Which Indian pharma companies could benefit from the adderall shortage in the US?
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i have been monitoring some pharma cos for turnaround and found one such company Novartis which is delivering positive results compared to year earlier , from last year annual negative eps its trailing twelve months eps has risen phenomenally to Rs 21.74 just in two quarters of the current financial year and if this trend continues for remaining two quarter i expect it to close at 35 plus eps, which will be a very good thing for valuations i presume but one thing which i found out was this company inspite being a renowned Multinational with 70 percent promoter holding is not rated by any brokerage houses , so would like to know any good reason for this, so please share your insights to why no coverage on this co yet by any brokerages?
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U.S. generics picking up, says DSP
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First Gambia and now in Uzbekistan… Indian authorities obviously will not test all medicines which are exported but if Indian drug regulator doesn’t get it’s act together then we’ll lose our reputation as World’s Pharmacy.
Quality and reliability are the only factors which is giving Indian pharma companies an upper edge as compared to China which is looked upon as dubious and spurious goods manufacturer.
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At the risk of sounding fake, it must be said that, the linkage between cough syrup and Gambia’s kids death has NOT been established. No data has been shared by WHO nor has Gambia has said it is due to the syrup. What we have is a media game with no one coming on record to say it is the pharma company which did it.
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Gambia has already clarified
Can knowledgeable members mention some good pharma companies into formulations? Any pros/cons of investing into them? Their benchmark ratios, returns, etc.?
Thanks!
Some take aways from Sajal Kapoor + Aditya Khemka’s Twitter spaces about 10 days back -
Neuland is the only company to share full pipeline of molecules ( phase wise ) in their investor ppt. No other company does it - not even Divis, Syngene, Laurus
Laurus has 1200 scientists on its rolls vs 400 for Divis. That’s a definitive tick for Laurus. Nothing against Divis
Domestic Pharma margins likely to shoot up in Q1 FY 24. Should have happened for Q4 FY 23 as well but didn’t because its a seasonally weak Qtr for domestic mkt
Margin improvement due falling power, RM costs plus the annual price hikes
Diagnostic companies results to start looking better from Q1 as the base Qtrs won’t have COVID related sales. So… double digit topline growth with improved margins are possible
API overstocking took place in FY 21, 22. Hence FY23 was weak. FY24 should be much better on the base of a weak year and the overstocking has also now been liquidated
NLEM prices set by the Govt are generous. Domestic companies don’t have any problems meeting NLEM price criteria
Long term risk in domestic Pharma mkt- buyer consolidation due emergence and growth of big E-Pharmacies
Possible Black swan event- If private sector doctors are forced to prescribe generic drugs
One concern with Indoco Remedies - No improvement in MR productivity in last 4 yrs
Had very kind words to say about Manish Gupta, CEO of Jagsonpal Pharma (joined last year). He may well turn it around like Mr Sikri turned around RPG Life
New injectable long acting ARVs are overhyped as patient compliance and affordability is low there vs oral ARVs
As such NCE CDMO is the real long term story iro Laurus. May start to play out from 3rd or 4th Qtr of FY 24. Agro and Animal pharma CDMO contracts likely to go commercial by then
Large hospitals are too expensive. Better to buy smaller chains and wait for them to become big
Be careful in Hospitals adding > 20 pc of Gross Block via Greenfield route … it causes significant suppression of return ratios. The same gets reflected in stock price performance (Eg-Apollo from 2010-14)
Current management of Sequent,Pharmova and Piramal Pharma-not promising
Seeing significant positive operating leverage to play out in Syngene in next 2 yrs
Spoke highly of Dr Reddy’s current CEO ( joined in 2018 ) because he out licensed their cash burning NCE projects and increased capital allocation to India Branded vs US generics business
One good thing that Sun Pharma did was to de-merge their NCE business. Should also be done by Glenmark, Pharmova and not burn shareholder money
Mankind’s IPO may have some rub-off on valuations of Eris, JB,RPG and other India focussed branded businesses
Aarti Pharma looks good… just on the basis of their long term track record
Disc: invested in - Laurus, Divis, Neuland, Syngene, JB, RPG, Sun and Indoco in Pharma space. Holding - KIMS, Rainbow and Narayen among hospitals
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Fortis Healthcare Q4 concall highlights -
Consolidated numbers -
For Q4-
Revenues at 1643 cr, up 19 pc
EBITDA at 285 cr, up 25 pc
PAT at 128 cr, up 47 pc (excluding exceptional items )
Net Debt at 330 cr, down 40 pc !!!
Hospitals business -
Revenues at 1350 cr, up 29 pc
EBITDA at 230 cr, up 60 pc. Hospitals EBITDA margins at 17 pc
Occupancy at 67 vs 59 pc yoy
Diagnostics business -
Revenues at 332 cr, down 9 pc
EBITDA at 55 vs 84 pc
EBITDA margins at 16.5 vs 22.5 pc
Adjusted for COVID, diagnostics revenues were up 12 pc
For full FY 23 -
Hospitals revenues at 5107 cr, up 20 pc
EBITDA margins at 18.1 vs 15.8 pc !!!
Diagnostics revenues at 1347 cr, down 16 pc
EBITDA margins at 19.5 vs 26.5 pc ( due loss of COVID revenues )
Company guiding for Consol EBITDA margins at 20 pc for FY 24
For FY 23, Intl patients revenues at 425 vs 215 cr yoy !!!
Fortis’s main therapeutic focus areas with revenue shares -
Cardiac- 19 pc
Ortho- 9 pc
Renal- 7 pc
Neuro- 8 pc
Gastroenterology- 5 pc
Oncology- 13 pc
Gynae- 4 pc
Pulmo- 3 pc
Domestic Cash - 36 pc
Intl - 8 pc
ECHS - 6 pc
CGHS - 4 pc
PSUs - 9 pc
Insurance - 35 pc
Hospitals margins profile -
EBITDA …No of Hospitals… Revenue Contribution
25 pc …2 …20 pc
20-25 pc …9 …31 pc
15-20 pc …3 …27 pc
10-15 pc …3 …12 pc
< 10 pc …5 …10 pc
Current Bed capacity - aprox 4000 beds
Added 140 beds in FY 23
Brown field additions planned over next 4-5 yrs - aprox 1400 beds (looks like a huge positive as this should not involve heavy capex)
In addition, company would pursue inorganic hospital acquisitions
Acquisition of Meteor Hospital Manesar -
To acquire for 225cr. Deal signed in Apr 23
Bed capacity - 350, spread across 5 acres
Aim to operationalise this Hospital within 9 months
Also added a 200 bed Multi Speciality Hospital in Noida
Added a new cancer day care centre in New Delhi in FY 23
SRL diagnostics added 1100 touch points in FY 23 to take the total beyond 3500 touch points
SRL has not taken any price hikes in FY 23
Govt business may reduce slightly going fwd (presently at 18 pc), improving margins
Brownfield expansions will improve economies of scale going fwd
Expect double digit revenue growth in FY 24 in Hospitals business
Expect to take the acquired Manesar’s hospital from 150 to 300 beds over time. Manesar has good catchment area wrt patients
Aim to divest 02 facilities which are loss making over next 1-2 yrs. If this happens, EBITDA margins for FY 24 may go to 21-22 pc
Maint + expansion Capex for FY 24 to be around 600-700 cr (Manesar facility requires expenditure of aprox 100 cr to bring it to Fortis standards)
Looking to acquire assets in the existing markets subject to sensible pricing ( NCR/ Mumbai/ Punjab/ Bangaluru/ Kolkata ). Should be around 150-250 beds kind of asset
Assuming a 7000 cr topline and 20 pc EBITDA, Fortis should do around 1400 cr EBITDA next yr
PAT should be around 700 cr or thereabouts. Not a bad deal at 21k cr Mkt cap for a brand with national recall and good return ratios
Disc: hold a tracking position, biased, only expressing my opinion
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Interesting that someone mentioned this earlier as a possible black swan event. In my opinion it is a distinct possibility.
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Difference between formulations vs CDMO players.
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Good initiative… Will have long term effects
Dishman in its presentation has given much clarity on pipeline.
Number of scientists in Divis and Lairus should not be compared. Divis is a focussed company with clear strategy for the product pipeline and target molecules. They are pure play API. Laurus has its hands full of peojects with strategy for eveything it seems. Laurus does everything from general to ARV in APIs and further in formulations, not to mention their recent foray in biologicals and aspirations in food category (think they are working on artificial meat as well). Either they are very smart or very confused. Only time will tell.
No positions in any, had exited all.
I’m looking at Kilitch drugs. It’s basically a CRM company and are into injectables and have large exposure in African market. If anyone is tracking this space closely, please guide which companies fall under its peer-set.
What is the rationale for all these companies to make it big? How does it help the forum to study by just posting names of the companies?
Good Question 
Let me give some explanations wrt each company -
RPG LIFE, ERIS LIFE - Both have great focus on branded Indian Mkts ( Eris doesn’t sell outside India ). Their managements are aggressive. Both companies throw up cash like FMCG companies ( Or like - Mankind Pharma, Abbott India ). Their return ratios are excellent. Growth in last 3-5 yrs has been Mkt beating. Its like buying FMCG companies at the price of Pharma ( ie sub 25 PE kind of valuations )
Syngene Ltd - Only end to end listed CRO to CDMO player with impeccable regulatory track record. As more molecules go into commercialisation, profits can really take off
Neuland Labs - Similar story except that it doesn’t do the CRO work nor does it have the biologics manufacturing capabilities. As more molecules get into commercial stage, there can be blue skies ahead. Here too - the regulatory track record has been very good
Senco Gold - Gold/ Diamond jewellery retailer. Only few except Titan have a track record of good corporate Governance. Senco is one of them. Plus they have dominant mkt share in East India. If they do not goof it up themselves, ingredients are in place for sustained growth and high valuations for the company
Angel One - A discount broker - like Zerodha. Their tech platform is very good. Has been consistently gaining Mkt share for the past 4-5 yrs. Plus the F&O volumes in India ( the segment where they charge on a per trade basis ) have never seen a dip since 2008 on a yearly basis. No Dip was seen in 2008 financial crisis, nor during the COVID fall. To me ( as suggested by data ), its a secular story commanding cyclical valuations
Explanation for the rest of the pack by tomorrow. Thanks for the Push !!!
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ABBOTT INDIA - COMPANY OVERVIEW -
Key brands -
Udiliv ( chronic lever disease )
Influvac ( prevention of Influenza )
Pankreoflat ( indigestion )
Cremaffin ( constipation )
Arachitol ( Vit D deficiency )
Zolfresh ( Insomania )
Heptral ( liver disease )
Duphaston ( miscarriage, IVF )
Digene ( antacid )
Prothiaden ( depression )
Librax ( irritable bowel syndrome )
Brufen ( analgesic )
Duphalac ( constipation )
Thyronorm ( hypothyroidism )
Duvadilan ( pre-term labour )
Vertin ( vertigo )
New brand Launches -
Cremagel ( anal fissures )
Brufen P ( pain and fever )
Solfe ( anemia )
Total product portfolio of 125 products. 10 new products launched in FY 22-23
15 of company’s brands are ranked-1 in their respective categories and account for 80 pc of company’s revenues
Last 5 Yr CAGR -
Revenue - 9 pc
EBITDA - 16 pc
PAT - 17 pc
Book Value growth - 15 pc
Expanding aggressively into - Nepal, Bhutan, SriLanka and Maldives
Udiliv and Thyronorm are a part of top 15 India Pharma brands
With a strong portfolio of - Cremaffin, Duphalac, Cremaffin Plus - company commands a 38 pc mkt share in Laxative category
Therapy wise performance for FY 23 -
Women’s health -
Degrew by 8 pc due increased generic competition in Dydrogestrone mkt (company’s brand is Duphaston). This has been a pain point for the company for quite some time now. Launched a slew of new products to augment the women’s health portfolio - Femoston (post-menopausal symptoms), Solfe (anaemia) and Cetropro (IVF)
GI -
Grew @ healthy 11 pc. Cremaffin, Duphalac, Udiliv and Creon (pancreatic exocrine insufficiency) did very well. Librax and Ganaton (GI dismotility) continued their steady growth rates. New launches in the GI space included - Digeraft (gastroesophaegal reflux) and Cremagel
CNS -
Grew by 4 pc led by Vertin (to treat vertigo)
Metabolics -
Grew by a strong 15 pc led by Thyronorm. Also launched India’s first Liothyronine molecule - Linorma T-3 in FY 23. Combirorm (probiotics capsules) continues to gather momentum for treatment of bacterial vagenosis
Multi-Speciality -
Grew by 5 pc led by - Duvadilan, Zolfresh, Brufen. Aim to grow these into mega brands for the company. Brufen-P was launched this yr
Vaccines -
Grew by 6 pc led by - Influvac, Rotassure, Enteroshield (typhoid) and Havshield (Hepatitis A)
Future growth drivers -
Accelerate pillar brands
Multi-Channel doctor engagement
New launches to improve portfolio depth
Disc: hold a tracking position, not SEBI registered, biased
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