Cadila Healthcare, a Rs.3,600 crore Indian pharma company, has maintained its strong financial position and set to become a US$ 3 billion entity by 2015 with special focus on research. The company has spread its presence in US, Europe, Japan, Latin America, Asia Pacific, Africa and Middle East during last couple of years by launching products in the therapeutic areas like CVS, GI, pain management, etc. It has in-licensing arrangements with international players like Bayer, Schering Pharma, Boehringer Ingelheim, Nycomed, Baxter, Genzyme etc.
The promoters are holding almost 75 per cent of equity and remaining stake is with foreign financial institutions, domestic financial institutions and public. The Rs.5 face value Cadila scrip outperformed the the BSE Healthcare(HC) index in the first two months of 2011 and now moving in the range of Rs.760-780 on Bombay Stock Exchange with a market capitalisation of Rs.15,684 crore. The BSE HC index declined by 13.8 per cent to 5832 points on March 7, 2011 from 6763 points on January 3, 2011. Whereas, Cadila scrip maintained its level at Rs.753 touching its new yearly high of Rs.864 on January 21, 2011. Sound financial performance, tie-ups, new launches and entry into new markets given boost to investors confidence.
The management has taken due care of its investors and stepped up equity divided to 120 per cent during 2009-10 from 80 per cent in last year. In April 2010, the company issued liberal bonus shares in the ratio of 1:1 and its current equity capital stood at Rs.102.37 crore consisting of 20.47 crore shares.
The latest performances also helped the company to move ahead smoothly. The company's consolidated net sales increased by 19.5 per cent during the first nine months ended December 2010 to Rs.3296 crore from Rs.2758 crore in the similar period of last year. Its earning before depreciation, interest, taxation and adjustments went up by 28.2 per cent to Rs.808.03 crore from Rs.630.11 crore. Its net profit has taken a quantum jump of 37.7 per cent and touched to Rs.532.03 crore from Rs.386.38 crore. Its EPS touched to Rs.25.98 as against Rs.18.87 in the last period. Based on these figures, the company will able to generate impressive growth in current year.
During the third quarter, Cadila launched 9 new products in the domestic formulations market, which includes line extensions and 'Ostigard 100' a first-in-India launch. The consumer wellness business posted a top line growth of 21 per cent and a bottom line growth of 37 per cent. In the US, its sales grew by 33 per cent and it launched 4 new products in the US. Out of this two were day 1 launches. The formulations business in Brazil grew by 33 per cent and in Japan, the company posted a growth of 22 per cent. It launched Rabeprazole and Glimeperide in Japan, both of which were day 1 launches.
Cadila Group filed 3 ANDAs during the third quarter taking the total to 118 filings. Three additions in US DMFs were filed during December quarter, taking the total filings to 96 US DMFs.
Recently, the company has tied up with Bayer to set up a new 50:50 pharma joint venture called Bayer Zydus Pharma for the sales and marketing of pharmaceutical products in India. The new JV will focus on women's healthcare, metabolic disorders, diagnostic imaging, cardiovascular diseases, anti-diabetic treatments and oncology.
The domestic formulation business contributed around 52 per cent to its consolidated net sales of Rs.3,575 crore during the year ended March 2010. Similarly, sales from regulated markets like US, Europe and Japan contributed 37 per cent and emerging markets like Brazil, South Africa, Sudan, Uganda, Algeria Myanmar, Taiwan, Philippines etc., contributed 11 per cent during 2009-10.
The joint ventures set up by Cadila Healthcare have made higher contributions to its top line as well as bottom line and likely to maintain momentum in coming years. Zydus Nycomed JV has set up state-of-the-art manufacturing facility for pantoprazole key intermediates and commissioned the expanded facility to manufacture complex high-end APIs for Nycomed. Zydus Hospira, a JV for oncology injectables, is planning to produce 6 oncology products. It has already commenced commercial supplies for EU market. Zydus BSV, JV for oncology NDDS, has launched NDDS product in India as Nudoxa.
With the talent pool of 1050 scientists and R&D investment of Rs.207 crore during 2009-10, Cadila is focusing on NME research, biologicals and NDDS. The company has set up two pharmaceutical technology centres to focus on finished dosage form development and NDDS. The Zydus Research Centre is focusing on dyslipidemia, diabetes, obesity and inflammation. It signed a new drug discovery and development pact with Eli Lilly to focus on cardiovascular research. It is conducting joint research with Karo Bio, Sweden for non-steroidal glucocorticoids.
The company is entering in vaccines segment in a big way in coming years. It has acquired Etna Biotech, Italy, which is engaged in vaccine research and development. It is setting up vaccine technology center. The company developed and launched successfully H1N1 vaccine and several other vaccines are under different sages of development.
Thus investment in R&D, joint ventures, growth in profits in first three quarters and tie-ups should boost its profit margins in the coming years. This will help Cadila scrip to move forward despite volatile market conditions and poor investors sentiment.