Intas Pharmaceuticals

Business Valuation Course

Group - 1

Overview attractiveness of Indian Pharma

Industry
Demand Drivers*:
Epidemiological Factors Population Growth ~1.3%,
increase in patient pool, increase
in no. of diseases
Drivers of Affordability Affordability to increase due to
sustained growth in GDP (~8%),
Increase in insurance coverage
and govt. sponsored programs
Drivers of Accessibility Accessibility to expand due to
growth in medical infrastructure
(160,000 hospital beds added
every year)
Drivers of Acceptability Acceptability of modern medicines
to increase due to aggressive
market creation and govt.
awareness programs

Overall attractiveness of
the industry - High

*Source: India Pharma 2020: Propelling Access and Acceptance report by Mc

Strategies for growth in the Indian Pharma

Sector
Cost Leadership
Players in the sector are trying to achieve cost leadership in various ways. For example, Sun Pharma is
trying to achieve the same by vertical integration.

Intas is vertically well integrated, having business in

pharmaceutical formulation development, manufacturing as
well as marketing those drugs

Differentiation
Players in the sector are trying to differentiate themselves by investing heavily on R&D efforts. For
example, Dr. Reddys is trying to develop technically complex APIs, Dr Reddys is investing in
technology platforms.
Headed by a strong pool of 400+ scientists and researchers,

R & D is the key growth driver for Intas. Intas' R & D

strategies are focused on 2 major areas - Pharmaceutical
Formulation Development, and API Development
Focus on New Markets
Certain players in the sector are focussing on entering new markets with new opportunities. For
example, Lupin is making inroads into
new
markets such
as Latin
America,
Russia and
other East
Intas
is present
in 70+
countries
worldwide
through
sales,
European countries
marketing and distribution infrastructure, and also has

factories in Mexico and UK

Based on these qualitative factors, Intas is well poised for growth

3

*References: IBEF Industry report on pharmaceuticals Aug 2014 and http://www.intaspharm

PORTERs Five Forces for Indian Pharma

Sector
Competitive Rivalry

Threat of New
Entrants

Substitute Products

Growth
Strict government
Threat to
opportunities for
regulations
substitute
pharma companies
thwart entry of
products is
are expected to
new players
low; however,
grow in
Difficult to
homeopathy and
next few years,
survive because of
Ayurvedic
with many drugs
high gestation
medicines can act
going off-patent in
period
as
the US and other
substitute
countries, thus
increasing
competition
Bargaining Power of Suppliers
Bargaining Power of Customers
Difficult-to-manufacture APIs
such as steroids, sex
hormones and peptides give
bargaining power to suppliers.
However, generic APIs do not
have much of that power

Generic drugs offer a cost

effective alternative to drugs
innovators and significant
savings to customers

Company Overview
Overview of the business
Intas Pharmaceuticals Ltd., (Intas) develops, manufactures, and commercializes
pharmaceutical, and biotechnology products for both human and animal diseases.
The company classifies its business operations into three divisions, namely,
Pharmaceuticals, Biologics and Animal Health.
Biopharmaceuticals division - Backward integrated operations and focuses on oncology,
critical care, biorecombinant and DNA based products.
Animal Health division - Specializes in large animals and pet segments. It offers products for
livestock, companion animals, equine, swine and poultry

Facts and Figures

Turnover ~ INR 5150 Cr as of Mar 31, 2015; 21% CAGR over last 5 years

Profit growth of ~50% CAGR over the last 5 years

Currently ranked 11th in the Indian Pharma Market with 2.66% market share
5th largest corporate in Indian Chronic Pharma Market with a market share of 5.06%
Present in 70+ countries worldwide through sales, marketing and distribution infrastructure
9 manufacturing facilities 7 in India, 1 each in UK and Mexico

Other key points from a valuation perspective

Twice deferred plan to launch IPO due to market conditions
In 2014, Tamsek acquired 10.16 % in Intas thorough secondary purchase from Chrys Capital

SWOT Analysis for Intas

Strength

S W

Market Leadership
Position
Strong
Manufacturing and
Operational Network
Focussed R&D
Activities

Opportunity

Generics Growth
Potential in
India
Strategic
Investment
Initiatives
New Product
launches

O T

Weakness

Competitive
Positioning

Threat

Raw Material
Procurement Risks
Stringent
Regulations
Uncertain R&D
outcomes

International Business for Intas

70
+

Overvie
w

Sales Revenues (Crores)

countries
Live product
registrations

3000.00

3000
+

2500.00
2000.00
1500.00

29
%

International Sales Growth

1000.00
500.00

Contribution by
US and Europe

0.00

77%

37.80%

40.00%
35.00%
28.97%
30.00%
22.46%
25.00%
20.00%
2762.43
2141.89 15.00%
10.00%
1314.20
1073.20 829.42
5.00%
601.90 618.81466.79
0.00%
Europe
U.S.
Rest of the World International
32.57%

2014-15

2013-14

Growth Rate

Marketing Approach
Mix of own marketing in select countries and tie ups with multinational companies in other markets
Each country is supported with local marketing team for catering to the needs of the customers
and regulatory team for registration of products.
Distribution Approach
Products are sold through leading wholesalers, mail order pharmacies and retail pharmaceutical
chains in the US
Combination of tender-based sales (to the national or state governments in various countries) and
retail sales in Europe

Pipeline

Drugs Status

Active Drugs by
Indication

Active Drugs by status

40
35

Launched

30

Registered

25

Phase 3 Clinical

20

Phase 2 Clinical

15

Clinical

10
5
0
Drugs in Active Development

14
4

Discovery
0

8
2

10

12

14

16

Valuation
Expenses

Conditional
Probability

Time

Overall Probability of
Success

Investigational New Drug Application

Phase 1

10167

22

75%

30%

Clinical Phase 2

15652

26

48%

14%

57859

30

64%

9%

90%

8%

40%

Phase 3

Approva
l
New Drug Application
Market

Post Market Survillence

Valuation
DCF

INR bn

270

184

EV/EBITA 130
EV/ Sales

Legal Risks :

195

Transaction comp.

254

179
161

230

110 130 150 170 190 210 230 250 270

Firm, management and promoters

are involved in multiple legal cases
which present a tangible risk to the
firm.
Solution: Create escrow account
and/or add
Indemnity clause