MARKSANS PHARMA LTD - QUARTERLY RESULTS - Q2 FY 15 (SEP 14) - NET SALES UP30.44% & NET PROFITS UP 54.19% YoY (CONSOLIDATED)

MARKSANS PHARMA LTD

QUARTERLY RESULTS

Q2 FY 15 (SEP 14)

CONSOLIDATED PERFORMANCE Q2 FY 15

MARKSANS has improved its financial performance considerably in Q2 FY 15 as can be seen from the Table below .

Ø Net Sales have gone up 30.44% YoY and Net Profit has gone up 54.19% YoY.

Ø The QoQ performance also is impressive. QoQ, Net sales has gone up by 4% Net profit by 22%

CONSOLIDATED RESULTS TABLE 
-In Millions.Rs.

MARKSANS	Q2 FY 15	Q1 FY 15	Dif % QoQ	Q2 FY14	Dif% YoY
NET SALES	2104.75	2023.95	3.99	1613.54	30.44
TOTAL INCOME	2105.39	2024.16	4.01	1613.79	30.46
TOTAL EXPENSES	1635.44	1636.57	-0.07	1348.98	21.24
OPT	469.95	387.59	21.25	264.81	77.47
PBT	422.08	352.21	19.84	224.87	87.7
TAX	105.49	93.03	13.39	19.55	439.59
NPT	316.59	259.18	22.15	205.32	54.19
EQUITY	385.32
EPS	0.81	0.66	22.73	0.52	55.77

Background

 Marksans Pharma Limited promoted by Mark Saldanha is a Manufacturer of generic pharmaceuticals across regulated markets – soft gelatin capsules & tablets in niche segments; Also undertakes Formulation CRAMS

 Export oriented business (exports contribute more than 99% of revenues) with a focus on regulated markets

 Supplies its products to 25+ countries globally with UK followed by US being its largest markets

 USFDA, UKMHRA & TGA accredited manufacturing facility for oral solids and soft gelatin capsules in Goa, India − UKMHRA approved manufacturing facility for Liquids / Ointments / Sachets at South Port, UK

 The business is classified under 4 heads: US Generics, UK / Australia Generics (Relonchem & Bells in UK and Nova in Australasia), CRAMS (external as well as for own subsidiaries) and ROW  Generics (CIS & South East Asia are key regions

Ø  Manufacturing facilities with global major regulatory accreditations

Ø  Well poised to capture the niche softgel opportunity

Ø  Expanding presence in the US market to be a key focus area

Ø  Targeting existing global markets for growth

Ø  Focused & experienced senior management team

Goa Plant - Capsules & Tablets

 Facility for manufacturing soft gelatin capsules & tablets

 Fully-automated unit spread across 18,000 sq. meters

 Generic pharmaceuticals manufactured from this facility are exported across the globe

 Fully automated packaging capabilities and a R&D centre that comprises of 3 key divisions for formulation development, devising analytical methods & conducting stability studies

 Employs 30+ staff in its R&D lab

Southport, UK Plant–Liquids, Ointments & Powders

 Primarily used to produce formulations (non-sterile liquids, ointments & powder products)

 Supplies to UK, West Africa & Middle East

How Marksans can effectively leverage the Softgels opportunity

An active Softgel player from India

: Marksans is currently one of the few active Indian firms focused on the Softgel segment

Differentiated offerings

: Focused on Softgels with a view to build a differentiated set of offerings in the crowded generics market

Selectively targeting the world’s biggest markets

: Filed SGC products in all major markets including USA, UK, Europe, Canada, Australia & Russia

Manufacturing capabilities with major approvals in place

: Marksan’s Goa SGC facility has various global regulatory approvals from USFDA, UKMHRA, TGA, etc

CRAMS : Leveraging R&D and manufacturing capabilities

 The CRAMS business broadly comprises: – External CRAMS

: Global pharmaceutical companies like Sandoz, Teva and Actavis

Subsidiary CRAMS

: MRKS’ subsidiary companies Relonchem , Bells, Nova etc.

 The CRAMS business with its strong margins is the largest contributor to the company’s EBITDA. With only a 26% contribution to the revenues, it adds 38% to consolidated EBITDA

 The Company undertakes selected contracts for highly specialized molecules, like narcotics, thus commanding higher margins than the industry average and hence offering better profitability

 Apart from taking manufacturing contracts for its own subsidiaries, it also has licensing agreements with other 6-7 MNCs for the next few years, including with leading players such as Teva , Sandoz and Actavis

Subsidiary CRAMS contributed 67% of the revenues in FY14

About Mr.Mark Saldanha

 Mr.Saldanha is the founder promoter of the company

 He is also the Chairman & Managing Director of Marksans

 A science graduate with more than two decades of experience across business and technical functions

 Prior to Marksans, he had been associated with Glenmark

Pharmaceuticals Ltd. as a Whole Time Director

BUSINESS STRATEGIES :

Focus on increasing sales from existing approved ANDAs (e.g., scale up contracts with branded retail players for Ibuprofen softgel)

 To be the first to file the product in the US aiming for Day 1 launch after patent expiry

 Tie up with the US pharma majors for exclusive supply & marketing arrangements

Set-up front end presence in the US

 Set up front-end presence in US, especially for the OTC segment in the near term, to maximize returns from fresh ANDA approvals in softgels expected over the next couple of years

Increase presence in Europe

 Expand presence in Europe, targeting other key markets besides UK such as Germany where Softgels as well as other pipeline products have a good market potential 

Continue building CRAMS Business

 Continue to build CRAMS business and expand CRAMS in regulated markets which could be at higher realizations and profitability

Explore out-licensing opportunities & Focus on drugs going off-patent

 Explore out-licensing opportunities for growth wherever the Company’s presence is limited

 Marksan’s Pharma is focusing on drugs going off patent between 2013 and 2018 

Inorganic Growth Strategies

 Initiatives already taken in this direction with the acquisitions of Bell’s, Relonchem & Nova

 Out-licensing ANDA’s to increase market penetration

 Leveraging manufacturing and R&D competencies in India (Low

-cost)

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