Shasun Pharmaceuticals Limited Company Analysis Report

Shasun Pharmaceuticals Limited Company Analysis Report

Summary

• Shasun Pharmaceuticals Limited is one of the leading contract manufacturers of APIs and drug products with a significant presence in anti-inflammatory and anti-ulcerative treatments.
• Shasun has an active presence in the CRAMS market of both APIs and finished dose forms. Its investment in state-of-the-art cGMP facilities has enabled it to execute several projects for innovator big pharma companies such as GSK, Eli Lily, Wyeth (now part of Pfizer).
• During FY 2010, Shasun's CRAMS business posted the greatest share of sales at $62m, contributing 55.6% of the total revenues. Although this division recorded a significant y-o-y decline of 22.9% in FY 2010, increasing outsourcing and contract manufacturing opportunity in India will revive its sales in the near term.
• Shasun targeted Japan as a key pharmaceutical market during FY 2010/11 and intends to establish long-lasting relationships with various Japanese pharma players.

Company overview

Table 18: Shasun Pharmaceuticals Limited snapshot
Headquartered:	Chennai, India
Established:	1976
Consolidated revenue (FY 2010):	$112m
Segmental revenue (FY 2010):	$62m*
Employees (2010):	1,450
*CRAMS business.Note: FY = Fiscal Year (April 01 to March 31).

Source: Company information

Headquartered in Chennai, India, Shasun Pharmaceuticals Limited is one of the leading Indian contract manufacturers of APIs and drug products with a significant presence in anti-inflammatory and anti-ulcerative treatments. The acquisition of Rhodia Pharma Solutions in 2006, also strengthened its offering in contract research, custom synthesis, contract manufacturing and contract formulation services to clients in the US, Europe and Asia. With over 1,400 employees in India, the US and the UK, Shasun is one of the major global producers of ibuprofen, ranitidine and nizatidine. Most of its products are exported to countries across Europe, North America, Latin America and Asia.

Business segmentation

Shasun's business offerings are divided into four segments:

• Contract & Custom Pharmaceutical Manufacturing;
• Formulation;
• Products;
• Biotech.

Shasun has an active presence in CRAMS business of both APIs and formulations. Its proactive investment in state-of-the-art cGMP facilities has enabled it to execute several projects including APIs (cycloserine, metohexital and isradepine) and advanced intermediates for big pharma companies such as GSK, Eli Lily, and Wyeth (now part of Pfizer). Shasun's pharmaceutical division develops and manufactures formulations for solid dosage products. Its services include formulation R&D activities, analytical method development and validation, technology transfer, and full scale commercial manufacturing of oral solid dosage forms.

R&D focus

Shasun's R&D Center has been operating successfully for the last four years and is primarily engaged in developing innovative and cost-effective processes for Shasun’s in-house needs as well as for external customers under its CRAMS offerings. Its R&D division aims to initiate research in various domains of synthetic chemistry to identify new areas of research. Moreover, the acquisition of Rhodia Pharma in 2006, also allowed it to access some sophisticated technologies such as Hydrolytic Kinetic Resolution (HKR), Aromatic Bond Formation (ABF) and trifluoromethylation which increased its efficiency in process development.

Shasun's R&D infrastructure in India is presently divided into four groups namely:

• API facility – Puducherry: Established in 1986, this facility is a dedicated plant for the manufacture of ibuprofen, widely supplied across Europe, North America and other countries;
• Formulation unit – Puducherry: This facility can handle oral solid dosages, with an annual production capacity of over 3bn tablets (including film and sugar coated) and 120m capsules (hard gelatin);
• Multi-product facility – Cuddalore: Spread over 700,000 square feet, this state-of-the-art facility is mainly dedicated for the manufacturing of excipients and anti-ulcerative drugs such as nizatidine and ranitidine;
• Biotech R&D unit – Velacherry: This unit is involved in protein processing solutions to provide services for the biotech and pharmaceutical companies across the globe.

Financial performance

During FY 2010, Shasun's CRAMS business posted the greatest share of sales at $62m, contributing 55.6% of the total revenues. Although this division recorded a significant y-o-y decline of 22.9% in FY 2010, increasing outsourcing and contract manufacturing opportunity in India will revive its sales in the near term. More recently, Shasun have started to scale-up its finished dosage business which achieved an annual revenues of $10m in FY 2010, registering the highest y-o-y growth of 81.3%. The company is also planning to increase its finished dosage business through several partnerships and exploring opportunities in contract manufacturing with major innovator and generic companies in the coming years.

Table 19: Shasun total sales ($m), FY 2010
	Sales FY 2010 ($m)	Sales growth FY 2009–10 (%)
Total sales	112	9.9
All numbers were converted into $m considering an average exchange rate for the fiscal year (i.e. in FY 2009, INR1 = $0.0218; in FY 2010, INR1 = $0.0211). FY = Fiscal year (April 1 to March 31)

Source: Company reports

Table 20: Shasun financial performance by key segment ($m), FY 2010
Business segment	Sales FY 2010 ($m)	Sales growth FY 2009–10 (%)
CRAMS	62	-22.9
Finished Dosage Business	10	81.3
Biotech	1	NA
Note: the company did not disclose its complete revenue breakdown.All numbers were converted into $m considering an average exchange rate for the fiscal year (i.e. in FY 2009, INR1 = $0.0218; in FY 2010, INR1 = $0.0211). FY = Fiscal Year (April 01 to March 31)

Source: Company reports

Growth strategies

Manufacturing higher quantities of existing products

Shasun continues to enjoy significant traction in its core APIs which is presently led by ibuprofen, ranitidine and nizatidine. Most of its products are exported across North America, Asia, Europe and Latin America. With respect to Ibuprofen, the company intends to maintain its growth rate and focus on higher value addition through more sales of Ibuprofen derivatives. Additionally, it has started to develop new products in the therapeutic areas of hyperphosphatemia, pain management, and tranquilizers to ensure higher capacity utilization in the coming years. Moreover, given the growing importance of emerging markets, Shasun has undertaken a restructuring of its marketing organization to ensure renewed focus on these markets.

Integrating CRAMS offering across geographies

Given the attractive opportunities from global generics market, Shasun is working on a set of products where it will file its own ANDAs. The company is constantly evaluating newer technologies and areas of specialization to create a differentiated value proposition for the customers. Shasun also targeted Japan as a key pharmaceutical market during FY 2010/11 and plans to establish long-lasting relationships with various Japanese pharma players. This move will enhance the customer base for the company increasing profitability in coming years. Moreover, with the growing importance of biologics within the pharmaceutical landscape, opportunities for biological CRAMS are set to rise in recent years.