Beta drugs is small cap company with mcap of 380 cr.
= It is a pharmaceutical company specializing in branded generics in niche oncology therapy. The company is listed on National Stock Exchange’s Emerge platform for small and medium-scale enterprises. Company is primarily focused on new onco molecule.
=As per recent concall ,promoters have shown interest for listing company on main NSE platform in near future
Business has four Verticals
…Export@15% revenues
1…CRAM @50%
2…Branded business @25%
2A…injectables@55%@direct hospil
2B…oral@45%@distributers
3…API@18%
4…R and D
1…25% of the products are manufactured under own brand (Adley pharma)
2…75% under other entities’ brand names;
…
MOAT
1…LOW COST PRODUCTION
=We are one of the very few backwardly integrated companies
2…LESS CAPEX REQ. AS COMPARED TO NATCO,SHILPA AND SO BETTER ROE
Because
A=we have only onco products
=Very few(probably only) company in india is totally focused on onco
=onco.products are less in quantity and more costly
=Shilpa and natco have antiviral,cephalosporin lines also
B=They have main business in usa also,so they require huge asset
=So our ROE is better as we have asset light model that is focused on onco products
3…FOCUS ON NEW PRODUCTS UNDER CRAM/CMO
=We are continuously adding new products as they become off patent
=We just tell big companies that this is our basic price.What attracts them is that we are continuously developing new molecules .
4…BRANDED BUSINESS
=Hospital network
=Doctors prescription
=Earlier our few team members have worked for Torrent and DRL .
So, we know the nitty-gritties of the market and how we can capture those hospitals. However, the strategy for different-different hospitals is different. So, our market intelligence is good.
=The team which we have recruited in last couple of years those are all experienced people, and they are having very good association with the chief pharmacist of those hospitals. We have a target list of
hospitals. We have the market intelligence, what exactly is happening in those set of hospitals,
and then we are targeting it accordingly.
=Before last year, we hardly had any presence like around 40 to 50% of the corporate hospitals. But with our efforts last year, we have made our presence in almost all the corporate hospitals.
=Some states we are doing
pretty well, like we are in top 1 to 10 and some states we are picking up very nicely
=We have certain brands which have
become number one position in India
5…R AND D
= We are totally a research and development-based company.
= We focus ourselves towards
developing new molecules to be the first one to come up with the molecules which are
becoming off-patent both in API and formulations.
= So, we are not based on the raw material being procured from outside parties. The strategy is very simple and clear.
=If the molecule is getting off-patent, the API needs to be developed first, the batches need to be taken for formulations first and then when they are becoming off-patent, it should be launched as the first one to be launched to Indian market
=Our R&D is the main key success towards our growth.
…
FUTURE GROWTH
1…API plant started in 2017
2…Set up Oncology Plant in UZbekistan in 2018
3…Incresing hospital network of branded business
4…Our major focus towards TKIs and our own API expansion
…
FUTURE FOCUS
=Management expecting 30-35% growth in all 4 segments
=The focus actually is that we intend to grow in all the segments.
= Branded business
The number one focus is that
we need to establish a domestic market and we need to be in the top three players where our own branding is concerned.
=API
Then the second aspect we look forward and the growth look
forward is in the API business. We intend to get an EU approval by next year end, and we need
to increase our margin, increase our revenues by exporting API to other countries.
=Export
Then the third thing we are planning is that we need to establish ourselves well in the international
market. We are filing dossiers in
many countries. So, our main foray is that we should cover the entire South East Asia market
and the Latin America market, with keeping all the professionals in place, hiring a team who will particularly taking care of the CAI for Africa and for Asian market.
=CRAM
We planning to increase our customer base .We have just added Reliance and now we are in talks with Fresenius Kabi and
Lupin. So, they both have planned audits maybe in June.
…
GROWTH ROAD MAP
1983=Laid the foundation of Adley group by Late Shri Vijay Batra
(adely api)
2007=Entered into the Oncology market
2008=Oncology unit in Adley formulations Pvt Ltd
2011=international market
2014…Set up a new “state of art” manufacturing facility for
Oncology formulations- Beta Drugs Limited
2015…Developed In-house Albumin bound Paclitaxel
2017…Commenced In-house API plant- Adley Labs
2018…Set up Oncology Plant in UZbekistan
2020…Setup In-house PFS facility
…Launched GEM-RTU, ADLEAP (Enzalutamide)
…Launched 1st Indian Brand of Dasatinib BEEDAN
2021…Launched 1st Indian Brand of Sunitinib ADSUNIB
2021…As of today, we don’t require any CAPEX. We have a leverage till now and we can do a
turnover of more than around 250 crores at the current scenario
After 2-3yrs…After reaching 80-90% capacity,we will add new capacity for injection
We have already purchased land for future expansion
…
BUSINESS VERTICALS
.A…R AND D
=No of scientist
As of now, we have total 4 to 6 members in R&D team and out of which 2 are scientists and 4
are into formulation segments. These have an experience of more than around 20 to 25 years of
developing new products. Some have come from Panacea, some have come from Natco, one
has come from Sun Pharma. All these put together, this team has consolidated the development
of new products. And taking it forward, we do have a plan of increasing our R&D capabilities
and taking this current count to 20-25
=R and D Expense
Question on concall =
If we look at our R&D expenses which is around 1.8 CR and size
of the R&D team which is 4 to 6 people. The kind of area and the kind of molecules that you
are working on they are pretty complex. So can you throw some more light that with such a low
R&D expense and such a small team, how are we able to do this kind of product development
and also launch just after molecule being off patent?
Answer from management=
Actually the team we have right now, they are the most advanced team, and they have onco experience in manufacturing and R&D for more than 15-20 years now.
So, almost all the product complexes are same. So, they just have to change the molecular
structure in terms of API. And in formulations they just have to take a batch and then they
have to do the comparative study with the innovators. In both the things they are quite competent
enough and with least amount of expense, we can do all these things.
=Plus, we have per product budget also which we allocate at the time of shortlisted product. So, the same amount of budget being allotted to the API team and the finished formulation team. So, there R&D
team will take up the API one and then the R&D team will take up the formulation one. And
we try to consolidate it at a very less expense that this is the total amount of budget is there,
and we have to develop in this particular thing
B…DOMESTIC MARKET
It is through hospital network and distributors
.C…CRAM
=The CRAM business we right now have established ourselves very well in the Indian market.
=Any company who wants to launch oncology, supposing tomorrow mankind wants to launch
oncology. They will approach us. They have already approached us and now we have a base in
clients as Intas, Zydus, Cadila, RPG, Alchem, Torrent, Panacea, Hetero, Reliance and Caplin
Point. We are having further audits of Lupin, Cipla, and Fresenius Kabi in the coming 2-3 months.
.D…INTERNATIONAL
=we have our international market which is our prime focus area, and we are putting a lot of our efforts
towards this particular vertical
=In 2019-20, we did exports of around 7.5 crores which increased up to 17 crores last year. We have cleared the audits of many countries.
=Last year we just registered
ourselves in Tanzania, Rwanda, Ethiopia, Syria, and we have got a pre-audit done for PICs and
Invima Colombia. We are all set to file our applications in Thailand, Malaysia, and Columbia
to go ahead with the PICs.
=The future of export is very good, but export is a time consuming thing,
=Right now because of this
pandemic situation, the auditors are not willing to come to India, so we might expect the audit
to be delayed. Once we get the audit through which we have already taken one of the clients as
a consultant, they have an experience of getting many plants audited and EU approvals. Those
clients only are taking this Invima and PICs forward. We expect like by 2022 end all our major plant will be PICs and Invima approved, and we will be entering these markets by 2022-2023.
=We have filed our dossiers in Ethiopia, we have filed more dossiers in Myanmar, we have filed
our one dossier in Vietnam, and we have filed one dossier in Thailand and now we are
continuously filing dossiers in Latin America
E…API(2017)
= We are one of
the few backwardly integrated companies in India. Our focus is equally distributed among API
business also.
=API is one thing which is like our major prime focus. This plant we came up in 2017
=Gradually we are increasing the capacity of this plant from two reactors, we have increased the
capacity to five reactors.
=We got a very good jump last year. If we talk about the standalone
revenues of Adley Labs, the revenue has been doubled and the loss-making company has given
EBIDTA of 19% last year.
=Now in API, we are also planning to file the first DMF by October 2022
in Europe. We have already started the process to take up to the level of EU GMP the API plant as well. In API, we have further strengths where earlier product trend was only 12 to 15 products, but now it has gradually increased to around 24 products.
=We want to be 70%-80% self-reliant
on the API front from our backwardly integrated company, so that it can support formulation
business on a much more higher scale.
= The only idea of coming onto the API was that especially in oncology, most of the RM (Raw Material) was at shortage. That brings us an idea
of coming out with our own facility
…
POSITIVES
1…Promoter buying from open market
14.11.20@6400 shares
1.9.20@50400 shares
2…Promoter experience
=The promoter’s experience of more than two decades, his strong understanding of local market dynamics, and healthy relationships with customers and suppliers should continue to support the business.
3…RENOWED CLIENTELES
Customers mainly include renowned pharmaceutical companies such as Zydus Healthcare Ltd, Intas Biopharmaceuticals Ltd, Torrent Pharmaceuticals Ltd, Cadila Healthcare Ltd, and Hetero Drugs Ltd
=.49 Indian companies.
=88 sku
=125 distributors
= 70% of Corporate and Private hospitals
=govt hospital
=Strong base of more than 600 Doctors
4… 1st to launch molecules in india
=Beedan
=Adsunib
=karezus protein shot
5…NEW PRODUCTS
A=NIBs, NDDS & PARP inhibitors
B=TKI
=To launch APIs in the cytotoxic segment
• To be the first few players in the entry of new TKI’s
• Enhancing the portfolio in Hematology segment
• Already launched 5 new APIs in 2020-21 and working to
launch 3-4 products every year
• Company is aggressively working to file its first DMF
(Europe) by October 2022
=Beta Drugs is strengthening its Oncology portfolio by in-house development of new products
like Tyrosine Kinase Inhibitors (TKIs) and improving existing products through New Drug Delivery System (NDDS).
C=6 Novel Molecules launched in FY 20-21
D= Protein Shot.
We are set to launch one of the protein shot, the protein is a
requirement for all the onco cancer patients. So, we are all set to launch one protein. Right now, the market availability of protein is in the form of powder. So, we have made an
innovative technology and we have tied up with a Singapore company where we have got this product and we will be launching it in another two months down the line. So, this particular product will be a mass product, will not be carrying a huge MRP, but it will be a mass product
so that it can be approachable and being consumed by almost all the patients
6…Beta Drugs in Oct, 2018 entered into a joint venture with SILUJIN Private Co. Ltd, to manufacture Oncology drugs in Uzbekistan. Beta Drugs is first Indian company to manufacture Oncology drugs in Uzbekistan.
7…Leading position in Oncology formulations for 2 products
=We have certain brands which have become number one position in India.
=The number one brand is Adcumin, which is being promoted as a supportive care product in oncology.
=Then the second brand is Dasatinib where we are the number one generic company product in India.
8…Ashutosh Shukla, who is VP Sales and Marketing and have an oncology experience of
more than 20 years. He launched Fulford Oncology and worked with Dr. Reddy’s Oncology
and headed Torrent Oncology
9…Why no dividend
=For the dividend thing, actually, why we are containing this cash is that we want to enter the international market and in international market a lot of expenditure is required.
= Once we are triggering any audits, we need to file the fees. And Columbia if we take an example, the
official fees is $30,000 and per product registrations is costing too much. We have to enter
around 8-10 markets, we need to have a cash liquidity with us, number one
10…Capacity utilization
=In API ,current utilization was close to around 70%-80% but since we have increased the number of reactors, three reactors we have increased, so the capacity utilization is around
40%-50% by increase of those reactors.
= And in formulation, the current scenario in oral the capacity utilization is around 30%-40% and in liquid injectable right now the capacity utilization is around 60% and in lyophilized it is around 90%.
So, I guess we don’t need much capacity expansion at the moment
…
RISKS
1…Large working capital requirement
=Operations will remain working capital intensive over the medium term: gross current assets were 206 days as on March 31, 2020, driven by inventory and receivables of 62 days and 129 days, respectively.
=However, payables of 60-90 days support working capital.
2…Intense competition continues to constrain scalability
3…Exposure to regulatory risks and raw material price volatility
The pharmaceutical industry is closely monitored and regulated and as such, there are inherent risks and liabilities associated with the products and their manufacturing. Furthermore, the price of key raw material (active pharmaceuticals ingredients) is volatile in nature. Therefore, susceptibility to the risk of variations in commodity price persists.
…
FINANCIALS
1…Cfo=pat
Cfo=25cr
Pat=26cr
2…fcf% of sales
2021= 11.41%/ 5.76cr capex
2020= Negative /15cr capex
2019= negative /20cr capex
2018= 17.64% /11cr capex
3…ROE
2021=20.5%
2020 =16
2019=20
2018=20
4…OPERATING MARGIN
Stable @avg 19% in last 4 yrs
5…PAT(avg) growth rate
Last 3 yrs@19.68%
6…Sales growth rste
Last 3 yrs@31%
7…D/E RATIO
0.13
8…debtor days
2020=128
2019=139
2018=104
9…Promoters sallary @8.4% of pat
=Sallary 2020@1 cr
Pat 2020@12cr
…
ABOUT COMPANY
=Beta Drugs is a part of Adley Group. Adley Group was founded in the year 1985 by its promoter Vijay Batra who has more than twenty five years of experience in manufacture of pharmaceutical products in India. The Company is a pharmaceutical formulation manufacturing company engaged in developing manufacturing and marketing of drug products for domestic and international
customers.
=The Promoter Vijay Batra took over the company(Beta drugs) from Kiran Goyal Deepak Kumar Prince Bharti and Rohit Bansal in the year 2014
=Subsequently the company was converted in to public limited company and the name of the company was changed to ‘Beta Drugs Limited’ on August 11 2017 .
1=BDL(Beta drugs limited)
=promoted by Mr Vijay Batra, BDL manufactures oncology products such as anti-cancer tablets, capsules, and injections (including the lyophilised variant). Facility is in Solan (Himachal Pradesh)
2=AFPL(formulation)
=since 2008
=it is a wholly owned subsidiary of BDL It was a proprietorship firm of Mr Vijay Kumar Batra and was acquired by BDL. The company has been manufacturing pharmaceutical drugs in the form of tablets and injectables .
3=ADL(api)
=since1992,
=ADL manufactures active pharmaceutical ingredients and was already supplying to BDL. In October 2019, BDL acquired ADL in the light of backward integration and to create synergies.
Plants
1…Beta drugs limited,.@HP
=WHO GMP
= Audited by most indian big pharma
2…adely formulations ltd@HP
=WHO GMP
=international accredited
3…Beta uzbekistan plant
=jv with silujin
=first indian comp. to manufact oncology drugs
4…Adely lab ltd(api)@ punjab
…
At last,
…I was surprised to find out from some scruttlebutt with my onco friends that its product adcumin and addcure are routinely prescribed in cancer hospitals
Disc…invested
This is my latest portfolio update
these guys to bo avail. Eventhough there are so much things on the overhang, This particular management pacifies me somehow. They know their past,They are very confident of what they are trying to do. They seem investor friendly (sadly not yet proved) . As per concall they were saying that they might be headed for approvals in various countries and also fda, when they have sufficient funds and are capable of actually doing them. What attracts me is their attitude of being frank with what they are capable( not pulling every string and the company down). Maybe it will turn out to be a golden egg, Let’s see