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RECOMMENDATION

Strong Sell

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RATING

RECOMMENDATION

Strong Sell

Business Type

Traditional Business

  • unlisted stock logo
    Arch Pharmalabs Limited Unlisted Shares Essentials

ISIN

INE182F01017

Face Value

₹10.00

Total Share

15,19,23,076

Total Income

₹65,150.34 L

Profit After Tax

-₹15,950.04 L

EPS

-₹10.50

P/E

-11.90

Market Capitalisation

₹1,899.04 Cr

Book Value

₹1,50,672.00 L

Intrinsic Value

-₹1,072.20

Sector

Health Care

Sub-sector

Pharmaceuticals

Cashflow - Operations

₹18,125.88 L

Cashflow - Financing

-₹17,514.06 L

Arch Pharmalabs Limited Growth

Compounded Sales Growth

  • 26.56%

    1 Year

  • 62.27%

    2 Year

Pro Only

Compounded Profit Growth

  • NA

    1 Year

  • NA

    2 Year

Pro Only

Return On Equity

  • 10.59%

    1 Year

  • 9.99%

    2 Year

Pro Only

About Arch Pharmalabs Limited

Overview : 

  • It is a pharmaceutical company aligned across two business verticals viz. products and services. 
  • Their products business comprises manufacture and sale of APIs and Intermediates to innovator and generic pharmaceutical players in both domestic and international markets including the regulated markets.
  • It has evolved their business and has, over the years, extended from manufacturing APIs and Intermediates to add CRAMS to their offerings, which has significant potential for the growth of their business.

Key facts:

  • Revenue from operations has been increased from INR 47,658  lakhs in 2019 to INR 63,229 lakhs in 2020, showcased a growth rate of 7.4%.
  • EBITDA has been increased at the growth rate of 10.3% from INR 5,226 lakhs in 2019 to INR 5,764 lakhs in 2020.

  • Arch Pharmalabs Limited Subsidiaries

  • Arch Life Sciences Limited (Subsidiary)
  • Arch Finechemicals Limited (Subsidiary)
  • Arch Pharmalabs FZ LLC (Subsidiary)
  • Kobo Biotech Limited (Associate)

  • Arch Pharmalabs Limited Revenue Segmentation

  • Pharmaceutical
  • Arch Pharmalabs Limited Industry Overview

Industry Statistics

Introduction: 

  • India is the largest provider of generic drugs globally. Indian pharmaceutical sector supplies over 50% of global demand for various vaccines, 40% of generic demand in the US and 25% of all medicine in the UK. 
  • Globally, India ranks 3rd in terms of pharmaceutical production by volume and 14th by value. The domestic pharmaceutical industry includes a network of 3,000 drug companies and ~10,500 manufacturing units.
  • India enjoys an important position in the global pharmaceuticals sector. The country also has a large pool of scientists and engineers with a potential to steer the industry ahead to greater heights. 
  • Presently, over 80% of the antiretroviral drugs used globally to combat AIDS (Acquired Immune Deficiency Syndrome) are supplied by Indian pharmaceutical firms.


       Market Size:

  • According to the Indian Economic Survey 2021, the domestic market is expected to grow 3x in the next decade. 
  • India’s domestic pharmaceutical market is estimated at US$ 42 billion in 2021 and likely to reach US$ 65 billion by 2024 and further expand to reach ~US$ 120-130 billion by 2030.
  • India's biotechnology industry comprising biopharmaceuticals, bio-services, bio-agriculture, bio-industry, and bioinformatics.
  • The Indian biotechnology industry was valued at US$ 64 billion in 2019 and is expected to reach US$ 150 billion by 2025.
  • India’s drugs and pharmaceuticals exports stood at US$ 24.44 billion in FY21.

Future Prospects

  • The Union Cabinet has given its nod for the amendment of existing Foreign Direct Investment (FDI) policy in the pharmaceutical sector in order to allow FDI up to 100% under the automatic route for manufacturing of medical devices subject to certain conditions.
  • The drugs and pharmaceuticals sector attracted cumulative FDI inflow worth US$ 17.75 billion between April 2000 and December 2020 according to the data released by Department for Promotion of Industry and Internal Trade (DPIIT).
  • In April 2021, National Pharmaceutical Pricing Authority (NPPA) fixed the price of 81 medicines including off-patent anti-diabetic drugs allowing due benefits of patent expiry to the patients.
  • In February 2021, Aurobindo Pharma announced plans to procure solar power from two open access projects of NVNR Power and Infra in Hyderabad. The company will acquire 26% share capital in both companies with an US$ 1.5 million investment. The acquisition is expected to be completed by the end of March 2021.
  • In February 2021, the Telangana government partnered with Cytiva to open a ‘Fast Trak’ lab to strengthen the biopharma industry of the state.
  • In February 2021, Glenmark Pharmaceuticals Limited launched SUTIB, a generic version of Sunitinib oral capsules, for the treatment of kidney cancer in India.
  • In February 2021, Natco Pharma launched Brivaracetam for the treatment of epilepsy in India.
  • In February 2021, the Russian Ministry of Health allowed Glenmark Pharmaceuticals to market its novel fixed-dose combination nasal spray in Russia.
  • In January 2021, the Central government announced to set up three bulk drug parks at a cost of INR 14,300 Cr. to manufacture chemical compounds or active pharmaceutical ingredients (APIs) for medicines and reduce imports from China.
  • In May 2021, Eli Lilly & Company issued non-exclusive voluntary licenses to pharmaceutical companies—Cipla Ltd., Lupin Ltd., Natco Pharma & Sun Pharmaceutical Industries Ltd.—to produce and distribute Baricitinib, a drug for treating COVID-19
       Road Ahead:
  • Medicine spending in India is projected to grow 9 12% over the next five years, leading India to become one of the top 10 countries in terms of medicine spending.

Government Initiatives

  • To achieve self-reliance and minimize import dependency in the country's essential bulk drugs, the Department of Pharmaceuticals initiated a PLI scheme to promote domestic manufacturing by setting up greenfield plants with minimum domestic value addition in four separate ‘Target Segments’ with a cumulative outlay of INR 6,940 Cr. from FY21 to FY30.
  • In May 2021, under Atmanirbhar Bharat 3.0, Mission COVID Suraksha was announced by the Government of India to accelerate development and production of indigenous COVID vaccines. To augment the capacity of indigenous production of Covaxin under the mission, the Department of Biotechnology, Government of India, provided financial support in the form of a grant to vaccine manufacturing facilities for enhanced production capacities, which is expected to reach >10 crore doses per month by September 2021.
  • In April 2021, the Union Government decided to streamline and fast-track the regulatory system for COVID-19 vaccines that have been approved for restricted use by the US FDA, EMA, UK MHRA, PMDA Japan or those listed in the WHO Emergency Use Listing 
  • (EUL). This decision is likely to facilitate quicker access to foreign vaccines by India and encourage imports.
  • Under Union Budget 2021-22, the Ministry of Health and Family Welfare has been allocated INR 73,932 Cr. and the Department of Health Research has been allocated INR 2,663 Cr. The government allocated INR 37,130 Cr. to the 'National Health Mission’. PM Aatmanirbhar Swasth Bharat Yojana was allocated INR 64,180 Cr. over six years. The Ministry of AYUSH was allocated INR 2,970 Cr., up from INR 2,122 Cr.

Arch Pharmalabs Limited Strengths

  • Revenue from operations has been increased from INR 24,719 lakhs in 2018 to INR 63,229 lakhs in 2020, showcased a growth of 59.9%. 
  • Cash from operations showed a growth of 1087.6% and has been increased from INR 1,526 lakhs in 2019 to INR 18,126 lakhs in 2020. 
  • There is a marginal increase in EBIT and EBITDA margin% from 2019 to 2020.

Arch Pharmalabs Limited Shortcomings

  • Company is not able to make profits from last 3 years due to high cost of materials consumed despite of increasing income of last 3 years.

Arch Pharmalabs Limited Opportunities

  • The Indian Government has taken many steps to reduce costs and bring down healthcare expenses. Speedy introduction of generic drugs into the market has remained in focus and is expected to benefit the Indian pharmaceutical companies. In addition, the thrust on rural health programmes, lifesaving drugs and preventive vaccines also augurs well for the pharmaceutical companies.
  • Going forward, better growth in domestic sales would also depend on the ability of companies to align their product portfolio towards chronic therapies for diseases such as such as cardiovascular, anti-diabetes, anti-depressants and anti-cancers, which are on the rise.

Arch Pharmalabs Limited Threats

  • Active Pharmaceutical Ingredients (APIs), or bulk drugs, are raw materials used in the manufacture of medicines or formulations. China was one of the leading countries to produce and sell APIs to the rest of the world until recently. However, with the outbreak of COVID-19 and its origin traced to China, the production of APIs took a hit. This may affect the price and sale of medicines in countries to which Beijing exports the important ingredients.
  • Moreover, the impact is set to be grave, as most of those materials are largely manufactured in the Hubei province. Its capital, Wuhan has been reported as the initial epicenter of the COVID-19 outbreak, and neighboring areas of Zhejiang and Jiangsu are the other two major Chinese centers of medicinal raw material production.

Arch Pharmalabs Limited Rating

  • RECOMMENDATION

    Strong Sell

  • Arch Pharmalabs Limited Detail Info

Registered In

India

Registered Date

27/08/1992

Planify Ticker

APL

Reg Office: 3rd Floor, Titanic Building, Chandivali Farm Road, Nr. HDFC Bank, Andheri (East) Mumbai - 400072

Website: http://www.archpharmalabs.com/