Tag: Supriya Lifescience

Interview | The secret behind the tripling of profit for this Mumbai drug maker

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Pharmaceutical companies are always under pressure as they are in a sector that is highly regulated and at the same time, highly competitive. This has been more intense in the active pharma ingredient (API) space as the business of generic drugs is getting increasingly commoditised, and the market prices are highly volatile. Sustaining growth, therefore, has become a big challenge even for large companies. 

Some small and medium players with a niche market approach, however, could beat the trend. 

Mumbai-based Supriya Lifescience (SLL) raked three times the profit in the latest December quarter compared to a year earlier. CNBC-TV18 spoke to Dr Saloni Wagh, Wholetime Director, SLL, to ask how the tide turned for the company. 

The ₹500 crore company makes active pharmaceutical ingredients, the primary input for making drug formulations, a business where the margins are highly volatile. The net profit margin of the company ranged between 12% to 22% in the last five years (2019 to 2024), while the industry margin swinged between 0.1% and 19% during this period.  

Wagh highlighted three strategic changes: focus on niche therapeutic areas and strong entry-barrier products with predictable business, reduce reliance on volatile markets like China and add most potential regulated markets for sales, and a new management team of professionals. 

“We want to beat the trend by pursuing our niche market approach with additional capabilities in product innovation and manufacturing and (are) also following a complete backward integration model,” the 29-year-old Wagh, daughter of the company’s founder Satish Wagh, said.

Listed in December 2021 after a ₹700 crore initial offer (IPO), SLL is today valued at ₹28.21 billion. The company, which is now entering the custom-development and manufacturing (CDM) of dosage forms, is setting up a dedicated research and development facility in Ambernath near Mumbai. 

In the latest December quarter, the company clocked a 33.2% growth in revenue at ₹140 crore, at a time when the industry average was less than 8%. The net profit almost tripled to reach ₹41.49 crore, with a net profit margin of 21.27%, as opposed to 20.81% in the year-ago quarter. 

Here’s a look at the performance of peers

SLL Chairman & Managing Director Satish Wagh, who founded the company in 1987, believes this is a sign that the strategic changes have started to yield results.

Dr Saloni Wagh, who steered the fresh growth momentum in the company along with a new team of senior industry professionals, said that SLL, as part of the CDM business, is also exploring exclusive partnerships with global branded drugmakers, and significantly adding production capacities at its manufacturing site at Lote Parshuram industrial area in Maharashtra looking at this new growth opportunity. 

Reducing dependence on volatile markets  

Since 80% of its revenue comes from exports to 86 countries, Supriya Lifescience decided to focus on developed markets where the business is more predictable and the margins are high. 

Traditionally, one of Supriya’s key markets (sales) has been China. But as part of the geographical shift, this dependence is being reduced. Earlier (till 2022-23), more than 50% of SLL’s revenue was from Asian markets, predominantly China. But the geographical shift has resulted in changing this proportion to 40:60 (60% revenue from Europe, Latin America and the US.)

Currently, the largest contributor to SLL’s revenue is Europe, where Saloni’s younger sister Shivani, who is also on the Board now, leads the market development efforts.

Niche products with predictable margin

In the last five years, SLL has been aggressive on product and process innovation. While the product innovation — in the form of efficacy enhancements, added bioavailability or new delivery systems (NDDS) by identifying patient needs— helps boosting niche market play with less competition and better margin, prcess innovation helps the company to keep the production cost lower to compete in the generic market. The new business opportunity with custom-development and manufacturing of dosage forms will support its plans to partner with large branded drug makers with high margin products and even market exclusivity.

Currently, there are about 8-10 products in various stages of research and development. These span from anaesthetics and antidepressants to analgesics, anti-obesity, and drugs for attention-deficit/hyperactivity disorder (ADHD). 

“Most of the new products, which are either in the registration process or research pipeline of SSL are in the category of high revenue potential,” says Dr Wagh.

All these products, which are expected to be on the market in the next three years, have a combined revenue potential of about ₹500 crore for the company. 

The company expects to get exclusive marketing rights for at least six months in the US for one of these products. Now, the company is increasing the production capacity at Lote Parshuram industrial area in Maharashtra by multifold to 550 KL.  

A new team of professionals

Supriya Lifescience brought in senior industry professionals like Rajeev Kumar Jain, Dr Shekhar Bhirud and Sreekant Shreedharan, among others—each of them with an average industry experience of at least 25 years, as part of steadily moving from the promoter driven management to a professional driven one. The daughters who joined the Board of late work closely with these professional leaders.

What does the street make of SLL’s pivots? 

SLL stock has moved up more than two times in the last one year from ₹170.95 a unit in March 2023 to ₹348.45 in March 2024.

“Supriya is well placed with its leadership position in niche products, comprising 38 APIs across diverse therapeutic segments,” says HDFC Securities’ Kushal Rughani in his recent report. While the Chinese market continues to remain a concern for the company, the management is now de-risking the current product basket, minimising geographical reliance, added Rughani.

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Supriya Lifescience confident of meeting FY24 revenue guidance after strong Q3 results

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Supriya Lifescience reported strong growth in quarterly earnings for the quarter ending December 31, 2023, and the company is confident of meeting its FY24 revenue and margins guidance. The stellar rise in net profit was achieved due to the growth in sales in Europe. The company’s profit after tax (PAT) surged more than three times, while revenue grew over 30% in the December quarter.

In an interview with CNBC-TV18, the Chairman and Managing Director of the company, Satish Wagh, said that the phenomenal quarter reported by Supriya Lifescience was a result of a growth in sales in Europe.

The sales in the said region contributed to 42% of the company’s overall net revenue. The analgesic and anesthetic segment led Supriya Lifescience’s revenue growth and contributed to 49% of sales in the December 2023 quarter, as opposed to 21% in the same quarter of the previous financial year.

Wagh assured that the company is confident of meeting the revenue and margin guidance for FY24. He is hopeful of achieving the guidance as the company is into a specialised category of active pharmaceutical ingredients (APIs). He also said that the company will continue to manage the guided margin of 28–30% in the near future.

On the top line, Supriya Lifescience had guided for a 15% revenue growth for the financial year 2024 (FY24). However, the company’s revenue growth touched 30% in the first nine months of the fiscal year. Nath has guided 21-23% on revenue growth in FY24, which could increase going forward in both revenue as well as margins.

Nath also spoke about Supriya Lifescience’s long-term contract with the European company DSM, where the order has started moving for the current quarter. This contract is likely to bring good margins to the API manufacturing company.

Supriya Lifescience reported a stellar 213% year-on-year (YoY) jump in PAT at ₹29.79 crore in Q3FY24 compared to ₹9.52 crore in the same period last year, while its revenue grew 33.2% YoY to ₹140.07 crore from ₹105.14 crore in the same period a year ago.

Supriya Lifescience Ltd shares were trading flat during the afternoon session on Monday, down 0.12% at ₹341.75 per piece on the BSE at 2:30 PM.

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Supriya Lifescience eyes strong growth in Latin America with 10 newly registered APIs

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Mumbai-based Supriya Lifescience, a global leader in the production of Active Pharmaceutical Ingredients (APIs), is eyeing significant expansion in the Latin American market. The company’s successful registration of 10 APIs marks a key milestone, paving the way for an expected incremental revenue of ₹300 crore.

In an interview with CNBC-TV18, Satish Wagh, the Chairman and Managing Director (CMD) of Supriya Lifescience, highlighted that the achievement follows the certification of their manufacturing site in Maharashtra with good manufacturing practice approval from the Brazilian regulatory authority.

“We have already registered 10 APIs out of 15. I am hopeful that within the next two years, we will attain at least ₹300 crore more in the Latin American market, especially in Brazil,” expressed Wagh.

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Discussing the company’s margin guidance, Wagh said, “We aim to double our margins within the next four years, and our EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) will continue to grow.”

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The API manufacturer has a market capitalisation of ₹2,472.83 crore.

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Supriya Lifescience embarks on key internal expansion, including R&D and distribution network

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bulk drug maker Supriya Lifescience is embarking on a major internal expansion, which includes capacity addition, enhancing research and  development capabilities and strengthening distribution network.

In an interview with CNBC-TV18, the company’s Whole Time Director Saloni Wagh spoke at length about its expansion plans and financial projections for the fiscal year 2024. With a clear emphasis on internal growth and efficiency, Supriya Lifescience aims to achieve ambitious revenue growth while maintaining healthy profit margins, she said.

Founded in 1987, Supriya Lifesciences is currently a prominent producer and supplier of active pharmaceutical ingredients (APIs). The company’s present focus is on internal expansion and by allocating a majority of funds towards this objective, it aims to fortify the market position and capitalise on emerging opportunities. Internal expansion involves investing in various aspects of the business such as research and development, enhancing production capabilities, and strengthening distribution networks.

“At this point, we are utilising most of the funds for our internal expansion. We are seeing a lot of traction for the existing product basket in the regulated markets. So, a lot of capacity enhancement activities are going on. We are creating a new block in our existing facility which would double our capacity by the end of this year. So, most of the cash will be utilised for capacity enhancements,” said Wagh

Talking about the revenue growth target for FY24, Wagh said that the company has an ambitious growth projection for the fiscal year 2024, which is to exceed 20 percent growth in revenue.

“We are very confident about achieving those numbers. In fact, our baseline last year was slightly lower. So, in terms of growth, it would be higher than the 20 percent mark and we are well on track for achieving that,” said Wagh.

Achieving such robust growth requires a combination of factors, including effective market positioning, product innovation, and strong customer relationships. The company’s optimism regarding revenue growth signals its confidence in the value proposition offered to its target markets and customers.

In addition to focusing on top-line growth, Supriya Lifescience is equally committed to maintaining healthy profit margins. By targeting margin guidance of 28-30 percent for the fiscal year 2024, the company aims to ensure financial stability and sustainable growth.

Supriya Lifescience’s strategic approach underscores its commitment to growth and operational excellence. By utilising funds for internal expansion and capacity addition, the company aims to bolster its market presence and enhance its competitive advantage. The target of achieving over 20 percent revenue growth for FY24 reflects the management’s confidence in their products and market strategies.

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Supriya Lifescience drops to 52-week low after operating margin falls to lowest since listing

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Shares of Supriya Lifescience slumped over 5.5 percent on Wednesday after the company’s operating margin fell to the lowest level since public records are available.

The company’s EBITDA margin for the December quarter fell to 13.3 percent , down from 32.8 percent in the same period last year and 46 percent in the September quarter. It had reported peak margin of 64.1 percent in the June quarter of the previous financial year.

Net profit for the period fell over 75 percent from last year and was reduced to a single-digit figure of Rs 9.5 crore. Operating profit also declined over 60 percent year-on-year.

Revenue for the quarter fell 10.2 percent to Rs 105.1 crore.

Supriya Lifesciences went public in December 2021 through an IPO worth Rs 700 crore. The issue was subscribed 72 times and listed at a 55 percent premium to its issue price.

In a regulatory filing to the stock exchanges, the company’s management said that lockdowns in major Chinese cities and decreased demand for key products led to lower revenue and profitability in the quarter.

To counter these impacts, the management said that it is expanding regulatory market presence, optimising manufacturing capacity, and diversifying its product offerings and geographic reach.

Moreover, the company is close to finalising two contract manufacturing opportunities and receiving several inquiries that will boost its revenue and profits from December quarter of the next financial year.

Even when compared to the September quarter, the company’s revenue declined 6.3 percent while net profit nearly halved.

Shares of Supriya Lifesciences are trading 5.4 percent lower at Rs 187.1. The stock is well below its IPO price of Rs 272.

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Supriya Lifescience shares slide after China lockdowns hurt earnings

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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[wealthdesk shortname=”Supriya Lifesci” isinid=”INE07RO01027″ bseid=”543434″ nseid=”SUPRIYA” sector=”Pharmaceuticals & Drugs” exchange=”nse”]

Shares of Supriya Lifesciences ended 3 percent lower on Friday after lockdowns in China impacted its net profit by 71 percent compared to last year.

Net profit dropped to Rs 16.8 crore from Rs 58.2 crore last year. Revenue for the quarter also declined 25 percent year-on-year.

The company said that it faced major challenges during the quarter due to lockdowns in major Chinese cities due to the Covid-19 outbreaks.

Most of the impact was felt by the company’s anti-histamine therapy, sales of which declined to just Rs 2 crore from Rs 52 crore in the same period last year.

However, when compared to the June quarter, the company’s revenue increased 11 percent while EBITDA increased 65 percent.

On a sequential basis, EBITDA margin expanded 15 percentage points to 46 percent from 31 percent. Compare that to the same period last year, it is lower than the 64 percent margin figure.

The company called the quarter a temporary setback and expressed confidence that it will be able to regain the lost opportunity during the upcoming quarters.

The management also mentioned that work for the new warehouse capacities and R&D facilities is progressing well. The projects in Lote and Ambernath are likely to be fully operational in the April-June period of financial year 2024.

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Supriya Lifescience makes strong debut, shares list at 55% premium over issue price

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Supriya Lifescience shares made a strong debut on Dalal Street on Tuesday. The stock of the Mumbai-based API manufacturer opened at Rs 425 apiece, a premium of 55.1 percent over the issue price of Rs 274, on the BSE. On the NSE, the shares began their journey at Rs 421 apiece, a premium of 53.7 percent.

With that, Supriya Lifescience emerged as one of the strongest listings of the recent times.

The listing of Supriya Lifescience was in line with the trend seen in the grey market in the past few days. Dealers said Supriya Lifescience commanded a grey market premium (GMP) of Rs 140 on Monday.

Grey market is an unofficial market of unlisted securities.

“We like Supriya Lifescience for its niche product portfolio, backward integrated business model and robust financials. It is well placed to tap the opportunity in the pharma API market given its strong pipeline focused on further diversification,” said Sneha Poddar, AVP-Retail Research at Motilal Oswal Financial Services.

“Supriya Lifescience has a niche product portfolio of 38 APIs with focus primarily on diverse therapeutic areas. It has consistently been India’s largest exporter of certain niche products with a well-balanced presence between regulated and semi/non-regulated markets,” she added.

Supriya Lifescience’s market debut comes at a time when most IPOs have received a robust response from investors, though the recent sell-off has dented the appeal of few debutants.

Supriya Lifescience’s IPO, which was open for bidding from December 16 to December 20, was subscribed 71.5 times the shares on offer. Shares were available for bidding in a price band of Rs 265-274 in multiples of 54 under the IPO.

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Supriya Lifescience IPO listing on BSE, NSE today; here’s what GMP suggests

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Supriya Lifescience shares will be listed on stock exchanges BSE and NSE on Tuesday. Mumbai-based Supriya Lifescience, a maker and marketer of active pharmaceutical ingredients (APIs), commanded a premium in the grey market, an unofficial market of unlisted securities, ahead of the debut on Dalal Street. Dealers said Supriya Lifescience’s GMP or grey market premium was steady at Rs 140 on Monday.

Supriya Lifescience GMP

Source: IPO Watch

Supriya Lifescience’s issue looked reasonably priced, Abhay Doshi, Co-Founder of Unlisted Arena, a portal that tracks grey markets and deals in unlisted securities, told CNBCTV18.com.

He expects Supriya’s listing to be rewarding. “I expect Supriya Lifescience shares to list around Rs 400-430… Given the growth on the financial front, Supriya Lifescience’s issue was successful in captivating huge interest from market participants,” he said.

Supriya Lifescience’s debut on BSE and NSE comes at a time when most IPOs have received a robust response from investors, though the recent sell-off has dented the appeal of few debutants.

Supriya Lifescience’s GMP had stood at Rs 180-250 during the IPO, which was open for bidding from December 16 to December 20.

The IPO, which was a combination of fresh issuance and an offer for sale (OFS), concluded with a subscription of 71.5 times the shares on offer. The shares were available for bidding in a price band of Rs 265-274 in multiples of 54 under the IPO.

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