MOSL: SHILPA MEDICARE (Buy)-Strong pipeline and forward integration to drive earnings
​SHILPA MEDICARE: Strong pipeline and forward integration to drive earnings
(SLPA IN, Mkt Cap USD0.7b, CMP INR585, TP INR804, 41% Upside, Buy)
We recently met Shilpa Medicare’s (SLPA) management to get an update on its business segments. The company is progressing well on ANDA filings, with cumulative pending approvals of 26. With a low base in the US market, sales there are expected to ramp-up, led by its existing products and new approvals. We expect SLPA to deliver US revenue of INR4b in FY20, significantly higher than INR250m in FY17. The company is well positioned in the Europe market too, with marketing authorization in place and likely tie-ups with marketing agencies. In addition to injectables, SLPA has started R&D in transdermal patches. We continue to like SLPA, as the key positives are in place to drive 42% earnings CAGR over FY17-20E. We maintain our price target of INR805, based on 12M forward earnings, and reiterate Buy.
Key highlights of the meeting:
- With a focus largely for oncology molecules, SLPA has filed five ANDAs till date in this segment, taking cumulative filings to 28. With only two approvals till date, SLPA has a robust ANDA pipeline awaiting approvals.
- Of the 28 filings, 13 are own and 15 are partnered. SLPA intends to increase share of own filings – based on its R&D, SLPA plans to file 7-10 ANDAs and 6-10 DMFs per year over the next 2-3 years.
- From a pure API company, SLPA is in process of transforming itself and forward integrating toward formulations.
- SLPA has 17 marketing authorizations for the Europe market, and intends to file 7-10 per year for the next 2-3 years. SLPA is in the process of tying up with a marketing agency to launch products in Europe.
Shilpa Medicare Limited is engaged in the business of manufacturing of bulk drugs or active pharmaceutical ingredient (API) and intermediates, and wind power generation. The Company's segments include Bulk Drug/Intermediates and Energy. It offers 3a 7b Dihydroxy. The Company deals with APIs, Intermediates, Formulations, New Drug Delivery Systems, Peptides/Biotech products and Specialty Chemicals. The Company supplies oncology/non-oncology APIs and intermediates. Its oncology API products include Anastrozole, Axitinib, Azacitidine, Abiraterone Acetate, Bicalutamide, Bortezomib, Busulphan, Cabazitaxel Amorphous, Capecitabine, Carboplatin, Cladribine, Clofarabine, Zoledronic acid, Vismodegib, Pemetrexed DiPotassium Nonahydrate, Cyclophosphamide Monohydrate and Cytarabine. It also offers AntiRetroVirals. Its non-oncology API products include Acebrophylline, Echothiophate, Nifedipine, Perfenidone, PrucaloprideSuccinate, Sildenafil Citrate, Ursodeoxycholic acid and Dimethyl Fumarate.
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