Active Pharmaceutical Ingredient(API) companies have been phenomenal wealth creators
Recently API companies are facing business problems that has led to correction in stock prices
A thread🧵on the current business problems & the opportunities in the API space
Lets go👇
(1/24)
Recently API companies are facing business problems that has led to correction in stock prices
A thread🧵on the current business problems & the opportunities in the API space
Lets go👇
(1/24)
What had happened?
In the last 6 months API company stock have undergone a severe correction:-
Divis is down 33%
Laurus is down 20%
Supriya Lifesciences is down 40%
So what is happening in this sector and what is the scope?
(2/24)
In the last 6 months API company stock have undergone a severe correction:-
Divis is down 33%
Laurus is down 20%
Supriya Lifesciences is down 40%
So what is happening in this sector and what is the scope?
(2/24)
What is an Active Pharmaceutical Ingredient(API)?
An active Pharmaceutical Ingredient is the biologically active component of a drug product (tablet, capsule. injectable)
(3/24)
An active Pharmaceutical Ingredient is the biologically active component of a drug product (tablet, capsule. injectable)
(3/24)
They are the substances that are responsible for the beneficial health effects experienced by consumers.
For example of an API is the acetaminophen contained in a pain relief tablet that helps in pain relief
(4/24)
For example of an API is the acetaminophen contained in a pain relief tablet that helps in pain relief
(4/24)
APIs find application in high quality drugs that treat diseases pertaining to oncology, cardiology, CNS and neurology, orthopaedic, pulmonology, gastroenterology, nephrology, ophthalmology, and endocrinology.
(5/24)
(5/24)
The global API market is expected to grow at 6.2%
The rising prevalence of chronic disorders, increasing demand for personalized medicine and emergence of novel drug delivery devices are some of the key factors expected to drive the API market over the next five years.
(6/24)
The rising prevalence of chronic disorders, increasing demand for personalized medicine and emergence of novel drug delivery devices are some of the key factors expected to drive the API market over the next five years.
(6/24)
India is continuing to gain market share in APIs:-
India's share in global API's was 5.7% in 2017
This has increased to 8.4% in 2022.
India is slowly gaining market share
(7/24)
India's share in global API's was 5.7% in 2017
This has increased to 8.4% in 2022.
India is slowly gaining market share
(7/24)
Some of the fast growing APIs include
🧪Oncology
🧪Repiratory
🧪Diabeties
🧪Repiratory
🧪Peptides
(8/24)
🧪Oncology
🧪Repiratory
🧪Diabeties
🧪Repiratory
🧪Peptides
(8/24)
Indian API industry:-
The Indian API industry is on a high growth trajectory over the past few decades.
It has contributed significantly to the global
generics market fulfilling 20% of the global demand in generics in terms of volume.
(9/24)
The Indian API industry is on a high growth trajectory over the past few decades.
It has contributed significantly to the global
generics market fulfilling 20% of the global demand in generics in terms of volume.
(9/24)
Advantages of Indian API industry
🧪India is on par with other countries in terms of technological capabilities and process efficiency.
🧪India has a very high quality and manufacturing standards along with a strong chemical industry
(10/24)
🧪India is on par with other countries in terms of technological capabilities and process efficiency.
🧪India has a very high quality and manufacturing standards along with a strong chemical industry
(10/24)
🧪The costs are very low in India – in reality, they are only two-fifths of what it costs to set up and operate a modern manufacturing plant in the West. Because of the low production and labor costs, companies can operate on considerably lower margins.
(11/24)
(11/24)
China+1
🧪 An estimated 40% of all factories in China have shut down, resulting in supply disruptions and higher costs.
India has a great opportunity to become one of the largest API suppliers in the world due to its fairly competitive labor market.
(12/24)
🧪 An estimated 40% of all factories in China have shut down, resulting in supply disruptions and higher costs.
India has a great opportunity to become one of the largest API suppliers in the world due to its fairly competitive labor market.
(12/24)
Active Pharmaceutical Ingredients(API) companies are facing a perfect storm this quarter
1. Destocking of APIs
2. Pricing pressure
3. Increase in raw material prices
4. Lockdown in China
All of this is temporary in nature
But
China+1 in APIs is permanent in nature
(13/24)
1. Destocking of APIs
2. Pricing pressure
3. Increase in raw material prices
4. Lockdown in China
All of this is temporary in nature
But
China+1 in APIs is permanent in nature
(13/24)
So how are Indian Companies taking advantage of the significant API opportunities?
Divis Labs:-
🧪Divi’s expects the API generic opportunity to be ~$ 20-25 billion over the FY23-25 period.
🧪Divi’s has worked extensively on backward integration of its Sartan portfolio
(14/24)
Divis Labs:-
🧪Divi’s expects the API generic opportunity to be ~$ 20-25 billion over the FY23-25 period.
🧪Divi’s has worked extensively on backward integration of its Sartan portfolio
(14/24)
🧪China+1 in both custom synthesis and API means immense opportunities are available
🧪Divis plans to invest 2000-3000cr in the Kakinada and the Krishnapatnam facility.
🧪China+1 will continue to drive both APIs and custom synthesis of APIs
(15/24)
🧪Divis plans to invest 2000-3000cr in the Kakinada and the Krishnapatnam facility.
🧪China+1 will continue to drive both APIs and custom synthesis of APIs
(15/24)
Laurus Labs:-
🧪Robust order book in anti-diabetic, CV & PPI amid capacity expansion in high growth therapeutics
🧪Capex guidance at 2,000 crore
(50%: custom synthesis,rest all is for non ARV APIs
(16/24)
🧪Robust order book in anti-diabetic, CV & PPI amid capacity expansion in high growth therapeutics
🧪Capex guidance at 2,000 crore
(50%: custom synthesis,rest all is for non ARV APIs
(16/24)
Supriya Life Sciences:-
Expanding Product portfolio for diversification
To derisk the dependence on any particular therapeutic area,
Company commissioned some new products👇
(17/24)
Expanding Product portfolio for diversification
To derisk the dependence on any particular therapeutic area,
Company commissioned some new products👇
(17/24)
• The future of company lies in R&D, initiated the process of setting up enhanced R&D facility
1. At Lote Parshuram to cater to lifecycle management and further backward integration projects (to be operational by Q3FY23)
(18/24)
1. At Lote Parshuram to cater to lifecycle management and further backward integration projects (to be operational by Q3FY23)
(18/24)
2. At Ambernath to cater to new molecules and CMO/CDMO business. (to be operational by Q3FY23)
3. A new manufacturing block with capacity of 70 KL along with a new R&D facility with Pilot plant is also being set up at Ambernath.
(19/24)
3. A new manufacturing block with capacity of 70 KL along with a new R&D facility with Pilot plant is also being set up at Ambernath.
(19/24)
Biocon:-
🧪Expanding in peptides and potent APIs
🧪Agumenting capacities in synthetic APIs
🧪Agumenting capacities for Immunosuppressants
(20/24)
🧪Expanding in peptides and potent APIs
🧪Agumenting capacities in synthetic APIs
🧪Agumenting capacities for Immunosuppressants
(20/24)
Glenmark Life Sciences:-
🧪With average capacity utilisation of 87% at its Ankleshwar, Dahej and Mohol plants
(68% at Kurkumbh),
🧪GLS began execution of a Rs 6bn-6.5bn capex plan in FY20 to expand capacity and double sales by FY25.
(21/24)
🧪With average capacity utilisation of 87% at its Ankleshwar, Dahej and Mohol plants
(68% at Kurkumbh),
🧪GLS began execution of a Rs 6bn-6.5bn capex plan in FY20 to expand capacity and double sales by FY25.
(21/24)
🧪The expansion will take total API reactor
capacity from 727kl in FY21 to 1,767kl by FY25 and comprises a mix of brownfield
(Dahej and Ankleshwar) and greenfield (Solapur, Maharashtra) projects for both API
and CDMO.
(22/24)
capacity from 727kl in FY21 to 1,767kl by FY25 and comprises a mix of brownfield
(Dahej and Ankleshwar) and greenfield (Solapur, Maharashtra) projects for both API
and CDMO.
(22/24)
Neuland Labs:-
🧪In the CMS business,Neuland labs is spending about 100cr for the expansion of UNIT-III at the Hyderabad facility
(23/24)
🧪In the CMS business,Neuland labs is spending about 100cr for the expansion of UNIT-III at the Hyderabad facility
(23/24)
Conclusion:-
API Business is facing short-term issues like demand +pricing pressure.
However long-term shift of APIs into India is a key trend.
Companies are expanding capacities to take advantage.
One must keep companies on the radar to take advantage of this shift
(24/24)
API Business is facing short-term issues like demand +pricing pressure.
However long-term shift of APIs into India is a key trend.
Companies are expanding capacities to take advantage.
One must keep companies on the radar to take advantage of this shift
(24/24)
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