Supriya lifescience is a completely debt free company engaged in the manufacturing of Active pharmaceutical ingredients (APIs). As of March 31, 2021, the company produces 38 APIs focused on diverse therapeutic segments such as antihistamine, analgesic, anaesthetic, vitamin, anti-asthmatic and anti-allergic.

Supriya Lifescience

Current market price on the date of publishing this report-: 252 Rs

Introduction

Incorporated as Supriya Lifescience Limited in 2008 M/s Supriya Chemicals, a partnership concern, was converted into a public limited company and is now involved in the production and export of active medicinal ingredients (APIs). It is a major manufacturer and supplier of active pharmaceutical ingredients in India, with a concentration on research and development. As of 2021, the company’s specialty product offerings consisted of 39 APIs focusing on various therapeutic categories such as antihistamine, analgesic, anaesthetic, vitamin, anti-asthmatic, and antiallergic.

Spread across an area of 47,000 sq.m. with delineated areas for warehouse, QA, QC, R & D, company’s facility supports production and finished products (dedicated blocks for different therapeutic segments). The plant has current capacity of 550 KL and supported with multiple clean rooms for finished products.

As a part of capacity expansion plan, company’s capacity would be approximately 1000+ KL by 2024 as said by the management.

Between Fiscal 2017 and 2020, the company was consistently one of the largest exporter of Chlorpheniramine Maleate and Ketamine Hydrochloride from India, accounting for 45-55% and 65-70%, respectively, of India’s API exports.

Chlorpheniramine Maleate is an antiallergic medication. Chlorpheniramine relieves red, itchy, watery eyes; sneezing; itchy nose or throat; and runny nose caused by allergies, hay fever, and the common cold. Chlorpheniramine helps control the symptoms of cold or allergies but will not treat the cause of the symptoms or speed recovery.

Ketamine Hydrochloride belongs to a class of drugs called General Anesthetics, Systemic. Ketamine Hydrochloride is a prescription medicine used as a sedative for diagnostic and surgical procedures. Ketamine Hydrochloride may be used alone or with other medications.

The company was among the largest exporters of Salbutamol Sulphate from India in Fiscal 2020 in terms of volume.

Salbutamol is used to rapidly treat asthma, bronchospasm and reversible airways obstruction by widening the airways of the lungs.

The company’s products are approved by various international regulatory authorities such as USFDA, EUGMP, EDQM, SFDA NMPA, ANVISA, KFDA, PMDA, TGA and Taiwan FDA.

As of 2021, the company have filed 11 active DMFs with USFDA and seven active CEPs with EDQM, for API products in therapeutic areas such as antihistamine, analgesic, anaesthetic, vitamin, anti-asthmatic and anti-allergic.

Business Products

Anti-Histamine

Antihistamines are medicines often used to relieve symptoms of allergies, such as hay fever, hives, conjunctivitis and reactions to insect bites or stings. They’re also sometimes used to prevent motion sickness and as a short-term treatment for insomnia.

Analgesic / Anti-Pyretic / Anesthetic

Analgesics are a class of medications designed specifically to relieve pain. They include acetaminophen (Tylenol), which is available over the counter (OTC) or by prescription when combined with another drug, and opioids (narcotics), which are only available by prescription.

Anti-Allergic

Antihistamines are medicines that treat allergy symptoms by blocking the effects of histamine. Antihistamines come as pills, chewable tablets, capsules, liquids, nasal sprays, and eye drops. There are also injectable forms used mainly in health care settings.

Anti-Asthmatic

An antiasthmatic and antiallergic agent that prevents mast cell release of histamine and formation of other mediators (leukotrienes) of anaphylaxis by inhibiting degranulation after contact with antigens. Treatment of allergic rhinitis, severe perennial bronchial asthma, exercise-induced bronchospasm (prevention), prevention of acute bronchospasm induced by environmental pollutants, mastocytosis

Vitamin

This medication is a multivitamin product used to treat or prevent vitamin deficiency due to poor diet, certain illnesses, or during pregnancy. Vitamins are important building blocks of the body and help keep you in good health.

Anti-Hypertensive

A type of drug used to treat high blood pressure. There are many different types of antihypertensive agents, and they work in different ways to lower blood pressure. Some remove extra fluid and salt from the body. Others relax and widen the blood vessels or slow the heartbeat.

Products in pipeline

API’s Under Pipeline		Status
USDMF’s	Microsoft Word – Cov Letter 15 API’s	Submitted
CEP	9 API’s	Granted
USDMF	4 API	Submission Under Progress
CEP	1 API’s	Assessment Under Progress
CEP	4 API’s	Submission Under Progress

Certificates

Financials

For the year ended March 2022

• Revenues from operations increased to 35.50% from Rs 391 cr in 2020-21 to Rs 530 cr in 2021-2.
• The capital employed by the Company increased 112% from Rs 299.45 cr as on March 31, 2021 to Rs 635.06 cr as on March 31, 2022
• The net worth of the Company increased by 129% from Rs 268.58 cr as on March 31, 2021 to Rs 615.69 cr as on March 31, 2022
• The Company’s net debt / equity ratio stood at a comfortable 0.04x at the close of 2021-22.
• The EBITDA margin of the Company for 2020-21 was 46% as against 42% in 2021-22 while the net profit for 2020-21 was 31% as against 28% in 2021-22.
• Profit before Tax (PBT) for the year has grown by 24% to Rs 2072.45 million as against a PBT of Rs 1673.09 million for the last year.
• Profit after Tax (PAT) before other comprehensive income for the year grew by 23% to Rs 1518.10 million as against a PAT of Rs 1235.93 million last year.
• Cash and bank balance was Rs. 190 crores out of which Rs. 180 crores was in fixed deposits.

For Q2 FY 23

• Net Sales stood at Rs 112.17 crore in September 2022 down 24.21% from Rs. 148.01 crore in September 2021.
• Quarterly Net Profit stood at Rs. 16.86 crore in September 2022 down 71.04% from Rs. 58.22 crore in September 2021.
• EBITDA stood at Rs. 54.14 crore in September 2022 down 33.38% from Rs. 81.27 crore in September 2021.
• Supriya Lifesci EPS has decreased to Rs. 2.10 in September 2022 from Rs. 7.96 in September 2021.

Management’s comments

• The Company is engaged with more than 1,200 customers across 86 countries and embarked on an expansion in North America, Japan, Australia and New Zealand.
• Company is working on nine projects, having started process development. It will pursue additional CMO/CDMO opportunities.
• Additionally, for key products, company is seeing good traction in untapped regulated markets like the USA where it has initiated 5 new ANDA projects in this quarter for anesthetic, vitamins and antihypertensive range.
• Management expects two of the CMO projects will cross phase 2 and be ready for regulatory filing in the Q4 FY23.
• As per the management in the first 6 months, it had produced about 372 metric ton of material which is a very large volume and the capacity utilisation still is at 72%. However in the next few quarters, when the high margin product demand picks up which have a very long cycle time, it might be possible that with the poor capacity utilisation, company would generate higher margins and higher revenues.
• Because of the company’s backward integration, it is relatively secure in terms of raw materials, hence margin pressure is not present.
• Compnay has also initiated one ANDA project for vitamin range of products and antihypertensive range of product.
• Other than this, in terms of CMO/CDMO also company is seeing a lot of good opportunities in the last 6 months, two of which we can now say have moved to phase 2 and in fact company is in the process of doing the regulatory filings for these products in Q4 of this financial year.

Capex

• Supriya is actively improving its infrastructure at the Lote Parshuram location (three times authorised by the USFDA) to construct an R&D centre, warehouse, administrative, and effluent treatment facilities.
• The company started replacing its old production block with a 350 kl capacity with a 350 kl successor (with a provision for an additional manufacturing block). Ambernath is getting a new manufacturing block, R&D facility, and pilot plant. These projects have the potential to increase total capacity from 547 KL to around 810 KL.
• Work on construction of E block with about 350 KL reactor capacity is in progress. A new manufacturing block with a capacity of 70 KL attached to the new R&D facility with pilot plant is being set up at Ambernath.
• The company leased 80,000 square metres from Maharashtra Industrial Development Corporation (MIDC) in Isambe Industrial Park to produce pharmaceutical ingredients and medication intermediates. The present production facilities are scheduled to be completely utilised by 2024-25, after which the additional MIDC allocation might satisfy future needs.
• So far company has made capex of about 127 crs in last 4 years and plans to do additional 100 crs till 2024-2025.
• Key focus area will be to increase presence in regulatory market with new emerging market, backward integration, optimization of manufacturing capacity with proper utilization of man, material and machinery**,** ZLF upgradation, in-house ZLD and automation.

Sectorial Outlook

The worldwide active pharmaceutical ingredients market is expected to increase at a 6.9% CAGR from USD 208.9 million in 2021 to USD 334 million by 2028.

North America has the biggest market share for active pharmaceutical ingredients, followed by Europe and Asia Pacific.

In 2021, the active pharmaceutical ingredients (API) industry in the United States is expected to be worth USD 71.5 billion. At the moment, the country accounts for 36.3% of the global market. The Chinese active pharmaceutical ingredients (API) market is predicted to develop at a 7.6% CAGR to USD 35.4 billion by 2026.

Other key regional markets, such as Japan and Canada, are predicted to increase by 6.1% and 6.5%, respectively, between 2021 and 2026. Germany’s market share in Europe is predicted to grow at a 6.1% CAGR, while the rest of Europe’s market will reach USD 37.5 billion by 2026.

China, as a significant producer and exporter of APIs, accounts for around 20% of global API output.

The Indian active pharmaceutical ingredients market was worth USD 11.8 billion in 2020-21 and is expected to increase at a 12.24% CAGR until 2026-27.

Compared to 2020 the investment in the API business has expanded by 3X in 2021. The country’s API industry is on a growing trajectory. It meets over 20% of the worldwide generics market’s volume demand, making India the world’s largest provider of generic medications.

Conclusion

Supriya Life science a company debt free company engaged in engaged in the manufacturing of Active pharmaceutical ingredients (APIs) having therapeutic products in categories such antihistamine, analgesic, anaesthetic, vitamin, anti-asthmatic and anti-allergic. Over the past 4-5 years company has spent around130 crores in capex and is planning to spend another 100 crs in the next 2-3 years to take its manufacturing capacity to 1000KL by 2024-25. There is immense opportunity for api manufacturing in the coming period and the same can be seen from the sectorial outlook. Although when we look as past two quarters, it seems like a negative revenue but company does have a product portfolio which in itself is growing and when the market stabilises, as per the management whatever revenue they have lost will be realised. Besides company has sufficient cash and equivalents to fund its capex and this is a big positive coupled with the capex company has already done. Thus this makes Supriya Life science worth exploring for long term.