Natco Pharma: Business Model Simplified.

Hit the 're-tweet' & help us educate more investors.

A Thread 🧵👇
1/ A niche business model with a focus on complex molecules that are either FTF or PARA IV.

What is FTF/ PARA IV?

For that, let’s get the basics cleared.
2/ A generic drug is a copy of the patented molecule which might look different optically, however, works the same way.

When the patent expires, generics enter the market.

A Para IV/FTF is a way to enter 1st among the generics & also get a 180-day exclusivity.
3/ The 180-day exclusivity is a big deal as you are the only one to compete with the innovator (one with the patent) for the time being.

One can gain significant market share just by taking a small price cut before other players enter the market.
4/ What makes Natco Special?

It solely focuses on molecules that are tough to copy

API may not be easily available/ the formulation is challenging/ where the clinical data may need several patient studies/ etc.

Not your average pharma company’s cup of tea= Low competition.
5/ They have been doing it in the past.

Tamiflu: Exp. to generate 800crs in EBITDA over its lifecycle.

Copaxone: Exp. to generate 2000crs in EBITDA over its lifecycle.
6/ Why always choose a partner?

The partner works on the front end distribution while they develop & manufacture.

When Natco was a much smaller company, they worked with a 35:65 profit share such that the marketer bore the legal costs. Now, they do it at 50:50 share.
7/ Capacity to suffer is a key ingredient in their business model. You ask how?

The molecules that they launch today, work started on them 10-15 years ago.

That’s what their 500 scientists team are currently employed for: “Solving the problems of the future, today” 🔬
8/ What’s the future holds?

20 PARA-IV molecules pipeline & 40 niche APIs

Seemingly superior settlement for Revlimid ($10B drug in oncology)
+ Potential few months of exclusivity in FY23 & Higher volume share with no competition until 2026.
9/ Post Revlimid (FY26+)

Pipeline to sustain profitability

- Pomalyst: $2B drug in oncology, settled, FY25 expiry
- Imbruvica: First filer in tablet form- 80% of the $6B molecule
10/ There’s more:

Domestic business (20% of Rev): Launched latest products in Onco, Cardio

+ Facing pricing pressure in legacy onco portfolio as a consequence of harsher regulatory oversight & increasing competition

USP? Launch the patented molecule & Aggressively litigate.
11/

ROW: A play to diversify geographically-

Canada: via a frontend sales team, distribution similar to the USA
Brazil: tender driven business

Growth: dependant on the new launches

Scale-up has been slower than expected.
12/

Agrochemicals venture: Challenging niche products while simultaneously entering the markets (Building their own distribution: Hired 100+ people & invested over 100crs)

Target: Enter global markets.

CTPR- 2000crs molecule litigation is a key monitorable.
More in pipeline.
13/

When will it reflect in the numbers?

The business model works in a step function pattern of growth.

Avg. Pat base can go from 500 to 1500crs over 3-4 years. (Observe the change in business economics in FY17)

The sustainability needs to be tracked carefully.
14/

Risks to be noted:

Delay in Revlimid & other approvals.

Higher price erosion than expected.

Inability to gather market share (like in Copaxone, guidance was not achieved)
15/

The domestic & ROW businesses not being unable to ramp up to the next league. (defeats the diversification strategy)

Weak return on capital from the Agri venture.

The End.

• • •

Missing some Tweet in this thread? You can try to force a refresh
 

Keep Current with JST Investments

JST Investments Profile picture

Stay in touch and get notified when new unrolls are available from this author!

Read all threads

This Thread may be Removed Anytime!

PDF

Twitter may remove this content at anytime! Save it as PDF for later use!

Try unrolling a thread yourself!

how to unroll video
  1. Follow @ThreadReaderApp to mention us!

  2. From a Twitter thread mention us with a keyword "unroll"
@threadreaderapp unroll

Practice here first or read more on our help page!

More from @JstInvestments

1 Apr
Health Insurance simplified:

Do 're-tweet' & help us educate more investors

A Thread 🧵👇
What is health insurance?

Health insurance covers medical expenses that arise due to an unforseen illness. These could be related to hospitalisation,cost of medicines etc

(1/14)
Why is health insurance important?

Health risks and uncertainties are a part of life

With the constant increasing prices of healthcare,insurance today is a necessity.

Health insurance provides people with a much needed financial backup at times of medical emergencies.

(2/14)
Read 15 tweets
23 Mar
We have been hearing about Non-Fungible tokens or NFTs a lot recently, therefore we thought let's shed some light on it!

In this thread, we will cover -

Fungibility
Bitcoin v/s NFTs
NFT sales
Applications
Advantages
Concerns

#LearningswithJST

Let's go 👇
First, let’s know what fungibility is.

It refers to the ability of an asset to be exchanged or substituted with similar assets of the same value such as currency.

you can exchange 5 notes of Rs 100 for 1 note of Rs 500. The value is Rs 500 (despite being in another form)
NFTs are the opposite of that

Each one is unique and can't be substituted for something similar

Think of the Mona Lisa painting - an original piece of art. It can’t be swapped for a poster of the same painting from a gift shop because the poster doesn’t hold the same value
Read 17 tweets
1 Feb
Jan Auto sales update:-

Escorts sales grows at 48%

Stay tuned for updates during the day!

#AutoSalesWithJST
Jan Auto sales update:-

Maruti sells 160,000 cars in Jan.(4% growth)

#AutoSalesWithJST
Jan Auto sales update:-

Ashok Leyland sells 12359 vehicles (a growth of 14%)

M&HCV is back with a growth of 32%.

#AutoSalesWithJST
Read 9 tweets
1 Feb
Stay tuned with all the important budget happenings!

As always, we will simplify the announcements for you!

Stay Tuned :)

#BudgetWithJST #Budget2021
A new central sponsored scheme - Aatmanirbhar Health Yojana with an outlay of Rs 64180 Cr over 6 years (in addition to National Health Mission)

Will strengthen National centre for disease control

Will launch 'Mission Poshan 2.0'

#BudgetWithJST #Budget2021
Will implement Jal Jeevan Mission with an outlay of Rs 2.87 Lakh Cr

Govt to set up 15 health emergency centres

#BudgetWithJST #Budget2021
Read 27 tweets
23 Jan
Grasim's Concall on the venture into the paints business. A Thread 🧵👇

Decorative paints will be the focus, 40,000crs market with unorganised share at 25%

Looks like a big opportunity, no? Let's delve deeper.

1/n
Have pan-India distribution presence with Birla white (Sold also at paint outlets & 2nd largest distribution in the industry): Will find synergies.

Red Flag: How will they copy Asian Paints Innovation DNA, operational efficiency, Inventory & supply management

2/n
Risk: Distribution of paints is from plant to dealers & for Birla white, it is from the factory to distributor to dealer. Totally different.

Answer: Birla white has a strong relationship with the dealer. What's the incentive?

No answer on the tinting machine Entry Barrier.

3/n
Read 5 tweets
22 Jan
Reliance Industries Q3FY21 -

Revenue down 19.9% YoY
EBITDA flat YoY
Net profit up 25.8% YoY

9 Quarters data shown for all segments and the business as a whole.

The business-specific commentary continued on the thread below 👇👇

#Q3FY21withJST #Reliance
RIL has reclassified the segments, this is how it looks now

Img 1 - Segment Revenue and EBITDA

Img 2 - EBITDA Margins and Revenue Mix

Img 3 - The older segment classification (Just showing for info to show how the newer categories look)

Img 4 - Category description
Some Updates -

RECORD QUARTERLY EBITDA FOR DIGITAL SERVICES AT Rs 8,942 Cr

HIGHEST EVER QUARTERLY EBITDA FOR RETAIL AT Rs 3,102 Cr

RIL AND BP ANNOUNCE THE START OF PRODUCTION FROM R CLUSTER, ULTRA-DEEP-WATER GAS FIELD IN BLOCK KG D6 OFF THE EAST COAST OF INDIA
Read 9 tweets

Did Thread Reader help you today?

Support us! We are indie developers!


This site is made by just two indie developers on a laptop doing marketing, support and development! Read more about the story.

Become a Premium Member ($3/month or $30/year) and get exclusive features!

Become Premium

Too expensive? Make a small donation by buying us coffee ($5) or help with server cost ($10)

Donate via Paypal Become our Patreon

Thank you for your support!

Follow Us on Twitter!