biocon
DESCRIPTION
Please post your valuable feedbackTRANSCRIPT
2
Company Profile
BUYApprox price : 270Target price : 325Estimated EPS : Rs 17Projected PE : 22.05Investment Period : 3 Months
Brief ProfileSector : PharmaBSE Code : 532523NSE : BIOCONBloomberg : BIOS@IN
� Introduction:
The pharmaceutical industry in India is ranked
4th world wide when compared its volume.
� Biocon established in 1978 as a 70:30 joint venture (JV) between Indian promoters (70%) and Ireland-based Biocon Biochemicals (30%)
� 1st biotech company of India & Asia's largest publicly-listed biopharma company.
� Listed in India since 2004, Current Market Cap > $ 1.2 Billion
� 4000 + Employees, 75% of these are scientists and engineers of which 10% are Ph.Ds.
3
Company Profile
Stock Info
Market Cap : 5,607 Cr
Face Value : Rs 5.00
Book Value : 81.11
EPS (FY 10) : 12.42
Dividend : 70%
Sales Growth : 27.53%
RONW : 6.68%
52 wk H - L : 311 - 174
Avg volatility : 3.16
Promoter’s
Shareholding : 60.92%
Avg daily Vol : 115,441
� Biocon, promoted by Kiran MazumdarShaw, named in the 100 most influential people by TIME Magazine
� It started with initial focus on enzyme manufacture & marketing.
� It is a research-driven, global healthcare company with a strong matrix of capabilities along the biopharmaceutical value chain. Focusing on unmet medical needs in cancer, diabetes and inflammatory diseases.
� Biocon have a robust research pipeline & strong patent portfolio.
4
Business Model
FY 2010Sales :1198.64CrOp Profit : 327.67 CrInterest : 1.99 CrGross Profit : 355.96 CrNet Profit : 293.25 CrEPS : Rs12.42AGM : 23/07/10
5
Product Services
Balanced Portfolio
6
Subsidiaries & JV
• Biocon Limited is neatly divided into 3 main organizations namely SYNGENE, CLINGENE & BIOCON
� SYNGENE :
Syngene is involved in early clinical discovery of the lead molecule & its development for clinical development.
In FY09, it registered a 29% growth in revenues from Rs160.4 crores in the previous year to Rs206.5 crores.
Operational margin (EBITDA) increased from Rs51.7 crores to Rs60.6 crores representing a 17% increase.
� CLINIGENE :
Clinigene undertakes clinical development
In FY09, Clinigene registered revenues of Rs33 crores and earned a profit of Rs4.5 crores
7
Subsidiaries & JV
� Biocon Biopharmaceuticals Private Limited (BBPL):
It is a 51:49 JV with CIMAB SA, to manufacture monoclonal antibodies and other recombinant therapeutics.
In FY09, it earned revenues of Rs18.6 crores as against Rs13.7 crores and pared its losses to Rs5.1 crores from Rs13.3 crores in the previous year.
� Biocon SA :
It is a wholly owned subsidiary in Switzerland, primarily engaged in development and marketing of biopharmaceuticals in the European region and has commenced Clinical Development of Insulin in the European markets.
8
Subsidiaries & JV
� NeoBiocon FZ LLC:
Incorporated in January 2008, it is a 50:50 joint venture with Dr. B.R.Shetty of NeoPharma. It is a research and marketing pharmaceutical company based in Abu Dhabi. It has successfully commenced marketing of oncology products in the GCC markets and is in the process of obtaining regulatory approvals for an entire range of formulations.
� Biocon Research Limited:
In the FY09, the Company formed a wholly owned subsidiary M/s. Biocon Research Limited to undertake discovery led development research work in biologics, antibody molecules and proteins.
9
Financials
40.83%-------Long term EPS growth (%)
39.66%56.60%11.69%30.07%63.43%--3-Year Avg. EPS growth (%)
-74.29%174.64%18.62%-23.45%39.89%73.78%76.61%Year-on-Year EPS growth (%)
5.5921.757.926.688.726.233.592.03EPS -adjusted for splits/bonus (Rs.)
5.5943.4915.8413.3517.4412.47194.95111.59EPS (Rs.)
111.80434.92158.36133.50174.40124.6735.8720.31PAT (Rs. Cr.)
32.28%-------Long term Sales growth (%)
8.72%7.98%17.91%42.52%64.64%--3-Year Avg. Sales growth (%)
8.10%-0.15%18.21%5.89%29.64%92.04%72.23%Year-on-Year Sales growth (%)
929.90860.23861.53728.81688.28530.91276.46160.52Sales (Rs. Cr.)
Growth Snapshot
FY 09FY 08FY 07FY 06FY 05FY 04FY 03FY 02Biocon Limited
10
Financials
10.21%41.17%47.60%14.76%20.31%26.42%35.41%20.19%Return on Invested Capital (%)
1143.061063.82349.81921.48871.82483.95115.60123.72Invested Capital (Rs. Cr.)
6.35%15.57%51.35%-36.11%-51.08%-4.68%-0.24%-17.25%Free Cash Flow/Sales (%)
59.02133.90442.40-263.14-351.55-24.83-0.66-27.70Free Cash Flow (Rs. Cr.)
56.97130.82-328.46303.46506.86130.6438.7641.94Capital Expenditure (Rs. Cr.)
115.99264.72113.9440.32155.31105.8138.0914.24Cash Flow from Operations (Rs. Cr.)
76.3571.1763.8352.7437.8157.7261.6653.16Inventory days (#)
121.7595.75116.44103.1991.6879.7297.37141.78Debtor days (#)
8.13%32.75%16.82%16.62%25.06%23.02%28.31%23.16%Return on Equity (%)
1.121.111.111.131.111.121.541.76Financial Leverage (x)
7.27%29.54%15.10%14.70%22.58%20.56%18.37%13.18%Return on Assets (%)
0.600.580.820.800.890.881.421.04Total Assets Turnover (x)
1.301.271.203.203.363.682.271.54Fixed Asset Turnover (x)
12.02%50.56%18.38%18.32%25.34%23.48%12.97%12.65%Net Margin (%)
21.66%60.18%27.49%25.55%30.41%58.76%40.70%41.88%Operating Margin (%)
FY 09FY 08FY 07FY 06FY 05FY 04FY 03FY 02Biocon Limited Profitability Snapshot
11
Financials Ratios
7671645338586253Inventory Days
12296116103928097142Debtor days
0.34%0.33%0.44%0.04%0.26%0.25%0.01%0.02%Cash/Total Assets (%)
0.940.841.090.830.690.800.921.07Quick Ratio (x)
1.511.451.681.250.981.371.501.48Current Ratio (x)
25.74145.1921.9665.8871.0847.5210.436.87Interest Coverage (x)
0.120.110.110.130.110.120.540.76Debt to Equity (x)
0.140.120.130.160.150.140.600.69Debt to Assets (x)
1.121.111.111.131.111.121.541.76Financial Leverage (x)
FY 09FY 08FY 07FY 06FY 05FY 04FY 03FY 02Biocon Limited Financial Health Snapshot
12
Peers Comparison
10994669676Inventory days (#)
165117127127122Debtor days (#)
1.90%0.34%1.43%1.00%0.34%Cash/Total Assets (%)
2.250.411.031.200.94Quick Ratio (x)
3.630.731.542.101.51Current Ratio (x)
2.9127.9127.6218.2625.74Interest Coverage (x)
1.310.850.120.220.12Debt to Equity (x)
0.640.920.140.250.14Debt to Assets (x)
2.351.891.121.221.12Financial Leverage (x)
12.11%14.45%10.67%17.85%8.13%Return on Equity (%)
5.16%7.64%9.51%14.68%7.27%Return on Assets (%)
0.560.640.691.000.60Toatal Assets Turnover (x)
1.353.013.372.661.30Fixed Asset Turnover (x)
9.14%11.92%13.75%14.67%12.02%Net Margin (%)
24.20%26.05%23.29%20.87%21.66%Operating Margin (%)
2116.034797.494080.405295.33929.90Sales (Rs. Cr.)
FY09FY09FY09FY09FY09
GlenmarkRanbaxyDr ReddyCiplaBioconBiocon Limited Peer Comparison Snapshot
13
8.15%13.51%12.60%19.82%10.21%Return on Invested Capital (%)
4096.994527.554667.694182.011143.06Invested Capital (Rs. Cr.)
-37.84%-18.56%-5.55%-8.68%6.35%Free Cash Flow/Sales (%)
-800.74-890.48-226.39-459.7359.02Free Cash Flow (Rs. Cr.)
956.10225.05707.69833.0056.97Capital Expenditure (Rs. Cr.)
155.37-665.43481.30373.27115.99Cash Flow from Operations (Rs. Cr.)
FY09FY09FY09FY09FY09
GlenmarkRanbaxyDr ReddyCiplaBioconBiocon Limited Peer Comparison Snapshot
Peers Comparison
14
Why to Invest inBiocon Limited
• SECTOR
� Established biotech centers in the U.S., Canada, Europe and Australia achieved an aggregate net profit of $3.7 billion for last year. That's well up from the $1.8 billion loss recorded in 2008.
� The global market for Biotech Drugs is estimated at $100bn and is growing at 18% every year. India market predicted to value about $3.1 billion (USD).
� Opportunities are arising for companies as $25bn worth of biologics are losing patent protection by 2016. Globally, the insulin market is expected to be $10bn by 2010. Also, it is expected that the share of Indian Crams player in the global manufacturing market would increase from an approx 15 percent in 2005 to 22 percent by 2010.
� Government has also taken some important measures to reduce the health care cost, they have reduced custom duty from 10% to 5% on influenza vaccine and nine life saving drugs and they have reduced excise duty from 8% to 4%.
15
• COMPANY
� Biocon have a very unique biopharma business model that straddles both products and services.
� Strong research-driven ethos in the company
� Very interesting and robust pipeline of products that are well balanced between biosimilars and novel biologics.
� Biocon was selected among 20 Indian companies in Forbes 'Best under a billion' list. The Syngene Vivariumreceived an official accreditation by AAALAC
� Self-financed both research and marketing, as well as manufacturing
Why to Invest inBiocon Limited
16
• Management / BOD
� Ms. Kiran Mazumdar-Shaw (CMD)- First generation entrepreneur with more than 32 years experience in biotechnology and industrial enzymes
� Mr. John Shaw (VC)- Chairman, Madura Coats Ltd between 1991-1998.
� Prof. Ravi Mazumdar- University Research Chair Professor, Department of Electrical and Computer Engineering, University of Waterloo, Canada
� Dr. Neville Bain- Chairman, Institute of Directors, UK, Board Member, Scottish & Newcastle Plc., Provexis Ltd.
� Prof. Charles L. Cooney- Prof, Chemical & Biochemical Engineering, MIT, USA
� Dr. Bala S. Manian- Chairman and Founder, Reametrix Inc. Co-founder, Quantum Dot Corporation and Surromed Corporation, USA
� Mr. Suresh Talwar Partner, Talwar Thakore & Associates, Director, Cadbury India Ltd., Birla Sun Life Insurance Co. Ltd., L&T Ltd.
� Prof. Catherine Rosenberg University Research Chair Professor and Chairman, Department of Electrical and Computer Engineer
Why to Invest inBiocon Limited
17
• FUNDAMENTALS
• 5-year average EBITDA of 30%, a 20% PAT,
• Very low debt equity of 1 is to 10.
• R&D is aprox 8% of revenues
• Global market access, India & emerging markets account for 40 % of the revenue.
• 2 novel drugs in late stage clinical trials– Oral Insulin: Potentially addressing 300 million diabetic patient world wide
– Anti-CD6: Entering Phase III human clinical trials for posariasis which affects 3% of global population.
• Biocon is planning to list its contract research business through its subsidiaries (Syngene and Clinigene). Thus, there is alot of potential to unlock the Value through their listing.
Why to Invest inBiocon Limited
18
Disclaimer
• Disclaimer:FIN PRO Analysis is an independent research firm. It is not a registered investment advisor or broker dealer. No information in this report should be construed as an endorsement to either buy or sell any securities mentioned in this report. The analyst whoprepared this report rely on publicly available information which neither the analyst, nor FPA, can guarantee to be error-free or factually accurate. This publication has been solely prepared for the information purpose. To fully comply with the requirements of law, FPA cautions all investors that such forward looking statements in this report are not guarantees of future performance. Unknown risk, uncertainties, as well as other uncontrollable or unknown factors may cause actual results to materially differ from the results, performance or expectations expressed or implied by such forward-looking statements. Investors should exercise good judgment and perform adequate due-diligence prior to making any investment.