NEULAND LAB LTD.Long
INVESTMENT IDEA
Neuland Laboratories is engaged in manufacturing and selling of bulk drugs and caters to both domestic and international markets.[1]
KEY POINTS [ edit ]
Business Segments
The company has three business segments namely Prime API, Niche-Specialty API & CMS.
It largely caters to small/mid-size venture backed biotech companies which are working on new products. It caters to a wide number of clients, both in India and overseas.[1]
Prime APIs Segment (46% of revenues)[2]
This segment includes mature APIs that have relatively higher competition.
It comprises over 15 APIs, where Ciprofloxacin and Levetiracetam are the key molecules.[3]
In this segment, top 5 products/ APIs account for 72% of revenues and top 5 customers account for 48% of revenues.[4]
Niche/ Specialty APIs (22% of revenues)
This group consists of the high-value, complex molecules which necessitate R&D expertise to manufacture consistent quality products.
This segment is the profitability driver within the API Business.
The Company has over 20 molecules in this segment. Some of the molecules in this segment continue to enjoy patent protection and the Company supplies these products for validation batches and regulatory filings.[3]
In this segment, top 5 products/ APIs account for 62% of revenues and top 5 customers account for 35% of revenues.[5]
CMS Segment (30% of revenues)
The CMS (Contract manufacturing services) vertical serves innovator pharma and biotech companies.
In this business, the Company develops and delivers APIs and intermediates in small scale clinical trial quantities and later commercial-scale requirements as a product moves through the clinical cycle.[6]
Presently, it has 21 CMS projects under pre-clinical stage, 18 in development stage and only 15 in commercial stage. It has a total of 76 CMS projects as of yet.[7]
The revenues from this segment has increased significantly from 11% of total revenues in FY16 to to 30% in FY21.[8]
Geographical Revenue Breakup
Presently, Europe accounts for 42% of revenues, followed by North America (35%), APAC Region (7%), India (6%), Mena (4%), Japan (4%) and Latin America (3%).[9]
R&D Capabilities
The company houses 15 development facilities inside its only R&D center in Hyderabad. It has 900+ DMFs filed, 300+ API processes developed & 200+ patents filed till date.[10]
It spent ~21 crores (3% of revenues) towards R&D in FY20.[11]
Manufacturing Facilities
Company owns 3 manufacturing facilities with a total capacity of 730 Kilo liters p.a. of APIs.[12]
QIP
In FY19, the company raised ₹124 crores via QIP by issuing 1,675,000 equity shares at a price of ₹740 per share.[13]
Scheme of Amalgamation
In 2016, the company was involved in a Scheme of Amalgamation wherein Neuland Health Sciences Pvt Ltd & Neuland Pharma Research Pvt Ltd was merged with the company.
As per the scheme, the company allotted ~2,270,000 equity shares to the promoters of the entities.[14]
KEY POINTS [ edit ]
Business Segments
The company has three business segments namely Prime API, Niche-Specialty API & CMS.
It largely caters to small/mid-size venture backed biotech companies which are working on new products. It caters to a wide number of clients, both in India and overseas.[1]
Prime APIs Segment (46% of revenues)[2]
This segment includes mature APIs that have relatively higher competition.
It comprises over 15 APIs, where Ciprofloxacin and Levetiracetam are the key molecules.[3]
In this segment, top 5 products/ APIs account for 72% of revenues and top 5 customers account for 48% of revenues.[4]
Niche/ Specialty APIs (22% of revenues)
This group consists of the high-value, complex molecules which necessitate R&D expertise to manufacture consistent quality products.
This segment is the profitability driver within the API Business.
The Company has over 20 molecules in this segment. Some of the molecules in this segment continue to enjoy patent protection and the Company supplies these products for validation batches and regulatory filings.[3]
In this segment, top 5 products/ APIs account for 62% of revenues and top 5 customers account for 35% of revenues.[5]
CMS Segment (30% of revenues)
The CMS (Contract manufacturing services) vertical serves innovator pharma and biotech companies.
In this business, the Company develops and delivers APIs and intermediates in small scale clinical trial quantities and later commercial-scale requirements as a product moves through the clinical cycle.[6]
Presently, it has 21 CMS projects under pre-clinical stage, 18 in development stage and only 15 in commercial stage. It has a total of 76 CMS projects as of yet.[7]
The revenues from this segment has increased significantly from 11% of total revenues in FY16 to to 30% in FY21.[8]
Geographical Revenue Breakup
Presently, Europe accounts for 42% of revenues, followed by North America (35%), APAC Region (7%), India (6%), Mena (4%), Japan (4%) and Latin America (3%).[9]
R&D Capabilities
The company houses 15 development facilities inside its only R&D center in Hyderabad. It has 900+ DMFs filed, 300+ API processes developed & 200+ patents filed till date.[10]
It spent ~21 crores (3% of revenues) towards R&D in FY20.[11]
Manufacturing Facilities
Company owns 3 manufacturing facilities with a total capacity of 730 Kilo liters p.a. of APIs.[12]
QIP
In FY19, the company raised ₹124 crores via QIP by issuing 1,675,000 equity shares at a price of ₹740 per share.[13]
Scheme of Amalgamation
In 2016, the company was involved in a Scheme of Amalgamation wherein Neuland Health Sciences Pvt Ltd & Neuland Pharma Research Pvt Ltd was merged with the company.
As per the scheme, the company allotted ~2,270,000 equity shares to the promoters of the entities.[14]
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