Strides Arcolab – a Good Company to Invest

Strides Arcolab – a Good Company to Invest

Stride Arcolab - Latest Financial Results

(in Cr.)
Sep-11
Jun-11
FY10-10
Revenue
196.98
200.93
529.44
Net Profit
-65.2
14.61
73.56
EPS
-11.21
2.52
15.69
Cash EPS
-10.48
3.21
15.35
OPM %
-23.02
22.18
27.62
NPM %
-33.1
7.27
13.89
 
 
 
 
Stride Arcolab - Latest Financial Results

Stride Arcolab - Share Price Movement

 
 
 
Weekly H/L
407.8
386.05
Monthly H/L
437
369.4
52 Weeks H/L
438.85
276.25
 
( 12 Jan 11 )
( 22 Aug 11 )
Delivery / Var+ELM %
43.66
12.5
Stride Arcolab - Share Price Movement

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Strides Arcolab – a Good Company to Invest

Strides Arcolab – a Good Company to Invest
Strides Arcolab – a Good Company to Invest | Source
Strides Arcolab – a Good Company to Invest
Strides Arcolab – a Good Company to Invest | Source

Strides Arcolab – a Good Company to Invest


Slipped into red, according to BSE website

Strides Arcolab has slipped into the red during the second quarter ended 30.09.11, according to the BSE website. Its revenue has also dropped. The shares of Strides Arcolab are traded in the stock markets at Rs.388.80 (BSE 10.01.12). The shares of the company are available in both BSE and NSE. What is the reason for the high price of the company’s shares inspite of the net loss it posted in the second quarter? While the BSE website shows the company posting a net loss, newspaper reports say that the company’s net profit has increased by 34% to Rs.47 crore. While the newspaper reports say that the revenue has gone up to Rs.780 crore, BSE website shows a revenue of Rs.196.98 crore for the quarter ended 30.09.11. Probably the BSE website figures are wrong and newspaper reports are correct. That is why the share price is ruling high in the stock markets.

Disposing off its Australian subsidiary

The company is in operating in the pharmaceutical industry. Strides Arcolab is planning to sell its Australian unit Accent Pharmahealth for mobilising money. The Australian unit is engaged in branded generic drugs business with a 13% market share in Australia. Besides Australia, the company has operations in Thailand, Singapore and Vietnam. Its 2010 revenue was estimated at $140 million. Strides Arcolab has been advised by the New York-based investment bank Jefferies to divest its stake in several units that are in the business of anti-retro viral and softgel. Strides Arcolab wants to focus on speciality injectables in future. For this, the company needs funds to expand its operations. Therefore it is scouting for opportunities to disinvest its other businesses to unlock value.

US FDA approval

Strides Arcolab’s sterile manufacturing facility at Bangalore has secured US FDA node. The facility called Agila Specialities manufactures liquid, lyophilized, dry powder injectables and pre-filled syringes. Strides Arcolab also secured US FDA approval for its fludarabine phosphate injection USP 25 mg/L, packaged in 50 mg/2 ml single-dose vials. Fludarabine market in USA is estimated at $15 million. It was a part of oncology portfolio granted to Pfizer under license in 2010 for the market in USA. It will be launched shortly by the company. Fludarabine is used in the treatment of blood cancer chronic lymphocytic leukaemia. Usually fludaranbine is prescribed by doctors if no other medicine has any effect on the disease.

Geographical diversification of production facilities and markets

Strides Arcolab has 14 production facilities and a marketing network spread over 70 countries. In overseas markets, Strides Arcolab has established various networks for selling its pharmaceutical products. At present the company is rated as a speciality chemicals company. Speciality chemicals are the chemicals that are difficult to manufacture. They require special skills and have high entry barriers. Strides Arcolab has licensing agreements with GSK Pharma and Pfizer. Pfizer is planning to source around 70 off-patent products from Strides Arcolab for regulated markets. GSK Pharma is planning to source products from Strides Arcolab for emerging markets.

Brazilian joint venture

Strides Arcolab has multiplied its capacity by five times in the last four years. The company’s subsidiary Agila Specialities is commencing a Brazilian joint venture with BioChemico to enter high-end injectables and anaesthetics business in Brazil. Agila Specialities will be holding 52% stake in the joint venture. Strides Arcolab has filed 47 applications in important regulated markets, of which 42 have been approved. Strides Arcolab received two approvals from US FDA for its generic injectable Bupivacaine Hydrochloride USP. It was the 13th approval by the US FDA under the Sagent-Strides partnership under which the company is supplying after developing more than 25 injectable products for the US market. The products will be marketed by Sagent. Bupivacine hydrochloride is used for local anaesthesia or as an analgesic dental, oral or general surgery procedures and therapeutic and diagnostic procedures. It is also used in obstetrical procedures.

Clindamycin for bacterial infections

Strides Arcolab also received US FDA approval for its antibiotic injection clindamycin used to treat bacterial infections. The company’s wholly owned subsidiary Onco Therapies Ltd (OTL) secured European Union permission for its cancer drug Oxaliplatin injection. With this, Strides Arcolab has shifted its focus away from USA to Europe. For its biotech drugs manufacturing facility, Strides Arcolab has chosen Malaysia. Strides Arcolab has secured US FDA node for its anti-infective drug Levofloxacin injection used to treat variety of bacterial infections. Strides Arcolab has secured US FDA approval for selling its Vancomycin drug and Midozolam injections.

Buy the shares at declines

The shares of Strides Arcolab can be purchased at declines preferably at around Rs.350 for medium and long term holding for the following reasons:

  • The company is well diversified geographically in its markets
  • Strides Arcolab has 14 manufacturing facilities
  • Strides Arcolab has marketing tie-up with many companies like GSK Pharma and Pfizer among others
  • Strides Arcolab enjoys the confidence of US FDA which has approved many drugs manufactured by the company in the past
  • Strides Arcolab operates in the niche markets of USA and European Union
  • The drugs produced by Strides Arcolab are used in high value segments
  • The company is a profit making and dividend paying company
  • The management is efficient

Pharmaceutical industry never faces recession and is growing all the time

Comments 2 comments

Writer Fox profile image

Writer Fox 4 years ago from the wadi near the little river

Good information. Voted up!


ramkimeena profile image

ramkimeena 4 years ago from India Author

Thank you Writer Fox. Best Wishes

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