Torrent Pharmaceuticals reported impressive 75% growth in revenues and profit in the first quarter of FY 2016. The sterling performance was driven by the launch of new product in the US market, which has limited competition at present. The focus is on the therapeutic segments of cardiovascular and CNS. There is presence in gastro-intestinal, diabetology, anti-infective, pain management, nephrology, oncology, gynecology and pediatric segments as well.
The manufacturing plants for formulations and bulk drugs have been approved by authorities of several regulated and semi-regulated markets such as the US, the UK, Brazil, Germany, Australia and South Africa. Capacity will increase almost 100% once the new plant at Dahej in Gujarat becomes operational. The plant will be one of the largest pharmaceuticals manufacturing facilities in the country at a single location. The unit will primarily cater to the key regulated markets of the US and Europe. Approval from regulators such as the US FDA is in process.
The identified domestic branded formulation business of Elder Pharmaceuticals in India and Nepal was acquired on a slump-sale basis for Rs 2004 crore in FY 2015. This buy is expected to strengthen the position in women health, pain management, wound care and neutraceuticals. Manufacturer of dermatological formulations such as creams, ointments, gels, lotions and solutions Zyga Pharma was acquired in May 2015.
Divis Laboratories is the second most popular pharmaceutical stock with mutual funds, which held 13.91% equity end June 2015. The manufacturer of generic APIs, custom synthesis of active ingredients for innovator companies, other specialty chemicals and nutraceuticals is selective in the product portfolio and focuses on export markets within the domain. Transgressing into unrelated expansion, diversification or acquisition is avoided. Around 87% of the revenues came from exports last fiscal as against 91% in FY 2014.
There are a total of 39 drug master files (DMFs) with the US FDA and 197 EDMFs and 19 certificates of suitability with various EU authorities. As many as 11 patents for generic products have been filed. A wholly owned subsidiary, each in the US and Switzerland, has been set up to market nutraceutical products and to touch base customers within these regions.
The balance sheet is strong, with negligible debt and current investment of Rs 733 crore and cash of Rs 65.2 crore. In August 2015, Bonus shares in the ratio of 1:1 was announced in August 2015 on completion of 25 years in business.
One of the popular mid-cap stocks with the mutual funds (12.65% stake end June 2015),
Unichem Laboratories derived 57.2% of its revenues from overseas markets last fiscal. A significant portion, of 89%, was from formulations and remaining 11% from APIs.
There are wholly owned subsidiaries in the UK, the US, Brazil, South Africa and Ireland, whose focus remains on high value-added generics. Steps are being taken to grow revenues from international markets. With contribution on the lower side, there is tremendous opportunity to boost revenues from overseas, particularly the US. Contribution from the US market doubled in FY 2015 and a robust growth is expected in the current fiscal as well.
The zero-debt company has four manufacturing units. The US FDA recently inspected three plants without any critical observations. To serve the fast-growing US business, capacities are being augmented at the Pithampur plant in Madhya Pradesh. Also, an additional API facility has been acquired in Kolhapur, Maharashtra, where investments are required to commence production for both domestic and international businesses. Capex of Rs 80 crore was incurred in FY 2015 and it will on the higher side for the next two financial years.
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