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

Here are my notes from their condensed annual report (link)

Manufacturing facilities:

  • 9 manufacturing facilities (total 6 formulation plants + 3 API plants), 3 awaiting regulatory approvals (same as FY21)
  • F1 (Panelav): Oral solids
  • F2 (Panelav): Oncology oral solids (approved; commercial products are Para-IV opportunities awaiting patent expiry) + oncology injectables (awaiting regulatory approval; filed 4 ANDAs)
  • F3 (Karkhadi): General injectables (10 observations pushes back commercialization by few months; filed 15 ANDAs) + Ophthalmic (awaiting regulatory approval)
  • F4 (Jarod): Oral solids (awaiting regulatory approval)
  • Aleor (Karkhadi): Dermatology
  • Sikkim: Branded domestic business
  • 3 API plants (Panelav, Karkhadi)

US (sales: 1’666 cr., de-growth @(-23%))

  • Launched 13 products (vs 16 in FY21), filed 23 ANDAs (vs 29 in FY21), got 15 final approvals (vs 16 in FY21), filed 8 DMFs (same in FY21)
  • Top-5 suppliers in 62 products (vs 47 in FY21)
  • Witnessed steep pricing pressure in FY22
  • FY22 is the new base and company will grow by launching new products. Plan to file 25 ANDAs annually and launch 15 products (OSD, injectables, ophthalmic, derma)
  • Pipeline of 131 ANDAs
  • Filling rates have stayed at 97-98% in last 3-years leading to high reliability. Refused few customers where back end supply chain was fully occupied
  • Aleor became wholly owned subsidiary (paid 76 cr. for 40% stake; FY22 sales: 38.9 cr.). Expensed out 188 cr. in intangible assets
  • Competitive pressure in derma space has increased significantly. Aleor is positioned as a low cost manufacturer

Non-US generic (sales: 775 cr., de-growth @(-1%))

  • 149 filings
  • Have presence in 20+ countries in Europe. Mostly tender driven market
  • Australia: Few distributors control entire market. Currently have 23 dossiers commercialized or approved
  • South Africa: Ventured in 2014, have witnessed success recently. Currently have 23 dossiers commercialized or approved
  • Looking to venture in LATAM, filing aggressively in South-east Asian markets

Domestic business (sales: 1’926 cr., growth @29% vs 18% for industry)

  • 10 therapeutic areas (vs 10 in FY21), 18 (vs 17 in FY21) marketing divisions, 5500+ MRs (vs 5’000 in FY21) catering to 2.22 lakh doctors (vs 1.75 lakh in FY21)
  • Launched 5 new products
  • 1.51% market share (vs 1.4% in FY21), 3 brands in top-300 (vs 2 in FY21). 9-10 brands generating 50 cr.+ sales
  • Gained due to COVID and black fungus (azithral, amphotericin)
  • 21.5% (vs 19% in FY21) product in NLEM, 64% (vs 69% in FY21) of sales came from chronic and 36% (vs 31% in FY21) from acute
  • Have revamped complete Indian MR team and infused young talent directly from colleges. 66% of field force is under 30
  • Migrated stockist to lower inventory model which led to higher demand-pull thereby improving MR attrition
  • Registered strong growth in women healthcare portfolio

API (sales: 939 cr., de-growth @(-2%))

  • Ex-azithromycin portfolio grew well
  • Manufactures 100 APIs, 38% captive consumption (vs 33% in FY21)

R&D (15.8% of sales vs 12.4% in FY21)

  • 838 cr. (vs 694 cr. in FY21), 90% of R&D spends are targeted towards US market
  • Created a dedicated technology transfer team to facilitate seamless DMF/ANDA filing
  • Three R&D segments – formulations, API and peptides
  • Company has created a peptide R&D unit a few years back to develop peptide APIs for complex injectables. Company has built 100% in-house capability in doing characterization of peptide-based injectables
  • Intensified efforts to maximize solvent recovery, reducing consumption of fresh solvent in manufacturing process. Residue generated in the solvent recovery process, which used to be incinerated earlier, is now sent to cement factories in vicinity
  • 1200+ R&D employee strength (same as last year)
  • Facilities in Vadodara, Hyderabad and New Jersey
    o Vadodara unit is the mainstay innovation center developing non-oncology molecules
    o Hyderabad unit develops oncology and non-oncology molecules
    o US unit is focused on developing and filing oral solids and liquid products. It adds complimentary skill sets in soft gelatin based oral solids and oral liquids

Capex (482 cr. vs 687 cr. in FY21)

  • Have cumulatively invested 3’000+ cr. over last 5-years

Financials

  • Revenues de-grew by (-2%) to 5’306 cr., EBITDA margins: 18% (vs 30% in FY21), PAT margins: 10% (vs 22% in FY21), R&D: 15.8% of sales (vs 12% in FY21), ROCE (excluding new projects): 19% (vs 41% in FY21), ROE: 11% (vs 23% in FY21), Debt to equity: 0.12 (vs 0.1 in FY21)

Miscellaneous

  • Hedge 35-40% of net exposure
  • Employees: 11’974 (vs 12’160 in FY21)
  • KMP remuneration (including close members to KMP): 86 cr. (vs 88 cr. in FY21)
  • Related party purchases from Shreno Publications: 31.96 cr. (vs 26.16 cr. in FY21)
  • CSR: Spent 22 cr. (vs 17.6 cr. in FY21) (no outstanding obligations)
  • Shareholders: 108’622 (vs 101’950 in FY21)
  • Auditor remuneration: 1.51 cr. (vs 1.4 cr. in FY21)
  • Contingent liability: No major liability except corporate guarantee of 61.35 cr. (vs 96.04 cr. in FY21)

Disclosure: Invested (position size here, bought shares in last-30 days)

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