Thread by @jain_7199rahul

A thread on #glandpharma

Incorporated in 1978, Gland Pharma is an injectables-focused B2B player with capabilities for both API & formulations that derives 2/3rd of its revenue from the US, Row (16%) & India (9%).

Injectables account for 98% of its revenue while Ophthalmic fetches 2%. It is one of the fastest growing generic injectables-focused companies.

It offers services that cover entire injectables value-chain, including contract development, own development, dossier preparation & filing, technology transfer and manufacturing across a range of delivery systems.

It has 8 manufacturing facilities, 4 for formulations & 4 for API, & the plants are in Hyderabad (4 of 8) and Vizag. The facilities include 2 sterile injectables plants, 1 biosimilars drug substance plant, 1 dedicated Penems facility, 1 oncology facility, & 3 other API facilities

As a B2B player, It does not face pricing pressure that other Indian generic firms do & has reasonable capabilities to pass on cost pressure, if it were to emerge. It has a flawless track record on compliance & has been compliant with various developed market regulatory bodies

The company is promoted by Fosun Pharma, a China based player with a large global presence. The company’s revenue sources include not just sales of products but also profit share and licensing fees.

Gland earns 90% of its revenue from sales of products while 10% is from sales of services. Of the 90% product sales revenue, 80% is from transfer price and 10% from profit share from marketing partners.

The company has five key business models:
1.B2B IP-led Own filing (24% of revenue)
2.B2B IP-led Partner Filing (53% of revenue)
3.B2B Transfer Technology (17% of revenue)
4.B2B CMO (2% of revenue) and
5.B2C (4% of revenue)

As a specialist injectable manufacturer, it offers products such as sterile injectables, oncology, and ophthalmic, & it focuses on complex injectables,NCE-1s, & various drug delivery systems, including liquid vials, lyophilized vials, pre-filled syringes, ampoules, bags, & drops

It is now foraying into complex peptides, long acting injectables, suspensions and hormonal products, pens, and cartridges.

Injectables account 2nd largest category of delivery systems with 32% share of global pharma market in CY 14. From CY14 to CY19, the global injectables market clocked a 10% CAGR to reach a market size of USD432bn & market share of 39%, catching up with oral solids' share of 45%.

Between CY14 and CY19, more than half of the drugs that were in shortage in the US belonged to the injectables category.

Injectables have several advantages over other traditional dosage forms, including instant action, administration in a controlled manner, physician oversight, and bypass of gastrointestinal tract absorption. Biologics can only be administered through injectable route.

Gland has achieved economies of scale in the injectables space and operates as a low-cost injectables formulation manufacturer.

Globally, the company has 1,501 products registered across 60 countries. The company has USD7.5bn worth of pending ANDA and tentative approvals. With the new Pashamylaram facility, Gland has adequate capacity to venture into new markets.

The company has aggressive plans for the China market, as they plan to partner with their promoter, Fosun Pharma, and rapidly scale up in the region. With Pashamylaram, Gland has enough capacity to foray deeper in various markets across the globe.

It can leverage its relationship with its promoter, Fosun, to penetrate in Mexico, as Fosun has a large network presence there. It expects RoW market revenue contribution to reach 30-40% in the next 3-4 years, & the region is currently growing at the fastest pace for the Co

It aims to derive 10% of sales from China (part of its RoW strategy) in coming years, and its promoter, Fosun, could play a critical role. Regulatory requirements in China are complex and different from those in the US. The entire process takes about 12-14 months.

Fosun has a wide network in China, with deep understanding of the market. Gland has filed for 7 products in China and expects to receive 1-2 product approvals in the next couple of quarters.

Apart from the China penetration, Fosun has played a role in Gland’s EU sales by levering Fosun’s reach in the region. Although Gland has 3 API facilities and 24 ANDAs being supported by in-house APIs, Gland does procure some APIs from Fosun at very attractive costs.

Capex & Acquisition
In 2021, Gland acquired 10Kl biologics facility from Vitane Biologics and investing INR3bn in FY22 to add another 10Kl capacity. It will be further expanding biologics capacity in next few years to reach 60Kl, & the division would provide growth in long run.

The current capacity is for vaccine and is likely to be used for RDIF developed Sputnik-V/Sputnik light (single dose of Sputnik V) COVID vaccine until next year. Post Sputnik, Gland will begin with drug substance.

It has already started groundwork for biosimilars business & has begun business development exercise. Biosimilars manufacturing is a natural extension for Gland in next 2-3 years, it will likely obtain developed market's regulatory approvals and have enough capacities in place.

Some Key metrics, Indicators, Business updates, Performance & Management background are attached

Source: Annual Report & Jefferies Report

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