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
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.
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
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.
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.
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.
Exports:
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.
Plans:
BETA DRUGS UPDATE
(From credit rating and annual report 2023)
1…Performance
23% cagr growth
2…CAPEX
=The Company has invested in capacity additions at both the formulation and
API plants and is fully funded for growth for the next 3 years
=Beta has been allotted 14 acres land for 95 years lease in a special area allocated for API & intermediates in the vicinity of its
current plants which we plan to utilize for our future expansion.
3…While the company expects revenues to double in the next three years it does not foresee any major capex for the same period
4…Future growth triggers
A…BRANDED
=.30% of revenue from branded products
=. The company is now among ranked 9th in the branded oncology space and aims to be among top five
players in the next three years.
=We were among the few companies to launch Enzalutamide 160mg which provides dosing advantage to patients
B…CDMO
=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 ,Hetero Drugs, Cadila Pharmaceuticals, Alkem Laboratories, Shilpa Medicare, RPG Life Sciences, and Glenmark Pharmaceuticals
C…API
=We started with the API business in 2018-2019 as it was our firm belief that improving efficiency and quality are only possible if we have
control over the entire supply chain.
=The backward integration into API has provided us with better margins, higher yields, reduced
reliance on external suppliers and improved the quality of our products.
D…R and D
=We have a large pipeline of new product launches which address the white spaces in oncology.
= Over the next
three years Beta would be launching oncology formulations in novel NDDS platforms which would be the first of its kind in the Indian
oncology market.
=Beta Drugs is continuously increasing its spend on R&D …Its R&D expenditure almost doubled as compared to the last year.
=The company has proven experience in managing complex product development including Azacitidine Oral, Ready to Use Gemcitabine &
Docetaxel and Enzalutamide 160mg formulations.
=Beta has a pipeline of
twenty-five Oncology molecules wherein it would be either First to Launch or among the First Few to Launch. For all these molecules the
work on getting its API manufactured in-house is already in advanced stages.
E…Export
=Beta’s facilities were approved by INVIMA and ANVISA in 2023 and the company has now focused its efforts on accelerating product filings
in Latin America.
=We expect to be audited by EUGMP later this year which will open markets in CIS, Russia and other developing markets.
=Beta is well positioned to leverage its Indian low-cost manufacturing expertise to gain traction in the above-mentioned countries and
capture significant market share.
=We will continue to grow our exports business both in formulations and API over the next three years to
become a leading supplier of high-quality oncology drugs across developing countries
F…NEW segment
=1% from the recently launched dermatology and cosmetology divisions.
=The company recognised a revenue of INR3.9cr from this segment in FY23 with 12 products as of now.
=The dermatology/cosmetology segment is expected to break even in H2FY24.
Disc…invested
Sales and profit numbers are good while considering the slowdown in pharma and chemical space.
Company also approved the migration from from sme to main board. Waiting for this news from long time ago…
BETA DRUGS CONCALL HIGHLIGHTS(H1 FY2024)
H1FY24 DETAILED NOTES: • Sales for HY24 increased by 26% to Rs. to Rs 141.3 crores from Rs 112.4 crores yoy. EBITDA margins stood at 23.64%. Net profit increased by 26%
DOMESTIC OWN BRAND - 24 % growth
International API Business business - 11.8 % growth
API Business - 2 % growth
CDMO - 34.3% growth
• GUIDANCE FOR SECOND HALF: Management expects revenues for FY24 at Rs 290+ crores aided by strong momentum across all its four segments; EBITDA margins are expected to improve further.
• Beta was among the first few companies to launch Nilotinib in September 2023 and is on track to commercialize two NDDS products in Dec 2023.
• Fastest growing domestic oncology formulations company - 43.7% Revenue CAGR of branded formulations (FY21-23) - Will be the youngest Company to cross INR 100cr in oncology branded formulations revenue.
• Launch of 4 new brands - Developed 4 new API - Filed more than 30 dossiers in semi regulated and emerging markets.
• 68 products 118 SKUs - 28 New products in the pipeline – 15 NDDS formulations to be launched in the next 2 years.
Working on NDDS like nano-particles, suspensions & dry syrups – Working on off-patented products like NIB’s & PARP Inhibitors
• Domestic Formulations: Our products are cost effective due backward integration. It is helping us to get entry in a greater number of Govt & corporate hospitals.
Strengthening our product basket. It will help to get more business from each doctor.
• International Business:
o Total dossiers to be filed in various geographies – 397
o Expected to start commercialization in Brazil by FY26
o Expected to start commercialization in Russia, Belarus and Kazakhstan by FY26
o Plans to expand in regulated markets with EUGMP audit expected in Mar-24
• API Expansion Plan: • Foraying into the European market • In FY’25 planning to file 5 CEPs • Focus on export in the nonregulated, semi-regulated, and regulated market
• Plan to establish new manufacturing facility of Cosmetic-Dermatology products in next 2 years
CONCALL:
• Sales target set for FY24 was 280cr. Will do 290cr+.
• EBITDA margins are expected to improve further by Beta’s strong R&D pipeline with differentiated offerings including NDDS, FTL, and FFTL pipeline, which will help drive strong growth over the many years to come.
• Branded formulations:
o Added 5 new corporate hospitals in India – Presence in 85-90% of corporate hospitals in India.
o Plans to increase presence in Tier II – III cities – Appointing 10-15 sales people – Government District hospitals are also providing Cancer medicines, so plan to increase presence there in tier II-III cities.
• Exports:
o Signed agreements with more than 20 partners around the world
o In 2-3 years, Exports will be a major driver for the company – 2-3 years because currently registrations and filings going on. We have our major objective to file more than 200 dossiers in the coming 2 to 3 years.
o CIS Markets and Euro-Asia Audit: Euro-Asia audit will be happening in the last 10 days of December. The Euro Asia will open upfront in the entire CIS countries. We have already tied up with 2 Russian partners to register 5 products there. The same understanding is being developed in Azerbaijan and Kazakhstan as well. After this audit, we have already got the pre-audit done and there were no major or critical observations observed during the pre-audit. So, we expect the audit to go smoothly. And we will get the certification after 3-4 months of the audit. This will again open up a new front in the CIS market as well.
o We are putting our efforts in countries like even Syria, Iraq, Iran, and Algeria also.
• API:
o We are in a position to launch two more products next month, by December end, for which we are proud to say the API has been developed in-house. The total process to develop these APIs is very tough, but with all our expertise in place and being doing all these things since the last many couple of years, we are able to crack all this in the stipulated time.
o This year, we have also added one more line in the form of Kilo lab. There are many products in API which are produced in small quantities. For that, we have added one more line with a small glass reactor.
o We aim to export our API to the coming semi-regulated or unregulated markets. We have already started conversations. We have shared our prices, we shared our CS, we have shared our samples with many countries. We expect API to give a good boom in the coming months
• CDMO: We have added 1 new injectable facility with 2 new lyophilizers for having an additional extra business for the CDMO side. This will certainly reduce the timeline of the deliveries we have been telling them in the past we’ve been committing.
The new launches, which every company takes time, might be delayed by 2 to 3 months. Our focus is to give those products topmost priority. Any product which is becoming off-patent, we offer to our CDMO partners and we offer to our own domestic market as well.
• 450-500cr revenue can be achieved with current capacity.
• Dermatology:
o Today we have around 14 products. We tend to increase this product line to 35 to 40.
o This year was very great in dermatology as we are the first company in India who has signed an exclusive contract for India and Nepal markets with some Italian partners, which will be the first-time product launch in India. This has a unique combo which will be focusing only on the top 500 cosmetologists.
o We have further planned to open up our new cosmetology and dermatology plant in the next 1-1/2 years. The land and everything has been identified. The only thing is the execution has to take place. The total amount of CAPEX we look forward to invest in derma plant is close to around Rs. 30 odd crores. The main objective of derma is to do Rs. 50-crore sales in the next 3 to 4 years in own brands.
o There will be no B2B brand, all will be B2C, and this will be promoted only ethically through the doctors. Today, we have around 110-120 medical advisers on the panel. We tend to increase it to multiple folds in the coming year
o Rs. 20 crores to Rs. 25 odd crores, we will be matching the same EBITDA margins as what we are doing at the company level.
• Tech development agreement details: Transferring tech for certain countries and getting royalties and providing them APIs - There have been agreements signed with 2 companies in the CIS countries. The tech fees have already been discussed and the agreement is already signed. Maybe in another 2 months down the line, we will be having our first transfer for the tech development. Once those products are registered, after completing the tech transfer, certainly the agreement is there for a minimum of 5 years to supply the API to them as an exclusive supplier.
• Will migrate between March-May 24 to main board
• Continuous product launches planned in NDDS- Two products will be launched this month by November end or maybe maximum by December 15th. Then, there are eight more products which are under pipeline. So, the approval process is difficult. But we have already started that. Maybe the bioequivalence and everything will take its own time. So, if we see the launches of these particular further 8 products, 2 products will be launched by March, then 2 products will be launched by June or July, and then 2 or 3 products will be launched by December end.
• We will be launching 4 new products by March and 2 new NDDS which will be the first time in India. On track to commercialize 2 NDDS products which will be launched in December 2023. The second half in terms of own brands seems to be more promising with all the new launches.
• 2 NDDS Products: The market size of both these 2 products is very large. The only thing is, we have kept in mind the targeted segment. Right now, the targeted segment in this particular category has no access to a delivery system like what we have developed for these 2 products. Let’s see how it shapes up. But as far as our revenue is concerned, we are definitely expecting huge volumes and we are definitely expecting a huge market size and a transformation from those old novel products to these NDDS formulations from the doctors.
• Particular focus on expanding human resource and manpower capabilities in all different areas to support growth.
• First is that whichever product is becoming off-patent, we have started working on those products to launch those products and we are the first one to launch in India after becoming off-patent. Second is the new products which are not available in the market, like what we did with azacitidine – injection it was available, we converted into oral. Then there was one product, enzalutamide, which was coming as a strength of 40 mg. Since the patient has to consume 4 tablets, we made it 160 mg.
Beta Drugs Limited, one of the leading manufacturers of oncology medicines in lndia, announces its new setup of a "state-ofthe-art, oral suspension plant of cancer medicines. This plant is meant for the manufacture of suspensions and dry syrups of
existing cytotoxic drugs. This month, our company is poised to introduce the NDDS formulation of Megestrol Acetate
suspension, marking the first-ever launch of this innovative product in Asia
Disc…invested
Is there any fixed quantity lot for buying Beta Drugs?
dr.vikas
I think there is 100 shares of one lot at present. Disc invested, no reco
I am new investor. Can you tell me, why there is a Minimum 100 unit order qty?
