Suven Pharmaceuticals: CRAMS Market Insights
Discover key insights into Suven Pharmaceuticals, a CRAMS-focused company working on new chemical entities for Alzheimer's disease. With a market cap of 2500 Cr and a strong track record of innovation, Suven stands out in CNS research with a debt-free status, multiple patents, and high growth potential in the pharmaceutical industry.
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Presentation Transcript
Quick Background Summary: Small Cap Pharma CRAMS (Contract Research focus/ cabability built + working on New Chemical Entity for Alzeimer s ) Market Cap: 2500 Cr PE: 22 Current Price: Rs 200 Debt Free Holds several patents (multiple geographies) (700+ product patents for 26 inventions; and 37 process patents for 7 inventions) Conservative commentary from the Management (Venkat Jasti) Founded in 1989 (listed in 1995), based in Hyderabad (Plants: Jeedimetla, Suryapet, Vizag) Low competition due to complexity of space one of few players in CNS research
RoE: 27% (3 yr, 5yr avg), Sales CAGR: 25%, Profit CAGR: 40 %(3yr) to 50% (5yr)
Business Model (Rest of Pharma vs Suven: USP) Most Indian Pharma Companies Business Model A) Manufacture Generics (reengineer off patent drugs) B) Supply API to Generic manufacturers C) Supply API to Innovators SUVEN s Business Model: (high margin outsourcing biz + R&D biz) CRAMS (30% margins) Contract Research (not Contract Manufacturing) Outsourced Drug Discovery Partnership with AstraZenca, Pfizer, GSK, DuPont, Eli Lilly, Novartis, Abbott New Chemical Entity Central Nervous System disorders (CNS) - Alzeimers/ Dementia (memory loss) Suven 502: Phase 1 over; Phase 2 started Formulations Speciality Chemicals (20% margins; 200 cr revenue)
Business Model Canvas Product/Offerings Market/ Segments Contract Research to Innovators (high margin) Monetising Capabilities MktSize: $58B research budget of top 50 global Pharma Complex Drug Discovery/ Research Capabilities Own Drug Discovery (NCE: Suven 502 - Alzeimers) (Lottery ticket zero or one) Using learning from contract research to build capability to create IP MktSize: $5B(5mAmericans) Contract research relationships give opportunities for API/intermediary supplies Formulations/ Speciality Chemicals (200 Cr topline) R&D focus (15% of Sales); expensed not capitalised PE funding 200 Cr for Suven502 ($25m US subsidiary for licensing BD) One time supplies repeat every 18-24 months
Invest? Cons Pros Good Management Conservative (no debt, expensing R&D) Past Guidance: walked the talk Market does not have y-y visibility (supply repeats come once in 2 yrs; Jasti says Suven should be seen in 3 yr blocks; contract research depends on success of Innovators in each stage) Probability of success in Alzeimer s drugs are very low historically (2%?). (compare: Oncology is 30% success rate) Second line management not visible (Jasti age 65) Valuation of Suven502 not factored much (comparable molecule one sold for $150m, another got $350m investment) Patent factory Forbes Asia 200 Best under Billion, Motilal Oswal 100x multibagger Wealth creator
