Alkem Laboratories Ltd.

IPO RHP Note

Established in 1973, Alkem Lab is a leading India Pharma company

with global operations, engaged Pharmaceutical and Neutraceutical
products.
Mr. Samprada Singh and Mr. Basudeo Singh are two founder
Promoters
Alkem is 5th largest Pharma Company in India in terms of domestic
sales.
Company produce Branded Generics, Generic drugs, APIs and
Neutraceutical.
74.7% sales is Domestic and 25.3% is Exports sales.
Companys net sales grew at CAGR of 22.30% during FY11-FY15
As on sept 2015, company had 705 brands in India
Companys revenue from exports was 12.6% in 2011 which is now
25.3% in FY15.
Major exports are in US through its marketing subsidiary, Ascend
Laboratories LLC
Anti-Infective o Major therapeutic areas in domestic market are anti-infectives,
gastro-intestinal, pain and analgesics, and vitamins, minerals
and nutrients. These therapeutic areas accounted for 80.7% of
companys domestic sales.
o Anti-infective is the largest therapeutic area in Pharma
industry India. Alkem is ranked number one in terms of
revenue in this therapeutic area for past ten years. Company
has 11.2% market share out of total market size of Rs. 10655
Cr. in FY15
o Companys key anti-infective brands are Clavam, Taxim-O and
Taxim
Gastro Intestinal
o 3rd largest market share of 5.6% out of total market size of Rs.
8409 Cr.
o Key gastro-intestinal brands are Pan and Pan-D
Pain/Analgesics
o 3rd largest market share of 5% out of total market size of Rs.
6269 Cr.
Vitamins/Minerals/Nutrients
o 6th largest market share of 3.7% out of total market size of Rs.
6018 Cr.
In addition to above categories, company has some other fast
growing
portfolio
in
other
therapeutic
areas
such
as
neuropsychiatry,
cardiology,
dermatology,
diabetology
and
oncology. Brands in this therapeutic areas include Olkem for
hypertension, Donep for Alzheimers disease, Glucoryl-M for
diabetes, Kojiglo for hyper-pigmentation and Melbild for hyper
pigmentation

Company markets its products in 56 countries through direct

subsidiaries or through supply, distribution and other arrangements
with various global companies.
In July 2010, company acquired The Pharmanetwork LLC in US, the
holding company of Ascend, which provided company commercial
platform through which alkem was able to market and sell their
portfolio of products in US. Ascend was established in 2003 and had
its own portfolio of generic products prior to acquisition. Ascend
relationship with major chains, wholesales, managed care
companies, distributors, food and grocery stores and ppharma
retailers.
Further in Dec 2012, company acquired manufacturing assets from
NORAC Inc in US, focused primarily on specialty APIs and providing
CRMS.
Recently in June 2015, company acquired a formulation
manufacturing facility from Long Pharmaceuticals LLC in US that has
semi-solids, liquid and nasal formulation manufacturing capabilities.
In US, company have filed 69 ANDAs (of which 21 have received
final approval and 3 have received tentative approval), of which 30
were Para 4 filing including first to files and one new drug
application. In US it has also filed 14 DMF in key molecules in
upports of ANDA development work.
Company has also filed 22 dossiers in Australia, 16 in Europe and
1166 dossiers in other markets.
Apart form US; Australia is also important market for the company.
In June 2009, company acquired majority stake in an Australian
company, Pharmacor Pty Ltd to enter Australian market. Alkem has
also build presence in Europe, South East Asia, Latin America, Africa
and CIS through subsidiaries or relationships with international
companies.
Company has 16 manufacturing facilities of which 14
manufacturing facilities are in India at 5 locations and 2 in US. Of
the total, 5 facilities are USFDA, TGA and UK-MHRA approved.
Of the 14 facilities in India, 12 are manufacturing formulations and 2
are manufacturing APIs.
Company has 2 R&D facilities in India and 2 in US. It employs 480
scientists in R&D functions. For FY15, company spent 4.5% of net
sales on R&D.
As on date company had a domestic field force of 5745 medical
representatives spread across all states in India. Its domestic
distribution network also includes 40 sales depots, 55 C&F agents,
15 consignees and 8 central warehouses covering 7025 stockists.
Sales Break Up performance

(Rs. In Cr.)
Domestic Sales
International

FY2013
2048
448

FY2014
2361
765

FY2015
2832
957

H1
FY2016
1925
645

Total Slaes

2496

3126

3789

Company has 60-bed clinical research organization facility where it

conducts bioequivalence and bioavailability studies on healthy
volunteers to prove effectiveness of developed formulations. This
facility is also audited by USFDA, UK-MHRA and other regulatory
agencies.
Company market and sells its products in US under their brand
Ascend.
Ascend currently sells 18 products in the market, of which 13 Alkem
products and 5 are in-licensed from third parties.
The sales of The Pharmanetwork LLCs (Ascend) 646 Cr. for FY15
and 453 Cr. for H1FY16
Revenue from international operations have grown at CAGR of
45.7% between FY11 to FY15
Consolidated Financial Performance

(Rs. In Cr.)
Networth
LT Loan
ST Loan
Liquid Assets
Cash and Bank
Inventories
Receivables

FY15
2909
33.43
1128
???
790
784
527

H1 FY16
3307
73.56
940
939
691
850
711

Sales
Other Income
EBIDTA (including OI)
EBIDTA (excluding OI)
Depreciation
Interest
EBIDTA (%)
PBT
PAT
FCF

3789
181
667
486
70
81
22.38%
516
463
200

2570
89
549
460
50
39
24.78%
459
438

2570

Issue Size 1.285 Cr. shares (OFS)

Shares Post IPO 11.9565 Cr. shares
Price Band Rs. 1020-1050
Market Cap at Upper Band 12554 Cr.
No Institutional Holding Promoters and other Individuals selling
shares.
US FY14 6 mths 265 Cr v/s US FY15 6 mths 455 Cr
Baddi Plants 100% tax benefit will get over in 2015 16 and only
30% of profit from this plant will be tax free till 2020 21

Sikkim Kumrek Units tax benefit will end in 2016-17. Sikkim

Samardunng unit tax benefit will last till 2022-23