Jubilant Life Sciences-Unseen Opportunities Ahead
Jubilant Life Sciences-Unseen Opportunities Ahead (COVID-19 Vaccine manufacturing, Demerger of business inline)
Twitter Handle: @shuchi_nahar
Company Overview
Incorporated in 1978, Jubilant Life
Sciences (JLS; formerly Jubilant Organosys), is a mid-sized integrated
chemical turned pharmaceuticals player. It started as a full-fledged chemical a company by entering the vinyl acetate monomer (VAM) business in 1983.
Broadly,
the company operates through two business segments - pharmaceuticals (62% of
the turnover) and life science ingredients (35% of turnover).
The
pharmaceuticals segment consists of sub-segments like
1) generics
2) specialty
pharma - radio pharma and allergy therapy products and
3) CDMO - contract
manufacturing (CMO) of sterile injectables and API.
In November 2020, Jubilant Life
entered into a strategic partnership with SOFIE Biosciences, Inc. (SOFIE), US.
Under the terms of the agreement, Jubilant will acquire 25% of equity holding
for a cash consideration of US$25 million.
This partnership will enable them to
collaborate in the development, manufacturing, and distributions of
radiopharmaceuticals that will help in the diagnosis and treatment of a wide
variety of oncology diseases. The acquisition is expected to be completed by January
2021.
LSI Segment
Within the LSI segment, Speciality Ingredients The business Unit is focused on developing new products. At any point in time,
there are 10-15 new products being worked upon. Specialty Intermediates faced
headwinds due to temporary impact on demand because of the pandemic, while
Nutritional growth was led by price growth and exports to the European market for
Vit-D3 products. LSC key product Ethyl Acetate growth was muted due to certain
customer segments viz. Automotive (Paints), Consumer durables (Packaging) and
Electronics sectors are witnessing lower activities during COVID-19.
The company expects revenues and profitability in
North America will continue to account for a significant portion of its
future consolidated revenues as the company continue to focus on growth in this
market. New products in the pipeline will lead to major revenue generation in
coming times. Two of their radiopharmaceutical products have received
505(b)(2) approvals from the US FDA, namely Drax ExametazimeTM and RUBY-FILL®
Rubidium Rb82 Generator and Elution System.
In
addition to Drax ExametazimeTM and RUBY-FILL® Rubidium Rb82 Generator and
Elution System, their Radiopharmaceuticals business line is in the process of
developing certain products such as I-131 meta-Iodobenzylguanidine (‘mIBG’) for
which company plans to make a New Drug Application (‘NDA’) filing.
Jubilantlife
planning $70 million expansion in the US facility & expecting to add 400
jobs while doubling its existing space & fill-finish manufacturing capacity
Syringe. Jubilant currently has 850 employees in Spokane.
In
addition, we have seven other products in different stages of development for
which we may consider making 505(b) (2) filings. For Allergy Therapy Products,
subject to the completion of relevant approvals from the United States
Department of Agriculture (USDA), we have filed our venom products and
allergenic extracts for use in animals. We also have a strong pipeline in our
APIs and Solid Dosage Formulations businesses.
Revenue
Growth Trend
Positive Impact of COVID-19 Vaccines
on Jubilant Life Sciences (therapeutic
angles).
CDMO on Ampligen Syringe Awarded FDA’s ODD
status for pancreatic cancer-17 Dec2020. Syringe Advancing CTs of Ampligen as
potential protective prophylaxis & an early-onset treatment for COVID19.
Syringe Japan is evaluating as potential COVID-19 vaccine adjuvant.
Jubilantlife vaccine manufacturing (CDMO)
during 1995-2020 and beyond (Virus Outbreaks).
In 2009 - manufactured over 100 million doses,
to treat the H1N1 virus Syringe.
In 2020 - manufacturing COVID-19 vaccines in
the US (Spokane facility) Syringe.
Increase in trend for Employee Cost(in Cr.)
R&D – Major growth driver for the company
Research & Development (R&D) is a key driver
for innovation and plays a vital role in developing and adopting new technologies
in the technologically intensive life sciences industry. The company has designed a
successful R&D, which continues to ensure delivery of a sustainable pipeline of high-value products of Fine Ingredients and Intermediates.
Patents
filed and approved to date
CMO
& Generics – Will led to stronger growth
CMO – New
lyophilization installation in Q1, strong demand from customers as well as new
deals.
Signed five
(one in Q2) separate clinical and commercial supply agreements for Covid-19
treatment and vaccine candidates (sterile injectable).Robust order book and new
business sign-ups.Nanjangud (API) operations started, strong order book.
Expecting 500 crores in revenue over 10-12 months from Covid products.
Remdesivir
started my contribution. Covid related products - 1 million vials produced.
Generics -
led by strong performance in key products in the US market and by the launch of Remdesivir
in various countries. Roorkee site capacity expansion completed in FY20.
Salisbury site expansion is underway translating to 85% increase in capacity by
February 2021. Remdesivir production capacity increased from 2 lakh vials to
4.8 lakh vials per month.
Pharmaceuticals business segment growth likely to be healthy
Recent long term contracts in the
radio pharma business, Rubyfill traction in the US coupled with Europe launch are
expected to strengthen specialty sub-segment growth that is likely to grow at
8.6% CAGR in FY20-23E to 3869 crore.
This is on the back of strong decent
growth in the radiopharmacy business (amid competition) and consolidation of the pharmacy business. The CDMO business was impacted in Q1 due to about two-month the shutdown of its Nanjangud API plant due to Covid (back on track in Q2).
However, going ahead, it's expected
this segment to see strong traction on the back of improving operating
leverage. Generic business is also posting decent growth on the back of base
business besides one-off opportunities. A key monitorable in the segment would be developments on the
five contract manufacturing agreements that the company has signed for Covid
treatment and vaccine candidates. On the LSI front, the performance continues to be
lumpy except for the nutritional sub-segment.
Demerger may complete in FY21
NCLT approval received for demerger: JLS has
recently received the NCLT approval to go ahead with its demerger plan of
having two separate entities for pharma and LSI (Life Science Ingredients)
businesses. The board had initially approved this re-organization of the
businesses in Oct'19 and the approval from shareholders and creditors were
received in Aug'20. Key objectives of this re-organization were:
1) Have
separate focus business entities,
2) better management of risks and regulatory
requirements,
3) enabling strategic growth with optimal capital allocation, and
4) unlocking of shareholder value.
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Twitter Handle: @shuchi_nahar
Dear Shuchi
ReplyDeleteIn the recent webinar by SOIC on specialty chemicals , there is reference to watch below episode on a chemical company https://www.netflix.com/gb/title/80118100 - Point Comfort - Formosa Chemicals , what is your view on below
Eveywhere the buzz is China + 1 - Mainly industry is moving away from China (in Chemical space especially) becuase of strignet Pollution norms, is it true to say Indian pollution norms are very strigent ? There are many villages in Tirpur Tamilnad , famour for all the texitle business, the pollution levels are so high, water from every borewell is coloured, same is the case in many places in Chennai, i witnessed this almost 20 years ago in Chennai, when I wanted to take shower, my friend said close your eyes and take shower, otherwise you cannot by looking at the water colour.
India is a developign nation and we also signed up for Paris agreemnet on climate change, so is it fair to say our pollution norms are very stringent ?
ESG - This is another buzz word, how to measure chemical and pharam players in india agaist these parameters ? Is it entirely voluntary ? There is some voluntary agency in india https://www.indianchemicalcouncil.com/affiliate-associations.htm , this was referred by DMCC. There are some companies like Valinat in their AR mentioned they are zero liquid dicharge company.
There are tail winds in this chemical and pharma sector but what can wrong is pollution norms (what if US FDA and all make it compulsory for the comanies that they deal with have to have strict norms as one of the criteria ? For example in UK there are some allegations where the cloths that come from Bangladesh are now banned from some supplier due to labour explotiation and poor safety norms, same has happend with Page Industries as well, Norweign soverign fund pulled out their investments ) , so what I am wanted to is put the Formosa chemicals into the context and see what could go wrong .
Another big risk in these industires is Risk of fire, there is this company based in UK, which has devloped very advanced detenction systems, which detech gas leaks as well, so how these kind of investments are done in the comapnies in this sector ?
https://www.halma.com/our-companies/advanced
I will be eagerly looking out for the updates on your handle, if you get a chance please raise these questions in the relevant meeting when you get an opportunity.
Many Thanks
Rafi