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Unichem Laboratories

July 31, 2014 by sknlakshmi

Unichem Laboratories is one of the India's oldest and largest pharmaceutical company headquartered in Mumbai, Maharashtra, India. Its plants located in Roha (Maharashtra), Goa, Baddi (Himachal Pradesh) & Ghaziabad, also new plant coming up in Sikkim. The company has made more than 500 product registrations across the world and more than 500 regulatory filings such as DMFs, EDMFs. It has been granted Certificate of suitability to European Pharmacopeia (CEP) by European Directorate for the Quality of Medicines and Healthcare (EDQM) for Alfuzosin Hydrochloride.  Company mainly interest in synthesis, development, manufacturing, marketing and export of bulk drugs, chemical intermediates and formulations, serving the needs of both human and veterinary health-care. 

With formulations forming the core of Unichem’s business, the company also manufactures active pharmaceutical ingredients (APIs or bulk actives). In addition, it has several pharma products that address relevant and growing therapeutic areas like gastroenterology, cardiology, diabetology, psychiatry, neurology, anti-bacterials, anti-infectives and pain management among others.

Backed by a highly capable and motivated team of nearly 3000 people, Unichem is headquartered in Mumbai, India, and has six drug manufacturing locations across the country. In keeping with its commitment to benchmark quality standards, several of the company’s facilities have been accredited by reputed international organizations such as the US FDA, ISO, UK MHRA (earlier MCA), MCC (South Africa), WHO (Geneva) and TGA (Australia).

Unichem Laboratories’ revenue grew 9.6% yoy, to Rs2.91bn (slightly above our expected Rs2.84bn), driven by robust export revenues. Owing to higher input and staff costs, EBITDA margin shrunk 414bps yoy, to 15%, though were in line with our estimates. Reduced margin and other income caused 16.3% yoy decline in adjusted PAT, at Rs302m, though higher than our estimated Rs274m. The company reported exchange gain of Rs14m during the quarter. Export formulations key growth driver. 

SWOT Analysis

STRENGTHS

  • Low cost of production.
  • Large pool of installed capacities
  • Efficient technologies for large number of Generics.
  • Large pool of skilled technical manpower
  • Increasing liberalization of government policies.
  • Unichem Laboratories is one of India’s most respected pharmaceutical companies and is committed to delivering better health through superior products. 
  • By combining strategic research and expert industry knowledge, Unichem aims to transform itself into a global pharmaceutical drug companywith an increasing focus on cutting-edge research and developed markets
  • Chronic focus, clean balance sheet, decent dividend payout ratio, availability of facilities to scale up operations. 

WEAKNESS

  • Lack of experience to exploit efficiently the new patent regime.
  • Very low key R&D.
  • One of the lowest MR productivity, US traction still in nascent state. 

OPPORTUNITIES

  • Growing incomes resulting in getting batter medical facilities
  • Growing attention for health
  • New diagnoses and new social diseases.
  • Saturation point of market  is far away.
  • New therapy approaches.
  • New delivery systems.
  • Spreading attitude for soft medication 
  • Globalization
  • Easier international trading
  • New markets  are opening..
  • The US Generics space. 

THREATS

  • Containment of rising health-care cost
  • High Cost of discovering new products and fewer discoveries.
  • High entry cost in newer markets.
  • High cost of sales and marketing.5. Competition, particularly from generic products
  • Increased USFDA scrutiny across the globe regarding cGMP issues and consolidation in the US pharmacy space. Increased competition in the domestic formulations space. 

Peer Group comparison

Particulars

Unichem

Cipla

Strides Arocolab

Price

193.15

437.05

665.6

Mkt Cap

1775

35100

3961

Sales

1087

8432

831

Net profit

177

1507

56

EPS (TTM)

13.46

17.29

15.18

Book Value

99.92

127.76

820.12

P/E

14.35

25.28

43.85

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