Highlights: Q2FY22 Consolidated revenues at Rs. 7,360 m An EBITDA breakeven of Rs. 10 m Successfully completes acquisition of Chestnut Ridge site along with ANDA’s from Endo Commenting on the performance, Dr R Ananthanarayanan, Managing Director & CEO, remarked, “We have reported an operational breakeven in Q2FY22 enabled by a bounce back in other regulated markets, growing 27% QoQ. The performance in other regulated markets was driven by improving demand scenario and resumption of our supplies to partners during the quarter post the Covid related manufacturing disruptions in Q1. Emerging markets continues to track well delivering growth both in Africa and Institutional business. We continue to face headwinds in our US business. While we have been able to retain volume share on our key products, we continued to witness price challenges in our portfolio during the quarter, magnified by concentration towards acute products. We have completed the strategic acquisition of Chestnut Ridge site in the US along with a portfolio of approved products which will enable us to accelerate new product launches. While there are near term headwinds, we remain optimistic on the US business in the long run. We will start witnessing improvement in our US business starting Q3FY22 and will continue the growth momentum there on. Given the volatile dynamics we believe we will only be able to achieve our current year guided outlook for US in FY23 A muted sales performance accompanied with a drop in gross margins and relatively higher operating costs has led to a negative operating leverage in H1. While cost measures have been initiated to improve operating leverage, the shift will be visible in the coming quarters.” Result PDF
Strides Pharma Science Limited (“Strides”) today announced that its wholly owned subsidiaries have entered into definitive agreements with subsidiaries of Endo International plc (“Endo”) to acquire its manufacturing facility at Chestnut Ridge, New York and a basket of ANDAs. Strategic Rationale Over the last few years, Strides US business has seen a significant ramp up driven by portfolio expansion and strengthening of frontend presence. US is now the largest market for Strides contributing 48% of FY21 consolidated revenue The proposed acquisition will further bolster Strides US presence through acquisition of a multi dosage facility in the US and a basket of ANDAs cutting across multiple therapeutic segments. The cumulative addressable market for the acquired portfolio is US$4.7bn (IQVIA MAT May 2021). The facility at Chestnut Ridge, New York has an annual capacity of 2 billion units across semisolids, liquids, nasal sprays along with oral solids. The facility is also registered with the Drug Enforcement Administration (DEA) enabling manufacturing of controlled substances Considering the COVID-19 disruptions, this facility being in the US will enable us to mitigate supply chain related bottleneck and will drive logistics related synergies for the US business The facility has undergone several successful USFDA inspections in the past and has received the Establishment Inspection Report (EIR). This site mirrors the capabilities of our flagship facility at Bengaluru, India, and will help further de-risk our manufacturing footprint Being in the US, the facility will be able to participate in various federal government procurement programs including the Department of Veterans Affairs. The acquisition further strengthens our ability to cater to federal contracts The acquired portfolio has 20 commercial products and a basket of dormant ANDA’s which will help fast track our new launch strategy for US markets with 5-6 new product introductions every quarter Strides is pleased to welcome a strong talent pool having several years of global experience as part of acquisition Transaction details Under the terms of the agreement, Strides will pay ~US$24m for the acquisition The transaction will be financed by a combination of internal accruals and debt financing The transaction is expected to close in CY2021 subject to customary closing conditions Commenting on the development, Dr. R.Ananthanarayanan, Managing Director & CEO, remarked “Over the last few years our US business has witnessed a healthy growth momentum and has now attained a critical scale. The acquisition we have announced today is a very good strategic fit for the business and will help further accelerate our growth momentum for the US market. With this acquisition we have doubled our US portfolio with a potential to launch 5-6 new products each quarter going forward. We believe with the combined product portfolio, experienced management team, established frontend and a diversified manufacturing footprint we have created a strong foundation to achieve our previously stated growth ambition for the market. On completion of the transaction, our immediate focus will be on seamless integration of people and the acquired assets onto Strides platform” Result PDF