Bad news taken down the stock by 20%.
Any views on the news?
āLincoln Pharmaceuticals Ltd is exporting medicines to many African countriesā¦one of the highest selling product is Chloramphenicol Sodium Succinate injection. Tanzania drug Authority ( TFDA) has banned import of this product and companyās registration has been cancelled,ā the company said in a regulatory filing.
It further said: āIn this circumstance a huge quantity dispatched to Tanzania has (been) kept on hold there and the authority has issued a notice to destroy the product.ā
Due to rejection of registration, a large number of raw material and packaging material stock is piled up at factory, and this adds to the loss amount, it added.
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What is the reason for the ban?
Why they canceled company registration?
this stock is taking a massive beating in the trading sessions.
I think for the next five trading sessions this will go into a LC lock.
Update : As pointed out, the above link is an old one. I did not realize the date on it, and assumed it is the same news as it seemed like it with the headlines and all. If anyone else is able to find out the reason for the ban, much apprecaited.
Kermitz,
i think the link what you posted is old oneā¦24TH JAN.2015ā¦what am i missing in thatā¦
Please type Lincoln Pharmaceuticals in the below link and check:
http://www.accessdata.fda.gov/scripts/cder/drls/default.cfm
If it is not approved by US FDA why it is appearing there? Even Shilpa Medicare appears thereā¦ Also, Smruthi Organics which is still in ban doesnāt appearā¦ Any clues???
Note: I hold Smruthi Organics and donāt own Lincoln / Shilpaā¦
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I think thatās the registration of the plant for future/regular inspections. It is very very damaging that an African country has taken action in this manner. What kind of message this event has that you can take a non-sophisticated regulator for a ride? How could the management miss/ignore these issues?
Disc: No holding
Lincoln Pharmaceuticals was locked in lower circuit of 20% at Rs 179 on the BSE after the company said that Tanzania drug authority (TFDA) has announced to stop and banned importing of Chloramphenicol Sodium Succinate Injection and also cancelled the companyās registration.
āIn this circumstance a huge quantity dispatched by the company to Tanzania has kept on hold there and authority has issued a notice to destroy the product. Which will create big impact of profit margin of the company,ā Lincoln Pharmaceuticals said in a statement.
And due to the rejection of registration, a large number of raw materials and packaging material stock is piled up at factory, and this creates an addition to the loss amount, it added.
My commentsā¦ We are waking up to the fact that jugaad cannot work in the Pharma industry. Quality will add to the cost and impact shorter term margins. Long run this pain will be good but in medium term stay away from Pharma seems to be the conclusion
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Chloramphenicol was a drug used earlier in India to treat typhoid. But bcos of potential side effects and availability of newer better drugs with higher safety profile, it went out of favor.
I am surprised that that is a drug which is a big revenue spinner for lincoln.
And Motilal Oswal putting it in a list of winners is even more surprising.
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I have addressed similar issue on Ajanta thread to which i am linking the below post.
There are 2 different issues.
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Unlike Smruthi, other co.s which have had import alerts are listed among current registration sites such as Wockhardt, Ipca, Emcure, Megafine and so on.* It may be a case of Smruthi mgmt taking a view to not register until all issues have been sorted.*
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With respect to Lincoln, that is indeed a googly since the existing plant had never been inspected and there were talks of a separate greenfield plant at Ahmedabad. Suggest to check with mgmt.
Export are around 34% of sales,
Tanzania may contribute major part of exports.
How much % of sale can take hit because of ban?
Stock already corrected 45% from high.
Find below link
http://allafrica.com/stories/201501260705.html
Following molecules / drugs had been banned i Tanzania FDA
1ā¦CHLORAMPHENICOLā¦Sales From Feb 14 - Dec 15 Tanzania :-9.22 cr
2ā¦KETOCONAZOLEā¦Sales From Aug 13 - Dec 15 Tanzania :-1.33 cr
3ā¦AMODIAQUINEā¦Sales From Sep 14 - Dec 15 Tanzania :-2.20 cr
Total + 12.75
Even if we consider Lincoln might have one bulk order it will be equal to 13 cr only ieā¦last 2 yeras sales
NOTE :1)We are assuming all of export of these molecules to Tanzania is by only LINCOLN from INDIA
2)If there might be any other Pharma company that might be exporting then sales figure might further drop
3)I check there export data and value for last 3 years .
Kindly find attached ExcelLincoln Export.xlsx (23.2 KB)
4)Data:- Zauba
5)Disclosure:- No holdingā¦ Not intended to buy YETā¦I am not SEBI registered Investment Analyst
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Stock recovered from LCā¦
I think pain is over it seemsā¦
Some one has bought at LCā¦I do not know what is cooking in sideā¦
why management tone is vary harshā¦i think management is trying to create panic and buy at lowe levelsā¦
I thought that some other African countries also will follow Tanzania to ban those particular drugsā¦
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If you guys are willing to see the trend here on Lincoln Pharma. The news about the ban is present only on the Indian websites, that too couple of days back. None of the foreign websites have this news.
The tanzanian websites or african websites have this same news, but of the year 2015.
Thirdly, look at the volumes being bought by āsomeā people exactly during this fall.
And thenā¦after a week , well you know how its going to turn out.
Cheers
I found this article interesting and stunned to see how the media houses manage the sentiments in the falling market,
The ban was due to administrative lapses not due to the quality.
Another interesting fact is that retail investor PATEL JAYANTILAL D bought 1% stake on the day of news. He/She is the same investor who sold 1% stake to FII in the past. Not sure what is cooking.
Ps: just thought of sharing above news I found.
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Good Results in fact ā¦ Consistent from last 3 quarters
9 month EPS = 12 and assuming Q4 is going to be 10% less than Q3 for Tanzania debacle due to administrative errors the whole year EPS is going to be around 15+ which means stock is at P/E 12 as on today.
I remember watching a video where MD was telling that with injectible plant they are going to apply for USFDA/UKMHRA. It we get that approval say in 2 -3 years time + organic growth in the current markets i.e. 20% every year. I feel itās going to get re-rated.
From recent share holding pattern i see Dolly Khanna bought 60 thousand odd shares.
Letās see how things span out.
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Also one more sentence noticed from Results statement
"Since the revenue from different segment is less than 10% of total revenue, segment wise results are not given"
With this I am assuming #TanzaniaDrama was much of a hype.
@nerolu_praveen How you have calculated that there will only be 10% of less EPS in Q4? What method you used for the calculation?
They have stated that segment-wise revenue doesnāt exceed 10% of the total revenue.
Funny thing is that, CRISIL revised the company outlook to Negative from Stable based on the ban by TFDA
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