Granules India Ltd – Off-Patent Drugs Manufacturer & Future Scope

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Company Overview of Granules India Ltd

Founded in 1991, Granules India Ltd is a large-scale vertically integrated Company manufacturing Active Pharmaceutical Ingredient (API), Pharmaceutical Formulation Intermediate (PFI), and Finished Dosage (FD).

The Company over the years has created a strong presence in ‘the first line of defense’ products such as Paracetamol, Ibuprofen, Metformin, Methocarbamol, and Guaifenesin.

To date, Granules India Ltd has filed 45 ANDAs, received approval for 29 products (12 in FY20), and launched five in the US.

EBITDA margins have seen improving from better product mix, operating efficiencies, and higher capacity utilisations.

Also, the margins are expected to further expand with the launch of own-label products in the US, a new facility commenced at Vizag and using its own Metformin with new capacity commissioned.

In FY20 it received approval for 12 ANDAs. It has a further 16 ANDAs (45 cumulative filings) pending approval with the US FDA.

The company plans to file 20-25 ANDA filings from India and Virginia’s facilities put together over the next three years. 

The company has its dominance in key APIs such as paracetamol, ibuprofen, and metformin are likely to help Granules emerge as a prime beneficiary since the Covid-19 outbreak has led to a surge in demand for such drugs.

Granules India Ltd is likely to maintain strong traction for the next couple of years, driven by formulations and the healthy contribution from the new capacities.

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Revenue & EBITDA trend over the years 2008 – 2020


Product Revenue Breakup – Recent 3 Years

Geographic Revenue Breakup – Recent 3 Years

Under-Utilized Capacity of Granules India Ltd


Granules India Ltd will focus on asset sweating as the newly installed capacity is under-utilized.

Key molecule capacity is underutilized and waiting for regulatory approvals. Currently, Paracetamol capacity utilization is at ~60- 65%, Metformin ~15%, and Guaifenesin is undergoing validation process.

Carlyle Group in advanced stages to acquire Granules India Ltd for $1 billion 

  • Granules India, which has been on the block for a while may have found a buyer in large private equity firm Carlyle Group, which has been active on pharma investments.  
  • Granules India has been exploring options to sell stake due to favorable valuations and succession issues.
  • Carlyle is in advanced stages to acquire Granules India for around $1 billion.
  • Carlyle is expected to buy promoter shares which will trigger an open offer to acquire the additional stake from others. Carlyle recently acquired Sequent Scientific and bought a minority stake in Piramal Pharma.

US Generics US Generics – Opportunity from Core and Non-core Products Expansion

In FY20 it received approval for 12 ANDAs.

It has a further 16 ANDAs (45 cumulative filings) pending approval with the US FDA. The company plans to file 20-25 ANDA filings from India and Virginia’s facilities put together over the next three years. 

  • Received 2 awards from the US government for products made in GPI.
  • 24 Rx ANDAs filed and 16 ANDAs approved currently. 8 products to be approved. 11 products under development between GPI and GIL (Rx)
  • Granules India Ltd US Generics: Granules Pharmaceuticals Inc. (GPI)
  • Expect 3 launches in FY21, with an addressable market size of about $1 Bn based on IQVIA (brand and generic). GPI revenue in FY20 is at INR 2,960 Mn.
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Expanding the Core Business to Non-US market

  • Core molecules include Paracetamol, Ibuprofen, and Metformin. Core molecules will keep increasing in absolute terms on an account of expanding it to new geographies.
  • Gained traction with a first to the generic product – Methergine in June 2018. Set up a front end sales and marketing division and launched 11 products under the GPI label: “Control your own destiny”.
  • Granules India expanding the base business by entering into new geographies (Europe, Canada, South Africa).
  • The last paracetamol manufacturing plant in Europe was closed in 2008, while India & China produces nearly 60% of the world’s paracetamol.

Also Watch: Granules India Ltd Management on Q2 Results

US Generics: Opportunity by Market Size and Dosage Form in FDs

  • Higher contribution from FD continues to grow in absolute terms from INR 3,515 Mn to INR 4,301 Mn, up 22% YoY.
  • PFI is growing at 33% YoY with increasing contribution from 18.7% to 20.2% YoY on account of increasing penetration of PFIs as a category. API grew 17.2% YoY with the acquisition of new customers.

  • Filing new ANDAs (7-8 ANDAs per year. 2-4 dossiers per year and value-added DMFs/CEPs/EMFs).
  • Focus on developing controlled substances and niche/differentiated modified and extended-release products in varied dosage forms.
  • Average launches 7-8 ANDAs/Dossiers per year. Focus on operational efficiencies and process innovation through R&D.
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Also Read: Sequent Scientific – A Giant in Animal Heathcare Industry

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Shuchi Nahar

Shuchi Nahar

Shuchi is NISM Certified Equity Research Analyst, CFA - Level 1, a student of Law and Finance, and an aspiring CS.
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