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After a long long time, we have come across an IPO from a company with very strong fundamentals, Very strong business model and high growth rates and also growth potentials. However the IPO has turned controversial due to its promoters being a Chinese company and due to this aspect, some of the investors and some of the social media activists suggest not to apply in this IPO
Every time, It has been my endeavour to dissect each IPO and the company in depth and also consider influence of Grey market on the listing and to estimate the subsequent price trend based on the real fundamentals.
Gland Pharma is one of the fastest growing generic injectables-focused companies by revenue in the United States from 2014 to 2019 . It sells its products primarily under a business to business (“B2B”) model in over 60 countries as of March 31, 2020, including the United States, Europe, Canada, Australia, India and the Rest of the world. It has a consistent compliance track record with a range of regulatory regimes across these markets. It also has an extensive track record in complex injectables development, manufacturing and marketing and a close understanding of the related sophisticated scientific, technical and regulatory processes. It was established in Hyderabad, India in 1978 and has expanded from liquid
parenterals to cover other elements of the injectables value chain, including contract development, own development, dossier preparation and filing, technology transfer and manufacturing across a range of delivery systems. It has a professional management team and one of its Promoters, Shanghai Fosun Pharma, is a global pharmaceutical major.
Powerful Products : The company focused on meeting diverse injectables needs with a stable supply of affordable and high quality products. It has established a portfolio of injectable products across various therapeutic areas and delivery systems. It is present in sterile injectables, oncology and ophthalmics, and focus on complex injectables, NCE-1s, First-to-File products and 505(b)(2) filings. Its delivery systems include liquid vials, lyophilized vials, pre-filled syringes, ampoules, bags and drops. It is expanding its development and manufacturing capabilities in complex injectables such as peptides, long-acting injectables, suspensions and hormonal products as well as new delivery systems such as pens and cartridges.
Plants: The Company has seven manufacturing facilities in India, comprising four finished formulations facilities with a total of 22 production lines and three API facilities. As of March 31, 2020, it had manufacturing capacity for finished formulations of approximately 755 million units per annum. Its API facilities provide it with in-house manufacturing capabilities for critical APIs, enabling it to control costs and quality and mitigate supply chain related risks around its key products.
Impeccable Quality control : As of March 31, 2020, Gland along with its partners had 265 ANDA filings in the United States, of which 204 were approved and 61 were pending approval. The 265 ANDA filings comprise 189 ANDA filings for sterile injectables, 50 for oncology and 26 for ophthalmics related products. Out of these 265 ANDA filings, 100 represent ANDAs owned by the company, of which 63 ANDA filings are approved and 37 are pending approval. As of the same date, it along with its partners had a total of 1,415 product registrations, comprising 368 product registrations in the United States, Europe, Canada and Australia, 54 in India and 993 in the Rest of the world. It has a consistent regulatory compliance track record and all its facilities are approved by the USFDA from whom it has had no warning letters since the inception of each facility. Other key regulatory agencies for which certain of its facilities have approvals include MHRA (UK), TGA (Australia), ANVISA (Brazil), AGES (Austria) and BGV Hamburg (Germany).
Global Market :The Company sells its products to marquee global customers like Sagent Pharmaceuticals, Inc., Fresenius Kabi USA, LLC and Athenex Pharmaceutical Division, LLC in more than 60 countries across the globe including US, Europe, Canada, Australia and India
United States 66.74%
Rest of the world 8.80% 1920
B2B ratio:In Fiscals 2018, 2019 and 2020, its revenue generated from the B2B model constituted 96.27%, 95.57% and 95.99%, respectively, of its total revenue from operations for the relevant year
Employee Strength:As of March 31, 2020, it had a total workforce of 3,791 excluding contract labourers across these business divisions, including an in-house R&D team for product development, regulatory affairs for obtaining product registrations, manufacturing, supply chain management, and sales and marketing
Product Registration:As of March 31, 2020, Gland along with its partners had a total of 1,415 product registrations, comprising 368 product registrations in the United States, Europe, Canada and Australia, 54 in India and 993 in the Rest of the world.
Promoters:Fosun Singapore and Shanghai Fosun Pharma are the Promoters of the Company.
As on the date of the DRHP, Fosun Singapore holds 114,662,620 Equity Shares, including 10 Equity Shares each held by Fosun Industrial Co., Limited, Ample Up Limited, Regal Gesture Limited and Lustrous Star Limited for the benefit of Fosun Singapore, which aggregates to 74.00% of the pre-Offer, issued, subscribed and paid-up Equity Share capital of the Company.
Shanghai Fosun Pharma holds 100% of the share capital of Fosun Industrial Co., Limited, which holds 100% of the share capital of Fosun Singapore. Shanghai Fosun Pharma does not directly hold any of the pre-Offer, issued, subscribed and paid-up Equity Share capital of IPO Company.So this way Gland Pharma can be considered as a Chinese company. However the main promoter, a chinese company is world`s one of the topnotch pharma company with very huge turnover and profits.
Why one should apply ?
The Company has seen significant revenue growth, along with margin expansion – while Revenue from operations has grown at CAGR of 27.38% from FY18 to FY20, the EBITDA for the same period has grown at CAGR of 36.90%, and the PAT for the same period has grown at CAGR of 55.15%
Revenue from operations in 2019-20: Rs 26,332.40 mn
EBITDA in 2019-20 :Rs. 10,946.35 mn
EBIDA % in 2019-20 :41.57%
Restated profit for the year 201920 Rs. 7,728.58 mn
The company has earned EPS of Rs 49.88
Earnings per Share in the first 3 months of 2020-21 is Rs 20.24
Book Value of the Share as on 31.03.2020 is Rs.255.79
Return on Net Worth: 16-17 : 13.72 &
Return on Net Worth: 17-18: 15.79 %
Return on Net Worth: 19-20: 21.20 %
so the upper price band of Rs. 1500 is very very reasonably priced.
It is the largest IPO to date in the booming Indian pharma sector.
Lead Managers: Kotak Mahindra Capital Company, Citigroup Global Markets India, Haitong Securities India and Nomura Financial Advisory and Securities India are the book running lead managers to the issue
Guidance: If you are medium term investor, then do apply in this IPO.If you are only interested in listing gains ( Bhajiyu), then you may apply/may not apply.