Thursday, 20 June 2013

Investment Ideas - Sun Pharmaceutical Industries

Sun Pharma was started as a partnership venture managed by the Dilip Sanghvi and his family. It started as manufacturer of pharmaceutical formulations. Its operations started at Vapi in the state of Gujarat. The company became a public company in the year 1983. Since then the company has crossed several milestones to reach where it stands today. The company deals with segments related to Cardiology, Neurology, Psychiatry, and Gastroenterology.

I have briefly stated below the important events in the history of this company.

In the year 1994 two plants were commissioned one at Panoli and another at Silvana, to augment the production of bulk drugs.In the year the company acquired the manufacturing unit of Knoll Pharmaceuticals Ltd in Ahmednagar. This year two important drugs - Clofranil SR and Syndopa CR were introduced to the market. In the year 1996 sun Pharma brought out more new products. In this year a controlling stake also acquired in MJ Pharmaceuticals Ltd.

 1997 was an important year for sun Pharma. In this year the Chennai based Tamil Nadu Dadha Pharmaceuticals Co. Ltd was merged with Sun Pharma. Tamil Nadu Dadha Pharmaceuticals which was popularly known as TDPL had extensive product range in the segments of gynecology, fertility, oncology, pain relievers and many more.

 Sunkalp Laboratories Ltd., Sun Pharma Industries Ltd., Russia & Sun  Pharma Global Inc. became subsidiary companies of Sun Pharma.This year also saw the expanding manufacturing facilities in Dadra and Nagar Haveli.

In the year 1998 the company launched new products related to glucose metabolism, cholesterol control and Cardivas. The company also launched drugs in managing inflammation, gastrointestinal problems, endocrine disorders.

In 2000 Sun Pharma Exports was merged with the parent company. In this year the company launched more products and expanded its range of products.In 2001 a merger was reported with Pradeep Drug Company Ltd. In this year the company merged Sun Pharmaceutical Advanced research Centre which it created way back.

In this year also new products were launched in the segment of cardiology, diabetology. Edegra - the Sun Pharma’s answer to Viagra was also launched in this year.

Probably the year 2002 must have been the most important year for the company when it received approval from US Food and Drug Authority for Metformin Hydrochloride. This is widely used to treat diabetes. The approval was awarded to Caraco Pharmaceutical Laboratories, an associate of Sun Pharmaceuticals.

Another – Digoxin  ( a generic product) won the approval from the US Food and Drug  Administration (US FDA) to manufacture and marketing in the USA. This is another feather added in the cap of Sun Pharmaceuticals.

In the year 2004 increased its stake from 44% to 60% in Caraco. Later in 2007 this stake was increased to 75%.another significant event happened around this year was the commissioning of the unit in Bangladesh.

Phlox Pharma a company that manufactures a Cephalosporin Actives was acquired by the company. In the year 2005 the company bought a plant form Valeant Pharma in Ohio, USA. Also this year the company acquired Able Labs in New Jersey.

At this point it is noteworthy that the company was selected by Forbes to be among the best 200 companies in Asian region for the fourth consecutive time

 The year 2007 was also eventful for the company when it acquired Taro Pharmaceutical Industries Ltd. Taro had presence in U.S.A., Canada, and Israel.

 In 2008, the company acquired Chattem Chemicals - an approved facility in Tennessee.

 The dividend history of the company has been consistent and good indicating its health.  The last five years dividend from the year 2008 till 2013 climbed from 210% in 2008, 275% in 2009 & 2010,350% in 2011, 425% in 2012 and 500% in 2013. The current face value of the stock is Rs.1.

According to the latest available data from the company the profit after tax stands at 5,903 Crores.

At the time of wrting this notes the company’s shares were trading at Rs.980. Investors with a long term prospective can consider adding this stock to their portfolio.

Link to my post on Sun Pharmaceutical Industries 

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