In the realm of life-saving innovations, the pharmaceutical sector stands as a beacon of hope. This industry plays a crucial role in global healthcare, developing and manufacturing drugs that combat diseases and improve quality of life. Pharmaceutical companies invest heavily in research and development, striving to create breakthrough treatments.
They navigate complex regulatory environments while balancing patient needs with economic realities. As we examine the sector’s dynamics, we turn our attention to Strides Pharma, a notable player. Their recent performance raises an intriguing question: Strides Pharma – good net profit growth and guidance will help the company in continuing the growth trajectory?
Industry Overview
The pharmaceutical industry’s global revenue is expected to reach US$1,155.00 billion by 2024. India’s pharmaceutical market is expected to increase significantly. The country’s generic medication manufacturing capabilities make it a global leader in this market.
Indian pharmaceutical companies are growing into overseas markets. They are investing in R&D to develop novel medications. The government’s supporting policies are helping the sector flourish.
Market giants such as Cipla, Sun Pharma, and Dr. Reddy’s are pushing innovation and expansion, helping India gain importance in the global pharmaceutical environment.
Among all these giants in the race Strides Pharma is one such underdog company that is experiencing excellent growth in this market. With its massive increase in QoQ net profit, the company hopes to accelerate its growth trajectory.
Company Overview Of Strides Pharma Science
Strides Pharma Science, established in 1990, is a global pharmaceutical company based in Bangalore, India. The firm operates in Regulated and Emerging Markets, with eight manufacturing facilities across four continents. Strides specializes in developing and manufacturing niche, technically complex pharmaceutical products. The company prioritizes quality, giving it a competitive edge in a rapidly evolving regulatory landscape.
Strides aims to provide affordable treatments globally. It supplies drugs for various infectious diseases to institutionally-funded aid projects and global procurement agencies. The company’s world-class facilities meet stringent regulatory standards, holding approvals from US-FDA, MHRA, TGA, and WHO.
As a leading Indian supplier, Strides fights global pandemics by distributing products to over 100 countries. The firm continues to strengthen its R&D initiatives, developing next-generation products. Strides collaborates with international agencies like UNITAID and Medicines Malaria Venture, while also entering licensing agreements with various organizations to expand its reach and impact.
Financial Highlights Of Strides Pharma Science
| Financial Quarter | Jun 2023 | Sep 2023 | Dec 2023 | Mar 2024 | Jun 2024 |
|---|---|---|---|---|---|
| Revenue (Crores) | 930 | 999 | 1,038 | 1,084 | 1,088 |
| Operating Profit (Crores) | 134 | 111 | 142 | 181 | 205 |
| Operating Profit Margin (%) | 14% | 11% | 14% | 17% | 19% |
| Net Profit (Crores) | -9 | -149 | 54 | 10 | 68 |
| Earnings per share (₹) | -0.79 | -14.54 | 5.41 | 1.98 | 7.64 |
Strides Pharma’s financial performance shows positive trends. Revenue grew steadily from ₹930 crores to ₹1,088 crores over the year. Operating profit improved, reaching ₹205 crores in June 2024, showing a QoQ jump of 13.26%. The operating profit margin increased from 17% to 19% during the same period.
Net profit saw a remarkable jump, moving from ₹10 crore to ₹68 crore. Earnings per share rose significantly from ₹1.98 to ₹7.64. The company’s profitability boost came largely from reduced stock-in-trade purchases, which fell from ₹1,126 crores to ₹794 crores as compared to the last quarter.
This better fund utilization and improved inventory management contributed to the overall financial improvement in the last quarter.
Key Metrics Of Strides Pharma Science
| Metrics | Strides Pharma |
|---|---|
| Market Capitalisation | ₹ 9,775 Cr. |
| Current Market Price | ₹ 1,064 |
| Price to Earnings Ratio | 93.8 |
| ROCE | 7.91% |
| Promoter Holdings | 25.90% |
| FII Holdings | 26.70% |
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Will Strides pharma continue the trajectory?
US Market
Strides achieved record US revenues of $70m in Q1FY25, growing 24.5% year-over-year. The company reaffirms its FY25 revenue outlook of $285m-$300m. US business is on track to reach the $400m target by FY27-28.
In Q1, gSuprep captured 30% market share. Three new product approvals were received. The company launched a significant dormant product from the acquired Endo portfolio. Total commercialized products reached 67. Sustained market share across products drove growth. Disciplined portfolio launches improved profitability. Strides ranks in the top 3 for 35 products, contributing 75% of US revenues.
Generics Strategy
Strides identified 60 dormant ANDAs for relaunch over 3 years to achieve $400m generics revenue. The company invested in new segments like Control Substances Nasal Sprays and 505(b)(2) products. It plans to file 2 products with the USFDA by Q1FY26.
The company has been maintaining industry-leading customer service with near-zero failure-to-supply penalties. Quarterly revenues have shown an upward trend, reaching $70m in Q1FY25. The disciplined portfolio approach has improved profitability. Strides Pharma aims to sustain market share and growth through strategic product selection and launches.
Other Regulated Markets
Revenues from other regulated markets grew 17.8% year-over-year to $41m in Q1FY25 from $35m in the same quarter of last financial year. Strong demand and new supply contracts drove growth in UK and Nordic markets. The company expanded its customer base through advocacy and reliable supply.
Strides expects significant growth in the 2nd half of FY25 from new approvals and partner launches. It aims to expand its product portfolio and acquire new customers. The company plans to convert its pipeline of opportunities into growth. Strides maintains momentum in filings and approvals to accelerate growth in these markets.
Debt Reduction
1. The company aims to reduce Net Debt by ₹5,000m, including ₹2,800m debt pushdown to OneSource.
2. They are focusing on improving cash-to-cash cycles and generating operating cash to achieve Net Debt/EBITDA goals.
Capex
The company plans to fund ₹1,500m – ₹2,000m of continuing Capex from internal accruals.
Conclusion
Strides Pharma’s enhanced financials and tactical market positioning indicate a strong growth trajectory. The company is concentrating on regulated markets and generics while growing its footprint in the US. It is making investments in fresh product lines and upholding superior client support.
Strides wants to pay capital expenditures via internal accruals, enhance cash cycles, and lower debt. With its well-defined plan, the business seems to be headed toward sustained success. Would you kindly let us know how Strides sets itself apart from its rivals? What obstacles might it encounter in reaching its US revenue goal? To what extent is its growth strategy long-term sustainable? Comment below.
Written By Dipangshu Kundu
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