Thread by @MultipieSocial

Insights on the Indian API, Formulation and CRAMS via a recent report from o3 Capital.

Tailwinds (China+1): 10% market share switch from China can double Indian API market.

Headwinds: Rising input costs in China due to power outage + freight hike. India has high dependency.
1/n

2/n
Indian API landscape

Scale, capacity, DMF filings, focus segments/ therapy areas and leading products.

#Divis #LaurusLabs #Granules #AartiDrugs #Solara

3/n
Growth strategies adopted by API companies

- Diversifying beyond API and CRAMS into Formulations, Biologics and Nutraceuticals.

- Laurus: Forward integrated into drug development via contracts from NATCO, Citron, Dr. Reddy + foray into new markets + new segments (Biologics)

4/n
Solara - Merger with Aurora L/S triples CRAMS revenue + customer & geographic diversification + new product (ARV)

Divis - Backward integration in key products like Naproxen (70% share) - lowest-cost producer. 1200 cr Capex.

Aarti Drugs - Forward integrated into Formulations

5/n
Understanding the scale and margin profile of key API companies.

6/n

Segment snapshot: CRAMS players command higher EBITDA margins than pure API companies (28% vs 15%) and thus higher valuations.

7/n

Valuation multiples metrics of all companies in API, Formulations and CRAMS

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