Despite a late entry into the US market, Ahmedabad-based drug maker Torrent Pharma has managed to ramp up its US business reasonably well over the last few years.

A healthy pipeline of drugs , investments into building a portfolio of low competition drugs and steady growth in the Indian market should help Torrent Pharma sustain healthy growth in revenue and profit.

At the current price, the stock trades at about 21 times its estimated 2016-17 core earnings (excluding first to file opportunities). This implies a 10 per cent discount to the BSE Healthcare Index. Investors with a two to three year horizon can consider buying Torrent Pharma.

Revenue boost From ₹91 crore in 2009-10, Torrent Pharma’s revenue from the US market has grown over 12-fold to ₹1,164 crore in the first half of 2015-16. Besides launch of me-too generic drugs, launch of exclusive drugs which have limited competition, has provided a leg up to the company’s performance in this market.

The company has almost trebled its revenues in this market in the April-September 2015 period, compared with the same period last year, thanks to the launch of generic version of antipsychotic drug Abilify in the US.

Torrent has a pipeline of over 19 drugs pending approval by the US drug regulator - Food and Drug Administration (FDA) and 44 products under development.

The company plans to file 18-20 products every year and increase its presence in niche therapy areas such as dermatology, oncology and ophthalmology. Besides expanding its product offering through new filings, the company is also exploring inorganic opportunities.

In May, Torrent entered into an agreement with the Encore Group to acquire 100 per cent stake in Zyg Pharma, which manufactures dermatological formulations such as ointments, lotions, creams, gels, lotions and solutions.

The company has a manufacturing facility at Pithampur near Indore, which is approved by regulatory agencies such as US FDA and Australian drug regulator TGA. All these should help Torrent sustain strong growth in the US.

Growth plans The company has been pursuing aggressive growth plans in the home market too. In December 2013, Torrent acquired the branded formulations business of Elder Pharma in India and Nepal for a consideration of ₹2,000 crore; the integration of the same has been completed.

This acquisition gave the company access to 30 brands across therapies such as women’s healthcare, pain management and nutraceuticals.

Last year, the company entered into an exclusive licensing agreement with Reliance Life Sciences to market three of the latter’s biosimilar products which are currently in various stages of development.

These inorganic initiatives should provide a boost to Torrent’s growth prospects in the domestic market.

Though the company’s Brazilian business which accounts for about 7 per cent of its consolidated revenue has been impacted by the weakness in Brazilian Real, the underlying demand for Torrent’s products has remained stable.

For instance, in the first half of the fiscal 2015-16, despite a 13 per cent decline in revenue from this geography in rupee terms, the growth on a constant currency basis was healthy at 19 per cent.

Torrent managed to grow consolidated revenue by 56 per cent in the first half of the current fiscal to Rs 3,638 crore.

After tax, the profit swelled 2.2 times to Rs 1,017 crore during the April-September 2015 period, compared with the same period last year.

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