Beta Drugs Limited

Beta consolidated revenues from operations for FY23 jumpe d by 24% to Rs. 227.tL crores from
Rs. 183’84 crores compared with the same period a year ago. This increase was mainly due to
31% growth in Exports and 24% growth in Own Brand sales. While Apl sales to third parties
grew by 65%.

EBITDA excluding Derma impact increased by 28% to Rs.55.92 crores from Rs. 43.7 crores
compared with the year-ago period. While EBITDA margin expanded to 25.04% from 23.g%.
lmprovement in EBITDA was on account of higher sales of branded products and exports along
with the positive impact of backward integration. However, considering the impact on Derma,s
business the consolidated EBITA stood at Rs crores.

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Stock trades at 22.6x P/E trailing. Management guiding for doublin revenues in 3 years. While EBITDA margins are expected to improve further to be in the range of 25%-26% (from 23% in FY23).

Company continues to be net cash with 33% RoE





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Hello… I have some questions… hope someone will help me

  1. What is the moat of this business? Till what I could understand, its moat was its backward integration, thus it was able to offer lower pricing and had less risk of raw material price hikes. But if there is such high market opportunity (upwards of 200cr as indicated when the management guided for doubling revenues in 3y) then why don’t other players eg. Natco perform backward integration? (Natco has 938cr in cash and investments as compared to Beta’s 20cr)
  2. The company’s model for APIs seems fairly copy-able; what is the moat for that and how is the company able to sustain such high growth in API? What am I missing?

Forgive me if my questions aren’t valid… this is my first post :sweat_smile:


Question is valid. One moat that I am aware of is the regulatory approvals from various export markets it serves. Any API going in to regulated markers need those approvals in it manufacturing plants and the associated supply chains. So even if the API formulations are copyable, it is not easy to secure regulatory approvals. This is why it is a big deal when Beta secures an ANVISA approval.

I am also interested in knowing if there are any other moats.


By reading Natco’s and Beta Drug’s con calls, it seems that the established doctor and hospital network is another moat for Beta Drugs…

A question was asked regarding Natco losing market share in the oncology segment. The answer given was high competition and lack of reach in the doctor-hospital network for oncology; (Nov 2022 concall; Natco’s quarterly oncology revenues were ~55cr)

Beta Drugs, on the other side, seems to have a presence in most corporate hospitals and is building a presence in railway hospitals (as per May 2023 concall)

But this might only be a temporary moat as the CEO of Natco is confident of regaining market share in the oncology segment via acquisitions…

Also, till what I understood the CDMO oncology business is facing headwinds, that’s why companies such as Shilpa Medicare are planning to diversify into other segments; this creates space for Beta Drugs to grow


And if I am not wrong Natco and Shilpa both have ANVISA approvals

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If we’re trying to find moats in pharma, we need to look in 2 places - manufacturing and sales.
Manufacturing moats could be a unique product (preferably patented), unique process (complex or patent protected), or cost advantage (lowest cost producer).
Sales moat is mainly some sort of exclusive arrangement to supply, possibly through regulatory restrictions. Or it could be brand value, especially in OTC drugs.

The kind of business Beta Drugs is in, there is intense competition. Their product portfolio is non exclusive. They do have some unique products, but they aren’t blockbuster. In my opinion their success will depend on how aggressive they are with sales. This is the unfortunate truth of most formulation companies in India. I’m personally not a fan of aggressive sales in pharma, but that’s another discussion altogether.

To summarise, they might do well, but it’s by no means guaranteed.

Disclosure - Not invested.


Also this is a possibility. Could cause problems for formulation companies.

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Yes I share the same view; just that the management is guiding for doubling revenues in 3 years (mentioned above in this thread) and till now has managed to deliver on guidance given in the past…
Don’t think aggressive sales is the sole reason behind an excellent past growth record and a similar guided future growth estimate… there must be something more which we are missing

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Competition will not from established players but from niche firms focusing on oncology.

I believe oncology will undergo structural change with change in lifestyle, pollution, etc. Obviously this wont happen in 2 - 3 yrs.

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BETA DRUGS.docx (32.5 KB)

Beta drugs analysis.
Looks like an incredible long term opportunity


NATCO has ANVISA approvals in place. From this, I guess this is not a solid moat, perhaps just a differentiator.

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This company looks interesting - fast-growing and profitable. They have not registered their products in highly regulated markets such as the US, Canada, Australia, Japan, and the EEA. Hence, the regulatory risks (e.g., FDA issues) are minimized.

Some notes on Beta Drugs:

BETADR derived ( Sep 2023)

~30% of revenue from branded products;

48% from contract manufacturing for leading companies like Hetero Drugs, Cadila Pharmaceuticals, Alkem Laboratories, Shilpa Medicare, RPG Life Sciences, and Glenmark Pharmaceuticals;

13% from exports;

8% from APIs; and

1% from the recently launched dermatology and cosmetology divisions.

The dermatology/cosmetology segment is expected to break even in H2FY24.


Though export revenue clocked 44% CAGR over FY19–23, it remains in the nascent phase (contributed ~12% in FY23).

BETADR currently derives ~8% revenue from the API segment, The company derived ~28% of revenue from exports in FY23.

CDMO Segment:
The CDMO segment accounted for 48% of revenue in FY23 and clocked 20% CAGR over FY19–23. Over the years, it has developed strong partnerships with its partners. BETADR has more than 50 customers in the CDMO segment. Some of its marquee clients are Intas Pharmaceuticals, Glenmark Pharmaceuticals, Reliance Life Sciences Pvt.

New Business: dermatology and cosmetology
The company recognised a revenue of INR3.9cr from this segment in FY23 with 12 products as of now.

  1. plans to launch five products each in FY24 and FY25 and seven products in FY26 including four-to-five NDDS.