Sanofi India Ltd

Market Price on the date of suggestion – : Rs 8000

Sanofi India Ltd is a 100% debt free, Cash rich subsidiary of 157 years old Hoechst Gmbh, a German Lifescience company headquartered in Frankfurt, Germany which holds approximately 60% equity of the Company* . The company is among the leading companies in Diabetes care with a significant presence in Insulins. 

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Sanofi India with parent Sanofi is engaged in the research and development, manufacturing and marketing of pharmaceutical drugs principally in the prescription market, but the firm also develops over-the-counter medication. The company covers seven major therapeutic areas: cardiovascular, central nervous system, diabetes, internal medicine, oncology, thrombosis and vaccines.  

It is the world’s largest producer of the latter through its subsidiary Sanofi Pasteur. Sanofi Pasteur is the vaccines division of the French multinational pharmaceutical company Sanofi. Sanofi Pasteur is the largest company in the world devoted entirely to vaccines.

Parent History

Sanofi was founded in 1973 as a subsidiary of Elf Aquitaine (a French oil company subsequently acquired by Total), when Elf Aquitaine took control of the Labaz group, a pharmaceutical company formed in 1947, by Sociéte Belge de l’Azote et des Produits Chimiques du Marly; Labaz developed benziodarone in 1957.

Established in May 1956 under the name Hoechst Fedco Pharma Private Limited , the name was changed to Hoechst Pharmaceuticals Private Limited, Hoechst India Limited and Hoechst Marion Roussel Limited. 

*Hoechst AG was a German chemicals then life-sciences company that became Aventis Deutschland after its merger with France’s Rhone-Poulenc S.A. in 1999. With the new company’s 2004 merger with Sanofi-Synthelabo, it became a subsidiary of the resulting Sanofi-Aventis pharmaceuticals group.

Sanofi S.A. is a French multinational pharmaceutical company headquartered in Paris, France, as of 2013 the world’s fifth-largest by prescription sale

Sanofi India Limited, previously known as Aventis Pharma Limited, is amongst the leading multinational companies in the Indian Pharmaceutical Market. It offers a wide array of medicines for therapy areas such as Diabetes, Cardiology, Thrombosis, Central Nervous System and Antihistamines. The products manufactured by the company are distributed in India and exported to many developed as well as developing countries, including Germany, Australia, UK, Russia and Italy. Sanofi India’s products viz. Lantus, Combiflam, Amaryl and Allegra feature in the top 100 pharmaceutical brands in India. The company has its own manufacturing facility at Goa and Ankleshwar, Gujarat. The company also has various independent contract/third party manufacturers based across the country. Sanofi, one of the world’s leading pharmaceutical companies, and its 100% subsidiary, Hoechst GmbH, are the major shareholders of Sanofi India Limited and together hold 60.4% of its paid-up share capital. 

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The company was incorporated in May 1956 under the name Hoechst Fedco Pharma Private Limited. Over the years, its name was changed to Hoechst Pharmaceuticals Private Limited, Hoechst India Limited, Hoechst Marion Roussel Limited, Aventis Pharma Limited and Sanofi India Limited.

In the Indian market, the Company ranks at number 21 as per IQVIA TSA MAT December 2019 and enjoys a market share of 1.5 per cent. Four of the brands of the Company viz. Lantus, Combiflam, Amaryl M and Allegra feature in the top 100 pharmaceutical brands in India. 

Diabetes Care: 

As per the latest International Diabetes Federation estimation, India ranks second in terms of patient load with over 75 million adults affected by Diabetes. Sanofi strives to improve the lives of patients with Diabetes, by offering a range of quality medicines and patient support programs. The company is among the leading companies in Diabetes care with a significant presence in Insulins. 

The Insulin portfolio of the Company continued to grow strong double digits in 2019. Lantus the flagship brand is ranked among the top 5 brands in the Indian Pharmaceuticals Market. The Lantus range touched the lives of more than 6.7 lakh patients in the year 2019 and grew by 15 per cent in value strengthening its position as the leading analog Insulin. Toujeo, which was launched in 2018, further augmented the current Insulin portfolio, offering an advanced standard of care. To further build awareness on Insulins to general public and caregivers of Diabetes patients, a CSR program called as “INTOLIFE” was launched. 

The oral Anti-diabetic drug portfolio continued to grow in volumes led by Amaryl. In 2019, Amaryl group grew 9 per cent in value despite significant price cuts on few line extensions. 

In the Thrombosis segment, Clexane continues to be the leading Anticoagulant brand and grew by 14 per cent. There is a pressing need for awareness of VTE (Venous Thromboembolism) prophylaxis in India. The Company is actively engaged in building awareness and treatment protocols in hospitals towards achieving the vision of a ‘VTEFREEINDIA’. 

The flagship brand of the Company in Cardiology, Cardace group, continues to be the leading ACE Inhibitor prescribed by Cardiologists, Diabetologists and Consulting Physicians. 

Targocid is a leading Anti-infective, which helps save lives of critically ill patients in ICUs against known or suspected gram +ve bacterial infection with appropriate AB use. The first Indian guidelines for Antibiotic prescription were released in 2019 which recommended and strengthened the usage of Targocid in identified Gram +ve infections. 

The Anti-epilepsy brand Valparin was supported by strong market sharping initiatives and delivered a modest single digit growth. 

Consumer Healthcare

The Company has structured its Consumer Healthcare business under three verticals i.e. Allergy, Pain relief and Nutritionals. 

Allergy: The flagship brands in this segment are Allegra and Avil which registered growth of 12 per cent and 9 per cent respectively in the year 2019. The brand made an entry in the nasal topical market with the launch of Allegra Nasal in Q4 2019, with a modern generation steroid delivered through a superior technology spray device. The Company launched http://www.allergyfree.co.in, an exclusive portal to enhance the awareness on different types of allergies backed by educational and key expert videos. It serves as a destination for all answers about management, symptom and understanding of Allergy. 

Pain-relief: Due to sustained innovative activities through 2019, the Combiflam group grew by 16 per cent. Combiflam Plus (Paracetamol and Caffeine combination) was re-launched by mid-2019, targeted at providing relief from headache. Combiflam continues to be amongst the top 5 brands in volume in the Non-steroidal Anti-inflammatory Drugs (NSAID) market. 

Nutritionals: DePura by Sanofi group registered a growth of 21 per cent and gained volume share in a highly competitive Vitamin D market. 

Two new brands were launched in 2019, DePura by Sanofi Cal for managing calcium deficiency and Collaflex Pro Plus for managing Knee Osteoarthritis. 

Performance in Export Market 

During the year ended 31st December 2019, the Company exported its products to 59 countries, with Germany, Australia, United Kingdom and Russia ranking as the main markets. The other key drug products were Ramipril tablets, Paracetamol & Codeine tablets, Metformin tablets, Festal dragees and API’s like Articaine & Pentoxyfylline. 

During the year ended 31st December 2019, exports revenue contributed 30 per cent of Net Revenue from Operations, on the back of strong volume growth. 

New Product in PipeLine. (Parent Level)

Financials 

Company follows dec-dec accounting system as a result we are presenting financials based on latest available annual report.

For 2nd Qtr – Sept 2020

• Net Sales at Rs 686.60 crore in September 2020 down 11.87%.
• Quarterly Net Profit at Rs. 132.90 crore in September 2020 up 4.98%.
• EBITDA stands at Rs. 207.10 crore in September 2020 up 4.39%.
• Sanofi India EPS has increased to Rs. 57.71 in September 2020.

For Fy Ended Dec 2019

Revenues grew 10.8% YoY to 3070.6 crore.

EBITDA margins declined 84 bps YoY to 21.7%

EBITDA grew 6.7% YoY to | 665.3 crore.

PAY grew 24.4% YoY to | 473.5 crore.

The company’s board has recommended a special dividend of | 243 in addition to the final dividend of | 106 in CY19.

Mutual Fund Holdings

Parent Sanofi’s pursuit for Covid Vaccine

As the COVID-19 pandemic rapidly spread across the globe earlier this year, Sanofi formed a global crisis team to tackle an unknown virus that had already spread from China to Europe. The team focused quickly on ensuring the ongoing manufacture and supply of its vaccines and treatments for dozens of diseases, and keeping employees safe with new sanitary measures. In parallel, Sanofi started figuring out how to deploy its resources to fight the coronavirus.

Sanofi recently announced the continuation of its work in COVID-19 vaccine development with the start of a phase 1/2 clinical trial, in partnership with GSK. The trial will enroll 440 healthy adults in the US to evaluate the vaccine’s safety, tolerability and immune response. 

Sanofi is developing the antigen (the protein that stimulates the body’s immune response against the virus), which is based on recombinant DNA technology.

A positive outcome from phase 3 trials could mean a request for regulatory approval in the first half of 2021. 

Collaboration is also key to increasing Sanofi’s large-scale manufacturing capabilities, with the target of producing up to one billion doses in 2021. Supply agreements have already been agreed with the US, UK, EU and Canada.

“The company is working across six countries and in coordination with multiple partner manufacturing sites to be able to make vaccines at the extremely large scales required by the pandemic.”

Conclusion – : A completely debt free company with huge cash and equivalents of about 1100+ crores as of Dec 2019 and Sales CAGR of about 15% over 3-5 years . The key growth drivers for the company include its insulin portfolio (led by the flagship brand Lantus), next generation insulin (Toujeo), Allegra and the recently launched Combiflam topical pain relief gel/spray. Company has a solid ROCE of about 26+ over 3-4 year period with strong parent and deep roots in R&D along with significant new drugs and vaccines in pipeline. Additionally The company recommended a total dividend of Rs349 per share in 2019 showing management’s strong intent to return money or create overall wealth for all shareholders . Thus Sanofi India is one of our favourite darkhorsestock and we strongly recommend you to explore this stock for long term.

Please note that above expressed are our own views. Users are requested to take their own decision regarding investments. No member of DARKHORSESTOCKS would be responsible for any loss.

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Note-: Sanofi India was previously suggested on 15th April 2020 on darkhorsestocks at the price of Rs 5725 . Since then the stock has delivered 40% returns and the company had announced special dividend along with the regular dividend which totals to Rs 412 . Thus in total the stock has delivered around 47% returns.

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