Strides Pharma Analysis: 2020 Annual Report Takeaways

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Business Overview:

Let’s dig deeper into Strides Pharma Analysis of 2020 Annual Report.

Business Model:

  • Develop and market niche generic formulations across several dosage formats | 124 ANDAs filed (38 pending approval)
    •  Among the world’s leading soft gelatin capsule manufacturers.
  • Debt Repaid during the year: 1374crs | Total debt: 1020crs
    • Weak operating cash flow: 35- 40% conversion (Improving)
    • Capex of 130crs.
  • 5 USFDA approved plants |  8 Manufacturing plants
    • located in India [Bengaluru (two), Puducherry, and Chennai], the US, Singapore, Italy and Kenya.
  • Significantly affected due to withdrawal of all Prescription & OTC Ranitidine drugs from the US market: written off the inventory, and along with the withdrawal cost. Here‘s the timeline:

Existing US Portfolio:

  • 151 products | $23.9B opportunity (FOCUS: Regulated Markets)
    • Expect to file 12-15 ANDAs & approved numbers on similar lines | During the year, filed 4 new ANDAs for the US market and received 7 product approvals.
    • Focus is to grow market share in commercialised products.
    • US FDA approved plant acquired in Florida, USA.
    •  Acquired 18 ANDAs from Pharmaceutics International, Inc. for the US market (US$2.5 Billion market opportunity)

On Puducherry OAI:

“We received a warning letter in July 2019. This event has cast a blemish on our otherwise exemplary track record in having successful outcome from inspections.” ~ Mr Arun Kumar, Founder & Non-executive director

“We now await information from the US FDA on re-inspection. We do not take this lightly. There can be no room for complacency when it comes to quality compliance.” ~ Dr R Ananthanarayanan, MD & CEO

Accepting one’s mistake is a sign of character.

Other Regulated Markets:

    •  Momentum continues in the front-end-led markets of the UK, Australia, South Africa and Canada | 20 new product fillings.
    • Acquired a strategic stake in Fairmed Healthcare AG in Europe, thereby gaining a strong foothold in Germany, Austria and Switzerland (DACH region)
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Institutional tender business:

    • Shifted key products in the institutional business from India to our manufacturing site in Nairobi, Kenya, for an ‘In Africa for Africa’ market play. 
  • R&D spend is  3% of sales | 225+ scientists

Strides Pharma Concall Summary by Trendlyne:

Big Development:

  • Announced our re-entry into the sterile injectables segment with an incremental investment of ~US$40 Million in Stelis Biopharma: controls 48% of the company & will increase it to controlling stake.
    •  3 Segments of Stelis: biopharmaceuticals products, Contract Organisation (CDMO) and biologics services and CMO operations for sterile injectables. Paving the growth from FY23 & onwards:
  • Top Investments that have High Future Potential: Consumer Healthcare & Stelis (Invested 90crs in FY20)
  • Segments to focus on global speciality medicines: Oncology, Autoimmune
  • 2608 employees, % increase in median remuneration is -5% while KMP had a high salary increase:
  • Promoter Shareholding: 31.24% | 51% of shares Pledged (expected to go down as the Sequent- Carlyle deal takes place)
  • Institutional shareholders which increased stake; contains the likes of LIC
  • High Contingent liabilities, Although decreasing.

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JST Investments

JST Investments is a Mumbai-based investment firm that believes in long-term wealth creation. It's a brainchild of Aditya Kondawar, Aditya Shah, and Anish Moonka.
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