Sequent Scientific Ltd - Differentiated Model :: Edelweiss, link

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Sequent Scientific Ltd. (SSL) is a leading integrated API and formulation company in India, with presence in both Veterinary API’s and Formulations as well as niche human API’s. Over the last two years, SSL has been focusing on establishing (via both inorganic and organic routes) a strong veterinary formulation business across the globe. The company plans to generate ~INR 1500 crs revenue by FY2018E with margins of 20% mainly lead by growth in the veterinary business.  The promoters’ investments in the form of growth capital (~INR 165 so far with expectations of another ~INR 118 crs in the current fiscal), coupled with the differentiated business the company is operating in builds confidence for future growth.

Emerging as a strong player in the veterinary space

SSL forayed into the veterinary business post its merger with PI Drugs Ltd. (an established API Veterinary Company in India) in 2008. It used PI’s established expertise in veterinary APIs to make further inroads in this segment, and establish an integrated API and formulation company to create value in the Animal Health market. Limited competition, coupled with high realisations makes this a lucrative business with healthy margins. In a bid to restructure its business and increase focus on animal healthcare, SSL hived off its existing veterinary pharmaceutical business into its 100% subsidiary Alivira Animal Health Ltd. SSL expects the animal formulations segment to be a key growth driver going forward, and has taken various initiatives like in-licensing products, improving its distribution network and expanding through acquisitions. The company as a part of these initiatives have recently acquired Provet Veterinary Products, Turkey, providing it with a ready base of over 100 veterinary formulation products. SSL targets revenue of INR 1000 cr from veterinary pharmaceuticals by FY2018.

Human API a cash cow business

SSL is focused on development and supply of high-value, low-volume niche and complex with a wide presence across therapies like anti-malarial, anthelmintics, anti-infective, antiviral, CNS and Dermatology. Unlike other generic players who are looking to cash in on opportunities arising from Para IV challenges and patent expiries, SSL has consciously decided to build its portfolio in niche & complex molecules that have limited competition. With such molecules having a limited market, it is not economically viable for a lot of API manufacturers to supply small quantities, ensuring that the market is restricted to a very few players. Additionally, the company recent tie-up with Gilead for API technology for Sofosvubir and Harvoni to be marketed in 91 emerging countries is expected to open up a big market opportunity for the company.

LINK
https://www.edelweiss.in/research/Sequent-Scientific-Ltd--Differentiated-Model/10005249.html