company is on the positive trend because company get moderate by fix evosion as well as new launches So company aims to launch 10 products this year. Some of them have impact due to competitive dynamics. There is only upside in the US business from the current lower
  • What are the key areas where company is filing for new products ?
    • Company is working on Oncology and Othermic . Company have file 3 products so far and going to file another 3-5 products in current fiscal year.
  • Will the top three product of Unichem will be the growth driver and what kind of growth can be seen in next 2-3 years ?
    • Loxa , Empoxin and Uni Enyme then B-Grava these are th major molecule plus company is also focused on the new extensive that company will launch with Brand extension in Uninelyme and Vyalte which will give boost to parent brand.
  • What are the new plans for the company and is there any NP discussions ?
    • These programs are mostly focused on the India market. In India market company will launch the new product and that is there on the way. On NCE company will publish the paper for some where company is working and for emerging market company have come products in stage-3. One product is also in stage-3 for India business.
  • What is the strategy behind doing ADDS program in India?
    • Life cycle extension play very key role in the Indian market. These are incremental product they are not revolutionary product for example shelkan and it has become the top brand in the country with almost the sales is very much high than the time of acquisition. That credit goes to sales and marketing team but also to the line extension that are being launched. Shelkan today is a Umbrella brand with ten sub-brands. Company has made some products for India only and that has been done by talking to physicians and understanding their needs and bonding to them using company infrastructure. So those type of thing company is doing and lot more will come. So when company review a product company review it as an existing product in India or first time product in India. Company portfolio is divided into 3 categories like first in India and first in world category .
  • What are the sustainable gross margin going forward one should look at ?
    • Last year full year number it was close to around 72 % and there was no impact of adverse currency which company is seeing in Brazil . Although the rupee currency which happen to the extend of 4 % but that is not substantial for company because there is big component of Euro and BRL in sales for company. So the gross margin will remain in the similar range from 71 to 72 %. But if things are changing in terms of currency the things can improve. From next quarter basis it should be around 71-72 % basis.
  • On Forex did company follow the strategy of Hedging itself for full year ?
    • Yes
  • What is company comfort level on the Debt side of the Balance sheet and would company planning to raise any capital for acquisition ?
    • As of now there is no plan of raising fresh equity. From current cash flow company is quite comfortable for the 1.5 year pipeline. Company don’t see any reason to raise fresh capital.
  • From 3 year perspective what is the kind of Gradient company aspire from Unichem ? Will the increase in rate of 0.25 % in BOE will impact company business in any manner ? What is the forex loss company reported in the quarter ?
    • There is no interest impact as far as subsidiary are concern
    • The top five product of the Unichem will be the growth driver for company and Unichem portfolio. Company want to ensure that they grow faster than the market growth.
    • There was no forex loss but the forex gain has come down because Q1 for last year forex gain was 105 Cr with major component of forex gain this year it come down to 27 Cr as the forex gain has reduce substantially.

(SSK) #371

http://tehelka.com/pharma-cf-agents-charge-torrent-pharmaceuticals-elder-pharmaceuticals-with-multi-crore-fraud-cheating/

Does anyone have more information on this matter?

Disclosure -tracking and interested