Zydus Lifesciences (Erstwhile: Cadila healthcare)

lot of positive news around the stock and has broken out after 4 years.i was looking to invest mainly due to technical reasons + vaccine approval will re-rate the stock, i find it undervalued even after such up move what are your views?

When fundamentally speaking stock is undervalued.
ViraFin seems to be a game changer for the company.
This single dose injection had a very positive stage three results ao far…
Zydus vaccine is an another trigger for the stock.

The indian and global vaccine opportunity is also very vast…


#Tough to manufacture COVID vaccines sans tech transfers: Zydus Cadila#

Updated : May 06, 2021

By Ekta Batra (source: money control)

The United States has backed the plan to suspend COVID vaccine patents. However, Dr Sharvil Patel, MD of Zydus Cadila said that patents do not cover every detail of the biological process and it will be difficult to manufacture COVID vaccines on our own without technology transfers.

“Practically if one has to do a technology transfer, I would believe it would require at least 6 months. Not only do you need to do the technology transfer which is at small scale, but when you have to scale this process up to make a good vaccine that matters in terms of population, you will have to do a capital investment which again is going to take anywhere between 6-9 months even if you are very aggressive,” he said in an interview to CNBC-TV18.

“From all practical purposes, unless you have a manufacturing footprint which is identical to the vaccine patent holder, then only you can do it in 6 months. Otherwise, it is a process that will take longer than 6 months to do,” he added.

Patel also said that one cannot repurpose an existing injectable facility to manufacture a vaccine. “For making a vaccine, you need a vaccine API facility or a biological facility which has nothing to do with sterile injectable manufacturing. So, a sterile drug product manufacturing facility cannot be repurposed to make a vaccine,” he said.

He also said that it is important for a vaccine manufacturer to consider the cost of making a new vaccine as well as consider what works for India in terms of cost and distribution of the vaccine.

Patel also said that Zydus Cadila is in talks with other Indian manufacturers for technology transfer and is also looking at global tie-ups for their vaccine.

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Zydus has priced Virafin dosage at Rs 12,000/dose. By June, they’ll have production capacity of around 10 lakh doses a month. That translates to a total of Rs 1200 crore per month.
Sounds way too good.

Disc : Don’t have any position. Just wanted views from people who’re tracking Cadila…

The amount works out to Rs120/-crores per month and not as mentioned.


Cadila sells their animal healthcare division at 2’921 cr. which translates into P/sales ~ 5.7x (FY20 sales ~ 513 cr.). The networth of the division was 2’203.6 cr. (as of March 31, 2020). Interestingly, Cadila will continue pursuing their investments into US and certain European markets for animal health. There is a lot of buzz in animal healthcare these days. This transaction is subject to shareholder approval.

Disclosure: Invested (position size here). Sold some shares today to bring position size closer to target.

My apologies. It is 10 lakhs and not 1 lakh.


Details of turnover of the Undertaking for the financial year 2019-20 and networth of the Undertaking as on March 31, 2020 were as under:

Turnover*-Rs. 5,133 mio. representing 4% of the consolidated turnover and EBIDTA of Rs. 876 mio., representing 3% of the consolidated EBIDTA of Cadila
Healthcare Limited (listed entity).
Networth*-Rs. 22,036 mio. as on March 31, 2020, representing 21% of the consolidated networth of listed entity.

This seems good spin off for cadila.

@harsh.beria93 what’s your view of selling partial position.

Disc: Invested from lower level and added small portion today.

Here are more details about the deal.

• Sells their animal healthcare division at 2’921 cr. (FY20 sales ~ 513 cr.). Provisional numbers for FY21 sales are ~600 cr. and EBITDA of ~150 cr. (P/sales ~ 4.86; P/EBITDA ~ 19.47). Net worth of the division was 2’203.6 cr. (as of March 31, 2020). Tax rate will be ~25% on gains and tax implication comes ~200 cr. (gains ~ 2921-2204 ~ 717 cr.) Valuation was arrived using a bidding process
• The EBITDA margins of 25% for India animal healthcare business is actually sustainable because of strong branding
• The proceeds will be used to reduce debt (net debt will be ~1000 cr.) There was no debt in the animal business division.
• This transaction sells their India business (including certain other countries). They have 700 employees and one manufacturing facility in Haridwar (acquired from Zoetis in 2015 for 170 cr.). The transaction involves transfer of Immovable Assets, Movable Assets, Inventory, Brands and Intangible Assets, Contracts, Licenses and Permissions, Business Records, Employees along with Employee Benefit Funds, Insurance Policies, Other Assets and Assumed Liabilities. Gross block (in terms of fixed assets) was < 100 cr. implying most of the net worth of 2200 cr. was intangibles
• This sale doesn’t involve their on-going investments into regulated markets of the US and certain European countries (currently non-revenue generating). Their US/EU venture will be more towards companion business whereas Indian business was more towards poultry/livestock. Plant for the same is a SEZ facility located in Ahmedabad.
• More about US animal healthcare business: It takes 4-5 years to incubate it. Distribution is similar with a few players controlling the market (like human pharma). The commercial plans are atleast 2-years away. Competition is less severe than generic but it’s a far more evolved market
• Initially, they were looking for strategic partners who were willing to contribute equity to their venture (probably US/EU) but then realized it might be more beneficial to sell the Indian (including certain other geographies) business
• Should be able to fund future R&D over the next 3-years from internal accruals

Disclosure: Same as before


But isn’t cadila trying to get approvals for its own vaccine? Virafin?
Is it not a vaccine manufacturer itself?
So even if it gets approvals, it can’t start manufacturing then?

Sorry my mistake.
I was talking about the vaccine ZyCov… today’s news also says it can hit Indian markets by June

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Zydus pegs price of COVID-19 drug Virafin at Rs 11,995, says it can cut oxygen dependency in patients

Instead of launching own vaccine which they can continue as side job, Can they import technology/Process from Bharat Biotech and start manufacturing COVAXIN.

Question is do they have necessary infra required for it. As per my understanding CADILA has BSL 1 Lab while COVAXIN needs BSL 3. So How complex is the up gradation Can they adapt to the ocassion ?

BSL: Bio Safety Level/Lab

Disc: Invested in CADILA around 622

Upgrading to BSL-3 will require multiple steps 1. Infra 2. Training 3. Certification … all this certainly will take good time.
… I am not an expert just based on layman’ thinking + what I am reading around.

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Company launches Trastuzumab Emtansine for breast cancer treatment in India at a 80% discount to innovator prices.

Disclosure: Invested (position size here)


This is good development for breast cancer patient.

The cost from innovator Roche / via his subsidiary Gennentech is more than 2 Lakhs (160 mg) and 1.35 Lakhs (100 mg) post discount.


Here are my notes from today’s concall:

  • Faced pricing challenges in US, flu season was non-existent
  • Launched pegfilgrastim in Russia (only player to do this)
  • Q4 domestic growth is from base business and not covid products. 60:40 split in mass:specialty. Specialty business has done significantly better than market
  • US focus will be on orphan drugs, target segments are CNS, pain and gastrointestinal
  • 2 biosimilar products for developed markets but this is post FY25
  • Transdermal + hormonal products are filed out of Moraiya. See 4 critical launches after resolution of Moraiya
  • Vaccine: Have secured device supply chain, will be assembled in India. Expect to start with 1cr./month and scale it to 2.5-3 cr./month. Also looking for 1-2 contract manufacturers for additional capacity. Being tested in ~1000 children, they were approved because its needle free
  • COVID product portfolio is at lower gross margins compared to base business (conscious company strategy to make covid drugs more affordable)
  • Can maintain R&D at 8% of sales over the next few years
  • Want base EBITDA margins to be ~22%

Disclosure: Invested (position size here)


Cadila introduces a cool way to verify if the drug is real or a counterfeit by using a scratch code and verifying it on their application. Also, a useful way to collect consumer data.