Shasun Pharmaceuticals Creating Revolution in Cancer Treatment

UPDATES

UPDATE AS ON 04.01.12: The Thane cyclone that hit Cuddalore city in Tamil Nadu affected Shasun Pharma's Cuddalore plant. The plant has been temporarily closed down. Share price is also down a little. But basically it is a good company. The factory will reopen shortly.

Shasun Pharmaceuticals - Latest results

(in Cr.)
Sep-11
Jun-11
FY10-11
Revenue
185.15
136.3
567.85
Net Profit
2.48
1.26
4.88
EPS
0.51
0.26
1
Cash EPS
1.69
1.47
5.99
OPM %
-3.94
8.64
9.44
NPM %
1.34
0.92
0.86
 
 
 
 

Shasun Pharmaceuticals - Share Price Movement

 
 
 
Weekly H/L
47.9
38.5
Monthly H/L
55.95
38.1
52 Weeks H/L
88.35
38.1
 
( 24 May 11 )
( 16 Dec 11 )
Delivery / Var+ELM %
62.38
35.22
 
 
 

Shasun Pharma Creating Revolution in Cancer Treatment

Shasun Pharma Creating Revolution in Cancer Treatment
Shasun Pharma Creating Revolution in Cancer Treatment | Source
Shasun Pharma - share price movement
Shasun Pharma - share price movement | Source

Shasun Pharma Creating Revolution in Cancer Treatment


Good Q2 show

Shasun Pharmaceuticals has put up a good Q2 results for the quarter ended 30.09.11. Revenue and net profit have improved over the previous quarter ended 30.06.11. The shares of Shasun Pharmaceuticals are traded in the Indian stock markets at Rs.43.75 now (BSE 23.12.11). The shares are traded in both BSE and NSE. It is close to the lowest price in the last one year.

Promoters pledge shares further

The promoters of Shasun Pharmaceuticals have pledged 19% more stake amounting to 2213600 shares for an undisclosed amount. The shares have been pledged with Cholamandalam Investment & Finance Co Ltd, Chennai. The promoters had already pledged 22.72% of their stake in Shasun Pharmaceuticals.

Good export performance

Shasun Pharmaceuticals is targeting to achieve Rs.2000 crore revenue in the year 2015. For the year 2010-11, its revenue amounted to Rs.567 crore. By the end of the current fiscal, the company has targeted to achieve Rs.1000 crore revenue. S. Abhaya Kumar is the Managing Director of the company. 90% of the company’s revenue comes through exports to USA, UK, Japan and other regulated markets. The weakening of the Indian rupee against the dollar is beneficial to the company. The company is also expanding its capacity in its production facility in Newcastle, UK. The company is focusing on contract research, customs synthesis, manufacturing and introduction of branded formulations & new generic drugs to drive its growth in future. The company is looking into bio-similars and nano technology for its growth.

High debt burden

The company is setting up a new production unit in Vizagapatnam in Andhra Pradesh State for expanding its Active Pharmaceutical Ingredient (API) capacity at an investment of around Rs.100 crore. The company expects this new plant to generate revenue of Rs.500 crore in the next three years. The company went through torrid times in the last three years. It posted a net loss of Rs.33 crore in 2009. Now the company seems to have turned around and going in the right direction. The company was known as Shasun Chemicals & Drugs till recently. The company’s debt is high. It is suffering from interest burden. The company management is contemplating divesting a minority stake to a private equity firm in order to partly repay its debt. Promoters have around 46% stake in the company.

Incivek will generate huge revenue for the company

Shasun Pharmaceuticals bagged a major supply contract from Vertex Pharmaceuticals of USA. The two companies have reached agreement according to which Shasun Pharmaceuticals will be the exclusive manufacturer of telaprevir, a tablet used for the treatment of hepatitis C. The brand name of the tablet is Incivek. Incivek has a global market of about $2 billion (Rs.9000 crore). The US FDA has already approved this drug in the American market. Health Canada has also included this tablet in its list of approved medicines. This approval means that the Canadian government will pay for this drug on behalf of its citizens who are covered by the health insurance schemes. Between May and December this year, Incivek is expected to clock a sale of $1 billion (Rs.4500 crore).

Cancer research

In the next two years, Shasun Pharmaceuticals will be investing Rs.100 crore in expansion plans. Out of this investment, Rs.30 crore will come from debt and the remaining Rs.70 crore from other sources. Shasun Pharmaceuticals has formed a joint venture with Nanoparticle Biochem of USA for R&D in cancer. The company seems to have found the right path for its growth and may not slip into red again at least in the foreseeable future.

Human trial for cancer treatment to commence next year

Shasun Pharmaceuticals is contemplating allotment 1500000 of convertible warrants to the promoters and directors on a preferential basis amounting to Rs.11 crore. Shasun Pharmaceuticals may begin human trials in cancer therapy next year. Gold nano particles will be used in the treatment of prostate and oral cancer. The cost of the trial involved is $2 million. The project and the trial are aimed to destroy cancer cells instantaneously through injecting radioactive gold nano particles into solid tumours. In this method, there is no need for any radiotherapy or external chemo. Shasun Pharmaceuticals has its R&D units in Chennai and Puducherry. For the trial to succeed, gold rods should be broken to convert them into nano particles. In USA, trials are being done on swine, dogs and mice. Initial tests have indicated good tolerance by the animals without any side effects. Human trials will be conducted in India by around March next year. Pending US FDA node, Shasun Pharmaceuticals will start human trials in USA for prostate cancer. Shasun Pharmaceuticals will be acquiring the worldwide rights for this technology. It has invested over $1 million in the technology so far. It may take another 2 years for the product and technology to be available in the market. From India, this will be the first nano drug. In the international pharmaceutical industry, only one nano particle cancer drug has been approved so far. If this proves successful, the fortunes of Shasun Pharmaceuticals will rise and its share price will also rise.

Entry into branded generics

Shasun Pharmaceuticals is also test marketing branded drugs for heart disease and diabetes in Tamil Nadu state. It will be a profitable entry for Shasun Pharmaceuticals into the lucrative branded generics industry. The drugs are expected to be around 10% cheaper than the existing drugs. The company’s medical representatives have started canvassing with the doctors about the benefits of these drugs. The bio availability of these drugs is also more which means the body will reject lesser percentage of drugs and will consume more. The company plans to invest Rs.20 crore in two years for the branded drugs.

Tamil Nadu, diabetes capital of India

At present Shasun Pharmaceuticals mainly manufactures APIs (Active Pharmaceutical Ingredients) for many pharma companies worldwide such as Glaxo and Boots. About ten per cent of its business centres on contract manufacturing of formulations for innovators. The company has only a small presence in the branded drug market in India through Streptokinase drug in the biotech area. This accounts hardly for two per cent of its turnover. Through generics branded drugs, the company hopes to generate revenue of around Rs.400 crore in about two to three years. India being the diabetes capital of the world, there is a good demand for diabetes branded drugs in India. Tamil Nadu is the diabetes capital of India. Pharma players are reaping rich harvests in Tamil Nadu. But there are more spurious drugs being circulated in Tamil Nadu that reduces the profits of the pharma companies. Shasun Pharmaceuticals has come out with anticoagulant for cardiovascular problems.

Buy the shares for medium and long term holding

Shasun Pharmaceuticals has incurred a loss of around Rs.50 crore through closure of its Cuddalore plant in Tamil Nadu due to a chemical leak. The company’s Puducherry plant was affected by a strike declared by the workers. Investors may acquire the shares of Shasun Pharmaceuticals at the current market price for medium and long term holding for decent returns.

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