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#SuvenPharma Annual Report 2022 Key Takeaways 💊💊

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1. They had a great performance in FY22. They had initially given a guidance of 10-15% growth in revenues and ended the year with 47% growth in topline.

The EBITDA margin was above 50% for the year despite inflationary pressure.

2. A major part of the growth came from the Specialty Chemicals segment. Revenue for this vertical grew by 51% YoY due to increased volumes. They saw good volume offtake for the 1st commercialized

molecule which is now generic. But the partner developed a robust life cycle management which generated good volumes.

3. There was also a commercialization of a 3rd molecule in this segment which helped increase volumes. They currently have 1 more molecule in development

which is expected to be commercialized in the next 18-24 months.

4. On the Pharma side of the business, they expect future growth to come from vertical integration of the CDMO business and increased volumes in the formulations business

5.They have had multiple interactions with global innovators who have asked them to increase the runway of their services. So they have been working on increasing the scope of their services from manufacturing 1 intermediate

to multiple intermediates, KSMs, APIs and formulations for innovators.

6. During the year, they sold their stake in Rising Pharma to HIG Capital and acquired Casper Pharma. They had initially invested $35 million in Rising Pharma in 2019 for a 25% stake.

They sold the entire stake to HIG capital for $41.55 million in cash and a 7% stake in Rising Aggregator (a holding Company created by HIG to manage Rising Pharma and other acquisitions that would happen in future).

7. Of this, they used $20.5 million (~₹156 Cr) to acquire

Casper Pharma. They have a large manufacturing unit in Hyderabad for the manufacture of solid and liquid oral drugs for USA and regulated markets and is ready for USFDA inspection. They have filed 2 ANDAs which have triggered a US FDA audit which is likely to happen soon.

They also have 15 ANDAs which they plan to file in FY23.

8. Casper has a 7 year contract with Rising Pharma to manufacture and supply formulations for all products developed by Rising Pharma. So the initial investment of $35 million in Rising Pharma

resulted in $21 million in cash, 7% stake in Rising aggregators, 100% stake in Casper Pharma and a long term contract for supply of formulations.

9. They also plan to get into life cycle management of drugs for innovators. In this business, they will manufacture the drugs

for innovators after their drug goes off patent. They will provide manufacturing for the entire value chain - intermediate to formulation. They have been in conversation with the innovators to make this happen for a while but the travel restrictions

due to the pandemic caused delays.

10. For their existing formulations business (niche products) - they plan to maintain a steady pace of ANDA filings. They will be filing 6-8 ANDAs in FY23 which will start contributing to revenues in 18-24 months.

11. So they have 4 wheels in place to grow their formulations business.

Wheel 1 - Their existing formulations business of niche products

Wheel 2 - The stake in Rising Aggregator is expected to increase in value as HIG Capital is planning to do more acquisitions and more than

double the enterprise value of Rising Aggragator.

Wheel 3 - The acquisition of Casper Pharma and the long term contract with Rising Pharma is expected to increase revenues.

Wheel 4 - The life cycle management for the generic drugs of innovators.

To support this growth plan they are investing ₹600 Cr in Capex which will be spent on replacing old blocks in their Suryapet facility, moving their R&D facility in Jeedimetla and adding another block in the Pashamylaram facility.

This capex is expected to complete in the next 18-24 months

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