Alembic Pharma (Oral Solids ==> Injectables, Onco, Derma, Opthalmic)

The promoter entity seems to be doing another very complex demerger.

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Alembic playing a role in treatment of COVID19 with azithromycin. Alembic is the largest player in the estimated ₹550-crore per month of azithromycin market with approx 30 per cent market share. The company makes the anti-biotic at its Panelav facility.


Supreme Court Judgement on Environmental Protection against Alembic. Though it doesn’t have significant financial impact it still raises valid questions on the approach on the management in addition to huge salaries that they draw!

2 units of Alembic shall deposit a compensation of ₹ 10 lakhs for having caused environmental degradation

(iii) Darshak Private Limited - the eight respondent; and

(iv) Nirayu Private Limited - the ninth respondent.

Present-day API – I and API – II

Full Judgement can be accessed here:


Ashwini, Ayush:

  • Alembic Ltd supplies APIs (and maybe even intermediates) to the Pharma business (I guess its to both the divisions - International and Domestic.)

  • The Alembic Ltd plant is located in the Alembic campus itself. Over last few years there has been talk of dismantling it and using the land for Real Estate development (done by the other promoter group entity under Alchemy brand.) But the plant is intact so far.

  • Regarding Shreno Publications - Please see this website - The Light Publications building is situated right on the opposite side of Alembic campus’ entrance. I understand that Alembic Pharma buys packing materials from Light Publications.

  • Light publications website says division of Sierra Investments.

  • Purchase of 11 Crores in previous year from Sierra Investments seems to tally with this. I guess subsequently Light Publications have been moved under Shreno Publications entity. Hence the 23.5 Crores purchase attributable to Shreno Publications.

Source: Currently staying in Vadodara. Light Publications is a known local brand. All the facilities / buildings can be seen personally.


Page 68 of 2018-19 Annual Report: [Section is General Shareholder Information].

The Company imports API/Intermediates/Key Starting Material (KSM)
which may be prone to commodity price risk. The Company does not
do any hedging except strategic procurement at times.

China is not mentioned specifically. I don’t know if the import trade data tracking through sites like Zauba still gives company wise details. Without customs data, it would be difficult to know.


While it is your job to only wear the “forensic purist hat” and blast away. It is the job of experienced investors invested/interested/tracking the business to point out the obvious unsubstantiated nature of certain allegations.

Even as a devils advocate job is being done to perfection, it should be done with full responsibility. Any insinuation that falls flat on “data” from that business must be avoided. Because the position/role of a forensics auditor in VP is going to become more and more powerful, and more & more independent - so that individual biases of senior investors/or prolific contributor(s) to a thread are properly balanced out.

Coming to this part :slight_smile: how come they are always there with the right API at the right time, manufactures the API, and makes huge profits, and implied …gets away with that?

This is easily demolished by a fact known to everyone who follows US Generics Pharma - that it is the most tightly regulated industry - no one can just make an API out of the blue…it must have filed for the API years ahead in time, got the approvals in place, got the plant inspected without 483 observations, and only then can make shipments.

So paper profits accruing from zero API filings for product, or zero shipments of product cannot be faked. I am sure that is obvious to someone like you too. Now I have seen this post after 2 weeks, so I am commenting now. Others investors/interested in Alembic may not have even seen this post in last 2 weeks busy as we are protecting our backsides :wink:

So lets NOT get carried away with playing the devils advocate role to perfection. Let’s stick to facts/data that CANNOT be disputed, which you are doing a great job of, and the community is grateful for that. Please continue to play the forensic purists role to perfection.

Let’s be extremely careful with insinuations - minus substantiating data - that’s what it is. If we are not quick to defend/are unavailable for some reason, that can influence newbies the wrong way given the weight of other substantiated data-points? Also it’s “unfair” to the business in question.

[PS: we need to get @pratyush to check if notification emails are being sent out properly for everyone (in my case I was not getting notified of new posts in my threads of interest due to some tech issues, resolved now]


Going by the estimates in this article, retail sales of Azithral (Alembic’s Azithromycin brand) have a significant upside.

Some excerpts from the article.

According to data with the research firm IQVIA, India sold 12 crore strips of the drug last year, which is around 60 crore tablets (an average of 5 tablets a strip). The top brand here is the Vadodara-based Alembic’s Azithral.

It is the largest player in the azithromycin market, estimated Rs 550 crore a month.

Alembic, which also claims to be the largest player in selling active pharmaceutical ingredients (APIs) of azithromycin to the world, holds 30 per cent market share in selling the finished tablets of the antibiotic in India.

“Our three manufacturing plants for the azithromycin APIs produce 20 tonnes every month, which can be expanded to 40 tonnes. Generally, one crore tablets are manufactured using 5 tonnes of API,” Rajkumar Kumar Baheti, Chief Financial Officer, Alembic Pharmaceuticals, told ThePrint.

Alembic exports all of its APIs. For finished tablets, the company, going by the estimates, can manufacture around 10 crore tablets per month.

Disclosure: Invested


Alembic Pharma receives 4 observations from USFDA for Panelav facility

None of the observations are related to data integrity or repetitive in nature.

“The company will provide comprehensive corrective action report to address each observation. The company is committed to maintaining highest quality standards that meet USFDA standards,”


My logic behind investing in Alembic
Assuming, demand for Azithral continues for at least a year, retail sales in India could potentially be 2784 Crs (10 Cr tablets * INR 23 per tablet * 12 months). Out of this 2784 Crs of sales we need to deduct distributor & retailer margins, etc. One can compare this to compare this Alembic’s TTM sales of 4326 Crs (Although not strictly comparable, it does provide some insight anyway).

And this is just domestic sales. International sales could be higher or could be significant.

What are the things that could go wrong?

Alembic might as well turn out to be an undertaker in a plague, in which case, the upside could be significant.

Valuation - Before the markets started tanking, the market was pricing each share at INR 674. The price at the current time is 631, which is slightly below the “pre-crash” price. I believe the market may not be factoring the potential upside from Azithral sales this year. In effect, there is a significant option value embedded in the stock’s current valutaion.

Request other valuepickr members to point out anything else that I might have overlooked or might not have given enough weight to.



Audited financials firstly are released much later, possibly July after 1st qtr results of following year
Audited financials are for main purposes a stamp of auditors that internal financials are accurate and systems are followed even then lot of audited financials miss system weaknesses
Data is available now that probably is 90-95pc accurate, why would you not discuss it now ?

Alembic, which also claims to be the largest player in selling active pharmaceutical ingredients (APIs) of azithromycin to the world, holds 30 per cent market share in selling the finished tablets of the antibiotic in India.


Result is good :+1: :+1:
but dependency of raw material on china could affect the company result in near future??

Excellent results

Rs crs Q4 FY 20 Q3 FY 20 Q2 FY 20 Q1 FY 20 FY 19 FY 18 FY 17 FY 16
Topline 1,208 1,209 1,246 949 3,935 3,131 3,134 3,162
EBITDA 329 332 342 233 875 642 615 1007
EBITDA Margin 27% 27% 27% 25% 22% 21% 20% 32%
Net Profits 225 234 246 124 584 413 403 720
Net profit margin 19% 19% 20% 13% 15% 13% 13% 23%
R&D spends 185 146 174 140 500 410 430 320
As % of sales 15.3% 12.1% 14.0% 14.8% 12.7% 13.1% 13.7% 10.1%

Q4 FY 20 numbers include a net exceptional item of c. -Rs 10 crs

Growth was led by US generics growing 84% YoY. India formulation grew 13% YoY and RoW grew 63% YoY. APIs degrew -33% YoY.
10 ANDA filings for the quarter and 25 ANDA filings for FY 20

There is a investor call at 4 pm today.


PPT Q4 FY 20 N FY 20.pdf (3.6 MB)

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Q4 Alembic Concall Notes

Didn’t connect for first few mins might have missed a few points, others please add.

US Business:

  • Base US Business - 70 Mn $ per Quarter since the last 3 quarters. Expects it to continue for the next 3-4 years
  • Bulk of the competition is among the Indian companies in the US Market
  • 15 ANDAs in the US. Don’t foresee any demand changes for next 3-6 Months
  • Price erosion in the US Market is in lower single digits
  • Significant gross margins improvements – Product Mix, Deprecation of Rupee
  • 60% (air) shipping ratio maintained. Will add a bit to the cost

Domestic Market:

  • Business Turnaround is sustainable in the domestic market for the next 3-4 Quarters
  • Product Launches in FY 20 – Haven’t been any large launches in domestic business
  • No price increase is expected of Azithromycin with govt capping
  • 60% (air) shipping ratio maintained. Will add a bit to the cost


  • No impact from the Lockdown foreseen as of now – Marketwise no changes
  • Women’s Healthcare, Orthopedic might see lower demand but it is expected to recover after the lockdown
  • 70-80% capacity utilization currently

Market Share:

  • No loss of market share in Focused Brands in the last 4 years
  • Generic Portfolio we are defocusing hence lost Market share
  • De-growth on API business – API contract with 1 particular MNC has become Zero


  • 15% overall raw material dependency from China
  • 70% normalcy of supply chain from China since March
  • Raw materials level should be ideally of 3 months, but that’s never the case


  • Debtor Days – 68 Inventory Days – 93 vs 88 YoY
  • Capex 700 Crs for next year with an increase of Debt not more than 200 Crs
  • Guidance of R&D – 700 Crs vs 650 Crs (PY)


Upgrade to BUY from HOLD
Revised TP of Rs 830 vs 640
Top Notch US performance
Recovery in domestic biz

Upgrade to BUY from ADD
Revised TP of Rs 840 vs 585 earlier
Raise FY21E EPS by 39% and FY22E EPS by 29%
Well positioned to generate Free Cash Flow

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IIFL on Alembic Pharma
We increased our US sales estimate for FY21 by 24% that, along with higher margin assumptions of 100-150pa and INR/USD rate of 76 (vs. 71 earlier), leads to an EPS upgrade of 23/10% for FY21/22ii
Maintain BUY, TP Rs 800
@CNBCTV18News @ekta_batra

Alembic Pharma Monthly, Weekly & Daily Chart. [PriceAction] BULLISH on all time frame. [EMA] ADX_DMI also confirmed last week BREAKOUT. Looking good for long term investment after price cool down a little bit.

Note: View is biased as already invested.

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