RPG Life Sciences - Rs.116.50

Earlier known as Searle India Ltd., RPG Life Sciences (RPGLS) is world class pharmaceutical organisation engaged in developing, manufacturing and marketing a broad range of branded formulations, generics and bulk drugs developed through fermentation and the chemical synthesis route. Importantly, it is the first Indian manufacturer of critical life saving, anti-cancer drugs, Doxorubicin, Daunorubicin, Epirubicin and the immunosuppressant cyclosporine. In fact, it is the only manufacturers of spironolactone by the fermentation route and one of the two manufacturers of Vitamin B12 in India. It has a presence in all key therapeutic areas including cardiovascular, CNS, antidiabetic, anti-cancer, immuno-suppressants, anti-infectives, anti-inflammatory etc.

RPGLS has four sophisticated plants in Navi Mumbai and Ankleshwar complying with international standards. Some of its units are certified by Therapeutic Goods Administration (TGA) of Australia, MHRA of UK apart from ISO:9001, 9002, 14001 and WHO GMP certification. Its top-of-the-line ultra modern R&D facility focuses on developing non-infringing process technology, designing novel Drug Delivery system, commercialising opportunities in biotechnology etc. RPGLS has a total strength of about 350 medical representatives / field staff, who make the products available to 75,000 all over India. It has an extensive distribution network comprising about 18 C&F agents, 1200 stockists and 45,000 chemists across India. On the international front, its products are exported to Europe, Latin America, Africa, Australia, CIS Nations and South East Asian countries and the company is represented in more than 30 countries through strategic partnerships and joint ventures. It has marketing alliances with European (Ivax) and Canadian (Apotex) companies for four generic products that have a huge potential.

To cash in on the off-patent opportunity in regulated markets, RPGLS is upgrading its fermentation plant to US FDA standard and is setting up new US FDA approvable API plant at Ankleshwar at a capex of Rs.20 cr. Recently, it received the process patent for Risperidone in USA having already won it for UK, Germany, France, Switzerland. It also the Australian and South African patent for its novel formulation of cyclosporine. Financially, the company has made a strong turnaround in FY06 after closing down its loss making unit at Pimpri in Pune, which it had taken on lease from Hindustan Antibiotics Ltd. Its total revenue grew by 15% to Rs.144 cr. whereas and net profit stood at Rs.20 cr. compared to the net loss of around Rs.5 cr. last year. For FY07, it may report sales of Rs.165 cr. and net profit of Rs.25 cr. leading to an EPS of Rs.18 on its equity of Rs.14.30 cr. As its growth story will emerge in FY08 and FY09 only, long-term investors can buy it on declines. The scrip has the potential to cross Rs.250 (130% returns) in 18-24 months.