Gland Pharma IPO: Information Analysis

A leading manufacturer of generic injectables, Gland Pharma was established in Hyderabad in 1978. Although having a presence in sterile injectables, oncology and ophthalmics, it mainly focuses on complex injectables and first-to-file opportunities. The company follows a business-to-business (B2B) model wherein it enters into contracts with pharmaceutical companies to manufacture their products. These contracts are of different types, including profit share, milestones achieved or royalty payment. This model enables the company to sign long-term contracts with pharmaceutical-marketing companies, which result in stable and predictable cash flows, better operating profits owing to low administrative expenses, lower R&D expenses and low working capital requirements. As on June 30, 2020, the company had 267 abbreviated new drug application (ANDA) filings in the United States, of which 215 were approved and 52 were pending approval. Out of these 267, 101 ANDA filings are owned by the company, of which 71 filings are approved and 30 are pending approval. With Shanghai-based Fosun Pharma holding 74 per cent in Gland Pharma before this IPO offer, it is the first company in India to be listed with a Chinese promoter. Through the IPO, the company plans to raise close to Rs 6,500 crore, which is the largest IPO in the pharma sector. Strength Diversified B2B model: This model enables the company to grow its market share by signing contracts with pharmaceutical companies around the globe to manufacture their products. High entry barriers: When it comes to manufacturing injectable medicines, the process is a bit complex. This is because products are directly injected into the bloodstream of patients. Hence, the entire manufacturing process requires stricter regulatory compliances and high-quality standards, which lead to high-capital investments and manufacturing complexities. And all these things act as high entry barriers in the industry. Large presence: Its products are exported to 60 countries, including the US, which alone accounted for more than 66 per cent of the total revenues in FY20. In the US, there is a growing demand for generic medicines, which is a good sign for the company. Increasing demand for pharmaceutical products: COVID-19 has led to an increase in awareness and demand for better healthcare facilities. People