RPG LIFE SCIENCES - Q2 FY 20 - RESULTS - REVIEW

RPG LIFE SCIENCES

Q2 FY 20 RESULTS REVIEW

Management : Harsh VardhanGoenka –Chairman, Chairman,RPG Group
YugalSikri -Managing Director

RPG Life Sciences, a part of RPG Enterprises, is an integrated pharmaceutical company operating in the domestic and international markets in the Branded Formulations, Global Generics and Synthetic APIs space. The company is a research based, pharmaceutical company, producing a wide range of quality, affordable medicines.

Manufacturing: Both API &  Formulations (3 Units)

Employees: ~1160

Sales* : Rs 331 crs

EBIDTA : 34 crs

PBT : Rs 15 crs

Exports : 39%

3 Business Verticals :

DOMESTIC FORMULATIONS :

Comprises of Mass & Specialty Businesses

Mass Business is a Mass-specialty Business with strong ‘Text Book’ brands in Cardio-vascular, Ortho, Neuro and GI therapies

Specialty Business is segment-leading ‘Nephro’ business with newer therapies ‘Onco’ and ‘Uro’ under development

Manufacturing: In-house (Unit at Ankleshwar) & Outsourced

Revenue: Rs196 crs

INTERNATIONAL FORMULATIONS

Niche Focus: Mainly Immuno-suppressants

Main Markets: Europe, Canada, SE Asia, Africa

Manufacturing: EUGMP/WHO Approved Unit at Ankleshwar

Revenue: Rs 67 crs

APIs

·        Both for Captive & External Sales

Manufacturing: TGA/WHO GMP Approved Unit at NaviMumbai

Revenue: Rs68 crs

Manufacturing Facilities

NAVI MUMBAI

•API Plant

•WHO, TGA approved

Ankleshwar, Unit 1

•Formulations Plant

•WHO, EUGMP,Ethiopia, Kenya, Sudan, Nigeria approved

Ankleshwar, Unit 2

•Formulations Plant

•WHO, Kenya, Nigeria approved

Products Under Development

SodiumValproate-EUCTD

AminocaproicAcid–ANDA

Azathioprine–ANDA

MycophenolateMofetil-ANDA

RPGLS: A transformation journey in progress

·        Bio-tech sell-off

·        Brands acquisition

·        Specialty strengthening

·        ANDA filing

·        USFDA approval

·        Portfolio clean-up

·        Growth restoration

·        Profitability upliftment

·        Leadership strengthening

·        Focused investment in Formulations business

·        FY 19: A poor year, after 3 strong years

·        Domestic makes up ~60% of company business

Domestic: Setback in Mass Formulations

Challenges in Mass Business & Actions initiated

Challenges in Mass Business

Market slowdown in represented segments

High reliance on trade; low focus on Rx generation

High in-market inventories, expiries & returns

De-growth of 21%

Loss after 2 years of profits

Gross Margin maintained ~55%

Actions initiated 

Change in business leadership

Renewed focus on Rx generation

Discounts & promotion optimization

Product Portfolio Augmentation : Chronic Therapies; Line Extensions of Legacy Products

Intl. Formulations: Setback in Regulated Market Business

Growth in Emerging Markets by 11%

 Regulated Market business setback due to key customer Teva deciding to drop the product due to internal re prioritization

API: Continues to be a strong cash cow

Consistent Performance for the last 3 years

Quinfamide is the key product and Latin America is the key market

API: Limited Customer & Molecule Base

Challenges Faced

Limited customer & molecule base

Legacy plant not capable of upgradation to regulated market standards

ACTIONS INITIATED

Manufacturing Strategy optimisation -Outsourced manufacturing initiated with USFDA approved API suppliers for key molecules

US DMF approval for Azathioprine received; source change process started

Strong growth & profitability

Good demand momentum for exports

FY19: Improvements visible in H2

Strategy Forward: Continued focus on Formulations

Focus : Downstream integration for formulation business; selective market expansion

Strategy : Own technology; judicious mix of In house and outsourced manufacturing

Focus: Above market growth with strong profitability

Strategy:  Product portfolio augmentation, Prescriber base expansion, Field force capability building

Focus: Growth/ Entry in regulated/B2C markets

Strategy: Niche products pipeline, Partnership for NPD; USFDA approval of the plant

RPG LS	Sep '19	Jun '19	Mar '19	Dec '18	Sep '18	YOY	QOQ
Net Sales	98.49	94	69	91	91	8.83	4.7
Interest	0.36	0.73	0.91	0.99	1.05	-65.7	-50.7
P/L Before Tax	12.04	11	2.1	7.3	3.1	288	11
Tax	2.27	2.51	0.58	1.97	0.94	141	-9.6
Net Profit	9.77	8.35	1.54	5.28	2.16	352.31	17.01
Equity	13.23	13.23	13.23	13.23	13.23	0	0
Basic EPS	5.91	5.05	0.93	3.19	1.31	351.15	17.03
Diluted EPS	5.91	5.05	0.93	3.19	1.31	351	17
NSE
Nov 15,	278.35	(+2.81%)		VOLUME 110030
PE	11.8
52 Wk L/H	55	319
Face Value (RS)	8
EPS (TTM)	15.08