Key Takeaways from Shilpa Medicare’s Credit Rating Report from CRISIL:
CRISIL recently upgraded the ratings of Shilpa to CRISIL A-/CRISIL A2+ from CRISIL BBB/CRISIL A3 in April 2013.
Some of the key facts about the company are given below:
Company derives 50% of its revenues from APIs and 50% from CRAMS which it does entirely for Industria Chimica Srl Italy (ICSI). Shilpa also has a JV with ICSI in the company Raichem Medicare in which Shilpa holds 50.01%. We will have to dig about ICSI in more detail.
The company derives 70% of its revenues from Europe, 20% from domestic market and remaining from other countries.
The company has a product portfolio of 50 products with special focus on oncology segment.
The company imports 50% of its total raw material requirement.
The company has ventured into formulation business by incorporating its 99.99% subsidiary Raichem Lifescience Private Limited. The formulation plant is expected to be completed in 2013-14.
Good news on Shilpa front as a means for not only diversification & increasing the top line but also in USFDA approval will soon be a reality if not so till now.
The FII who exited Shilpa after making 4.5 times the money have again entered Shilpa some time back. Shows confidence & good long term prospects for Shilpa.
Seems there is lot of interest in Oncology pharma firms by FIIs.Spoke to my cousin with long experience in pharma field .The rush in Rajiv Gandhi Cancer Hospital,New Delhi is too huge. The oncolgy firms enjoy a good pricing power & as such the margins are very high for these firms.
When is Shilpa launching its own formulations in India & abroad is the moot question?
Lot of interest as highlighted earlier in firms manufacturing specialised APIs by reputed PE players & FIIs.
Shilpa seems to have received the USFDA approvalfor its 2 units at Raichur as per the Pharmexcil site.This is a positive for the company.Still majority of its exports are to Europe only.
Any update on approval status for its newly commissioned Jadcherla formulations plant near Hyderabad? Is the co also venturing into fast growing domestic formulations market ?
standalone profits are amazing but consolidated results are a dampener. seems like subsidiaries are in losses.
ayush, donald - can you please enlighten on why this could be. any insights into what these subsidiaries are and why they may not be profitable. one observation is that subsidiaries add only 6.5 percent to the standalone revenues but add 67.7 percent to the employee benefit expenses. that seems rather disproportionate.
The subsidiaries it seems are the upcoming formulations plant at Jadcherla through Raichem life science n the Austrian subsidiary which seems to be a small operation.
The formulation plant is just getting operationalised so revenue generation will accrue from the coming quarters or the next fin year after the due approvals are received.
Is my assumption correct Ayush n Donald n other friends following the stocks?
Shipa acquired Loba feinchemie through Zatoria holdings in 2007 .Up to 2013 they invested total 23.29 crores as equity .
FY 09
Fy 10
FY 11
FY 12
FY 13
sales
31.16
29.72
31.24
36.53
40.25
PBT
-8.77
-2.29
-0.47
1.99
1.72
I think their intention to acquire this company might be access to highly regulated markets rather than profitability .
Shilpa's another subsidiary Raichem Medicare ( its an joint venture , have 50 percent stake ) meant for export of formulations for unregulated markets .They have not yet commenced operations .They are constructing Plant adjacent to Shilpa's main plant in Raichur with total outlay of 40 crores. At the time of our visit civil construction is going on . It will be operational by FY 14-15 .
Fourth one is NU therapeutics . They have acquired 67 percent in this company in 2011 for 7.7 crore( as total equity investment as on FY 13 ) based out of Hyderabad.Nu therapeutics possess novel oral fast dissolving thin strip technology . Its at nascent stage and posted 2.5 crores revenue in FY 13 . This technology will be future growth driver for company .
Raichem life sciences and its formulation plant merged with standalone entity in FY 13 . As per the announcement they have commercialized Jadcherla plant in June 2013 . They have to finish trial runs , send dossiers to get full approvals ( USFDA and European as it is meant to export for advanced countries ) and after that only they can go for full scale operations . At this stage its difficult to assume the reason for huge jump in revenues , whether it is due to formulation unit or any new oncology api which was off patent in 2013 .
many thanks for the information om. have you interacted with management about how big an oppurtunity do they expect the formulations business for regulated markets to be.
The results seem better than what is obviously seen as there is a forex loss of 9.58 cr for q2 fy 14 as compared to a gain of around 7.26 cr in q2 fy 13… thats a swing of around 16 crores in comparable quarters.
As mentioned earlier, subsidiaries seem to be bleeding but the sales growth is very encouraging for shilpa… Once margins stabilise, results can be very good.
Isn’t Natco pharma an equally good option to seriously evaluate in Oncology segment alongwith Shilpa?
Seems Natco teaming with Mylan will enjoy 180 day exclusivity for $4 billion Copexone drug generating nearly 40-50% net profit of Teva the innovator from May 14 . US Suprem court has already refused Teva plea to extend the patent by 1 more year. This could be a big opportunity for Natco who will be 1 amongs t the 2 group granted FTF permission for Copexone.
Why is Shilpa not following this high return policy of Natco ? Is it the reason Natco enjoys a PE of 25-30 & Shilpa a lower PE of 15 odd?
[quote="Donald, post:104, topic:62331050"]
> For that to happen, we need to encourage everyone - feed on each other. Each of us can do something? We need to do our bit - including You. Dig for information. Take the new name products Shilpa has shared in its AR 2013 - dig out the potential for these products. How many players worldwide for these?
>
> Ever compared with Natco Pharma? What does it have that Shilpa does not? or vice versa. What are the differences in business models?
[/quote]
Some information, I collected. But what are the implications, still not clear..??
Thanks, Atul for the digging. Yes, its not clear as to what the potential will be or how things will play out. The inference I can draw from this data is - that Shilpa would be the smallest co amongst all the other names mentioned above and this is quite interesting
