Indoco Remedies Ltd - 295.00 Rs
Promoted by Mr. Suresh Kare in 1947, Indoco Remedies Ltd (IRL) is engaged in research & development, manufacturing, marketing and distribution of pharmaceutical products and services in the domestic and international market. Basically, it manufactures API’s, formulations and provides contract research and manufacturing services (i.e. CRAMS). Besides, it has a unique revenue inflow from the dossier development and marketing them. Over the years IRL has a built a strong brand portfolio of 120 products across 11 major therapeutic segments. Earlier, it was focusing on acute therapies like - respiratory, anti-allergy, anti-infective, dental, ophthalmic etc which are volume led business. But off late it has also ventured into the high growth and lucrative lifestyle segment like anti-diabetes, cardiovascular, central nervous system, nutrition, dermatology etc. It has a strong presence in domestic formulation market with more than 75% of total revenue coming from it, whereas the balance 25% comes from export to over 33 countries globally including regulated and semi regulated markets. Notably, company boasts of having 10 brands which are among the top five in their respective segments with Febrex Plus, Cyclopam, Vepan, Sensodent and ATM being the most successful. In order to ensure focused sales approach, IRL has created separate marketing divisions namely Indoco, Spade, Warren, & Surge-Radius, each with specific therapeutic focus and working as an independent profit centre. This year company created two more divisions – Warren Excel and Spera.
Presently, IRL has five facilities for formulation - Goa Plant I, Goa Plant II, Baddi and the rest two plants at Aurangabad & Tarapur for non regulated market. Post acquisition of La Nova Chem and merger with SPA Pharma Ltd, IRL is now backward integrated to manufacture API for captive consumption as well as export with two commercial manufacturing facilities - one at Patalganga & second at New Mumbai. Importantly, company’s Goa plant II is USFDA certified for ophthalmic & injectables whereas the Goa plant I is approved by MHRA-UK & Darmstadt Germany. To fully integrate into CRAMS space, company has set up a state-of-the-art standalone R&D Centre at Rabale, near New Mumbai equipped with facilities like synthetic chemistry labs, F&D, AMD, regulatory and IPR cell. The unique feature of this R&D lab is the Kilo-lab, which can produce one gram to several kilogram quantities of APIs and key intermediates for pre-clinical phase to phase-III clinical studies. The lab intends to take up NDDS research and expects to commercialize the first NDDS product in calendar 2008. In order to maintain the growth momentum for the domestic formulations, the company has been launching around 25 new products every year and is expected to maintain the same pace for coming two years as well. However, currently it is looking forward to capitalize on export opportunities in the high margin regulated markets like US and UK. Under contract manufacturing, company has 21 projects for Germany, 9 for UK & 6 for Eastern Europe. But most importantly, IRL has entered into US market through a supplying pact with Nexus Opthalmic and has already made one shipment to USA. Moreover, it has recently finalized long term joint venture partnership with Amneal Corporation, New Jersey, U.S.A. to develop and manufacture ophthalmic formulations for marketing it in US. Besides, with its product registered in over 50 countries it will continue to export to other non regulated markets as well.
Meanwhile, IRL is taking various initiatives to increase its presence in global market. Like, apart from doing 14 projects for formulation research, it has undertaken six projects for custom synthesis (molecules under Phase-I, II, III) with innovator companies. Notably, for formulation division company has already filed 3 ANDA whereas 10 is underway and another 12 in pipeline. It has also completed 6 CTDs while 8 are under way and 12 in pipeline. For the less regulated market, IRL has filed 3 dossiers in SA, 47 dossiers in CIS, 1 dossier in Brazil and 3 dossiers in AU, NZ. On the API front, company has 9 molecules for DMF, COS & EDMF in CTD format for regulated market under various stages of submission and 8 molecules are in pipeline for regulatory submission. To summarize, IRL has laid the foundation and is now poised to enter into a strong growth trajectory in coming few years.
Although company doesn’t have any capex plan currently, it intends to set up a second manufacturing facility in Baddi, HP with the same capacity as in the present plant, in next two years. Financially, company has amalgamated La Nova Chem (India) Pvt. Ltd., Indoco Healthcare Ltd. and the Pharma Division of SPA Pharmaceuticals Pvt. Ltd with itself. For FY07, company recorded net sales of Rs.326 cr and PAT of Rs.42 cr thereby posting an EPS of 35 Rs. It reported encouraging nos for the first qtr as well. Accordingly, it is expected to clock a turnover of 375 cr and NP of 48 cr for FY08 ending June’08. This translates into EPS of 39 Rs on current equity of 12.30 cr. Hence at reasonable discounting by 12x times scrip has the potential to touch 475 Rs (60% appreciation) in 15~18 months. Investors are strongly recommended to buy at current levels.
Presently, IRL has five facilities for formulation - Goa Plant I, Goa Plant II, Baddi and the rest two plants at Aurangabad & Tarapur for non regulated market. Post acquisition of La Nova Chem and merger with SPA Pharma Ltd, IRL is now backward integrated to manufacture API for captive consumption as well as export with two commercial manufacturing facilities - one at Patalganga & second at New Mumbai. Importantly, company’s Goa plant II is USFDA certified for ophthalmic & injectables whereas the Goa plant I is approved by MHRA-UK & Darmstadt Germany. To fully integrate into CRAMS space, company has set up a state-of-the-art standalone R&D Centre at Rabale, near New Mumbai equipped with facilities like synthetic chemistry labs, F&D, AMD, regulatory and IPR cell. The unique feature of this R&D lab is the Kilo-lab, which can produce one gram to several kilogram quantities of APIs and key intermediates for pre-clinical phase to phase-III clinical studies. The lab intends to take up NDDS research and expects to commercialize the first NDDS product in calendar 2008. In order to maintain the growth momentum for the domestic formulations, the company has been launching around 25 new products every year and is expected to maintain the same pace for coming two years as well. However, currently it is looking forward to capitalize on export opportunities in the high margin regulated markets like US and UK. Under contract manufacturing, company has 21 projects for Germany, 9 for UK & 6 for Eastern Europe. But most importantly, IRL has entered into US market through a supplying pact with Nexus Opthalmic and has already made one shipment to USA. Moreover, it has recently finalized long term joint venture partnership with Amneal Corporation, New Jersey, U.S.A. to develop and manufacture ophthalmic formulations for marketing it in US. Besides, with its product registered in over 50 countries it will continue to export to other non regulated markets as well.
Meanwhile, IRL is taking various initiatives to increase its presence in global market. Like, apart from doing 14 projects for formulation research, it has undertaken six projects for custom synthesis (molecules under Phase-I, II, III) with innovator companies. Notably, for formulation division company has already filed 3 ANDA whereas 10 is underway and another 12 in pipeline. It has also completed 6 CTDs while 8 are under way and 12 in pipeline. For the less regulated market, IRL has filed 3 dossiers in SA, 47 dossiers in CIS, 1 dossier in Brazil and 3 dossiers in AU, NZ. On the API front, company has 9 molecules for DMF, COS & EDMF in CTD format for regulated market under various stages of submission and 8 molecules are in pipeline for regulatory submission. To summarize, IRL has laid the foundation and is now poised to enter into a strong growth trajectory in coming few years.
Although company doesn’t have any capex plan currently, it intends to set up a second manufacturing facility in Baddi, HP with the same capacity as in the present plant, in next two years. Financially, company has amalgamated La Nova Chem (India) Pvt. Ltd., Indoco Healthcare Ltd. and the Pharma Division of SPA Pharmaceuticals Pvt. Ltd with itself. For FY07, company recorded net sales of Rs.326 cr and PAT of Rs.42 cr thereby posting an EPS of 35 Rs. It reported encouraging nos for the first qtr as well. Accordingly, it is expected to clock a turnover of 375 cr and NP of 48 cr for FY08 ending June’08. This translates into EPS of 39 Rs on current equity of 12.30 cr. Hence at reasonable discounting by 12x times scrip has the potential to touch 475 Rs (60% appreciation) in 15~18 months. Investors are strongly recommended to buy at current levels.
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